why do big companies get their accounting done by accounting firms when they could afford to do it on their own?

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why do big companies get their accounting done by accounting firms when they could afford to do it on their own?

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Anonymous 0 Comments

Big companies do do (hehe) their own accounting, the larger the size of the company, the bigger an accounting department to be found. But the companies have a lot of responsibility when it comes to the stakeholders, so a way to validate the accounting. The big companies that dont do their own accounting is simply because its easier. Less effort for the same result, with less things to keep in mind.

Anonymous 0 Comments

For the same reason many functions are contracted to other companies: it saves money.

Company A could either hire their own accountants, which means paying them full time salaries, benefits, and payroll tax; or they could contract with Accountants Co. and just pay them for the time they actually use. Accountants Co. can then afford to pay for the salaries, benefits, and payroll tax of their accountants by contracting with Companies B, C, D, and E as well.

This is also why it’s rare for corporations to hire their own service and support staff like janitors, maintenance, etc.

Anonymous 0 Comments

It isn’t always cost effective. Most large firms have a large internal finance department and will handle the majority of the accounting work at the corporate level. However, there are reasons to hire outside

1) Specific expertise. Certain areas like tax are very specialized and external consultants who are experts in that field are needed. Also things like automating accounting/financial functions require a lot of IT and software package knowledge, and large parts of that might be better done using external firms.

2) International accounting. Large firms operate in many countries. Each country has accounting rules and the firms have to prepare local accounts in accordance with the regulations in that country for every country it operates in. It doesn’t make sense for a firm to hire accountants for every country they operate in, so they hire consultants instead.

3) Law. All publicly traded companies are required by law (in the US, the SEC regulates this) to prepare and have accounts audited by third party firms who attest (under law) that the firm prepared their accounts properly.

4) Cost savings. It just might be less expensive to have an accounting firm do some of the transactional accounting. Large firms also (typically) pay large salaries and bonuses to their full time employees. A part of their accounting needs might be fairly simple and the firm outsources instead of hiring full time employees.

Anonymous 0 Comments

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Anonymous 0 Comments

Liability. If something goes wrong with taxes they didn’t do it the accounting firm is liable and share the fault. That’s the biggest reason as well as cost.

Anonymous 0 Comments

If you are a big machine shop, like you got thousands of employees from machinists to welders,technicians for installing, and engineers. It makes sense to keep people that you actually need to run your primary operations in house. This was you can adjust expenses related to those easily and manage budgets.

When your operation has auxiliary operations, such as cleaning of social spaces, accounting… etc. Things which aren’t required for the primary operation, but support it. It is simply easier to buy those services from outside, this way you don’t need to think about them. You can just put a lump sum of money and that stuff gets deal with.

It really boils down to, do you want to manage your own accounting in house? Often the people at the top don’t have the skills to do such things, so you’d need to get someone who does and from this form a whole new department.

Also accounting services provide other services, not just accounting. My father is accountant and financial advisor specialised in entrepreneurs and small companies. He offers a service, which is really popular among immigrant entrepreneurs, where he helps them with everything from accounting to dealing with officials, and he comes to you when you need him and walks you through the papers basically by holding your hand through the whole process.

Bigger companies might want services like tax law related subject, or someone specialised in government subsidies, or foreign trade. Basically instead of hiring an expensive specialist to deal with things in-house, you can hire one to use when you need it. You might not always need someone who knows how to navigate government subsidies, so no point hiring one.

Also another benefit is that a whole firm doesn’t go on a leaver, vacations, get sick, at once. Your in-house accountant(s) might. A outside accounting firm will keep doing your accounting tasks by allocating workforce internally for it. Again, so you don’t need to deal and manage with it.