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VIEWPOINT: Why Government Entities Should Outsource Their Accounting

By Randall Shepard


Government leaders must manage several moving parts, issues, and responsibilities at any given time in order to be successful. Accounting does not have to be one of them. Outsourcing accounting can simplify the function and ensure that leaders can spend more time devoting themselves to important government and community matters and less time worrying about their bookkeeping. 

Better yet, outsourcing can help government entities lower costs, minimize disruptions to daily operations, and ultimately save precious time that can be better spent initiating change. 

Here are some of the main reasons why government entities should outsource their accounting function.

Save money

As with any decision, cost is a chief factor. Hiring full-time accounting employees involves steep costs associated with compensation, benefits, and more. Outsourced services are typically much less expensive, assigning a fixed fee for customized project services. That means you only pay for what you need. Accounting agencies assign a team of trained professionals to service your specific needs, delivering efficiency and an overall greater value for your investment. Accounting consultants are independent of the government and are better suited to potentially identify any red flags that may be negatively impacting your bottom line or posing a risk to your financial integrity.

Keep your staffing stable

The Great Resignation is affecting nearly every organization, and government entities are no different. In-house staff turnover can significantly impact the short and long-term health of your accounting function. Outsourcing your accounting will not only save you time that would be spent seeking and onboarding qualified candidates, but it will also ensure continuity of your financial function. Most importantly, the risk of hiring an unqualified candidate will be mitigated and you will benefit from a higher level of expertise and improved processes. 

Improve your controls

Having a third party involved in managing your transactions can significantly mitigate risks associated with your financial functions. Outsourced accountants are better able to make unbiased identifications of red flags associated with compliance issues or human errors than in-house accountants and have more checks and balances built into their processes to ensure accuracy. Accounting firms are also able to identify and address any deficiencies in your current financial reporting. This includes addressing any gaps in your supporting documentation for transactions and helping you to establish better in-house procedures for reviewing and approving expenditures. This is critical because, in government services, financial transparency is imperative, so it’s of utmost importance that your bookkeeping is conducted accurately and in alignment with all laws and regulations. 

Receive real-time metrics

Outsourced accounting-service providers will consistently pursue optimizations and compile real-time reporting metrics to help you run your government better and more efficiently. Reports can identify where your entity is overspending and under- spending, ensuring that your financial function is balanced accordingly. Financial information will be available to boards and citizens any time, and you won’t have to worry about your in-house accountant finding time to organize the numbers. 

Outsource more financial functions

Once you have established a trusted relationship with an accounting-service provider, there are more opportunities to enhance the partnership by adding more day-to-day financial needs to your agreement. Other areas of business that can be outsourced include accounts-payable processing, bank-account reconciliations, cashflow management and planning, budgeting, forecasting, and strategic planning. The more that you outsource, the more of your attention can be dedicated to improving the lives of your constituents. 

Government entities face obstacles and important issues every day that require their time and care for the sake of a better tomorrow. Outsourcing accounting services is just one of the ways that you can ensure the health and consistency of your bookkeeping while you focus on what matters most.        

Randall Shepard, CPA, is a partner at The Bonadio Group. He has been providing professional and personal consulting and auditing services to his clients for more than 25 years. As a partner in the firm’s government practice, he oversees all of the services provided to government entities throughout the firm. 

Author’s disclaimer: The summary information presented in this article should not be considered legal advice or counsel and does not create an attorney-client relationship between the author and the reader. If readers have legal questions, it is recommended they consult with their attorney.

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