The Virtues of Relying on Reputable External Providers for Procedures and Templates

According to the Good Bad Ugly survey, just 36% of firms rely on an external provider for developing and maintaining their procedures and templates, with the remaining 64% choosing to retain responsibility for these tasks. From both a risk management and an efficiency perspective, these results are puzzling, given that what a firm stands to gain from an external provider will typically outweigh any associated costs.

We have made three assumptions in drawing this conclusion, and these are:

1. That the external provider’s service is reputable,

2. That their procedures and templates are of the highest quality (accurate, comprehensive and representative of industry best practice)

3. That their service is priced appropriately.

Not all providers fit this description, and it is incumbent upon any firm seeking to ‘outsource’ the development and maintenance of their procedures and templates that they satisfy themselves as to these three criteria.

What we have set out on the pages that follow is a comparison of the characteristics and benefits of the ‘in-house’ model (where a firm relies on its own team members to develop and maintain all of its procedures and templates) and the ‘outsourced’ model (where a firm relies on an external provider to develop and maintain some or all of its procedures and templates).

Time invested

In-house model: Realistically speaking, does a team member (or group of team members) with client work responsibilities have sufficient time to dedicate to the important task of developing and maintaining procedures and templates?

Legislation and rates change each year – just how much time will it take the responsible person or group to do what they are supposed to do?

What will happen if the responsible person or group simply doesn’t have enough time to do what they are supposed to do, because they are required to prioritise client work? What effect will this have on work to be completed across the firm?

Outsourced model: A reputable external provider with a high quality service will be dedicated to the task of developing and maintaining best practice procedures and templates – it is their prime focus and income source.

An external provider will not (and should not if they are reputable and their service is of the highest quality) be distracted by client work.

Quality assurance

In-house model: Due to competing client work priorities, it is less likely that a firm will have sufficient resources to thoroughly and comprehensively review any procedures and templates for accurateness.

What effect will this have on the quality of the procedures and templates used across the firm?

Putting in place a set of procedures and templates is not a once-off task – maintaining (reviewing and updating) procedures and templates is a time-consuming task if it is done properly.

Outsourced model: External providers will have (and should have – if they are reputable and their service is of the highest quality) established quality assurance policies and procedures in place.

Any procedure or template which is developed or updated will go through different stages of review by appropriately qualified people.

Key person dependence

In-house model: Relying on the in-house model exposes the firm to the risks associated with key person dependence, leaving the firm in a vulnerable position should the key person (or people) leave or be away from the office.

Outsourced model: There is no need to depend on any particular person for the development and maintenance of firm procedures and templates.

This improves risk management across the firm.

Productivity

In-house model: Relying on the in-house model reduces the productivity of team members responsible for developing and maintaining firm procedures and templates. Time allocated to performing these tasks is time that could be spent on chargeable client work.

Outsourced model: Relying on the outsourced model improves the productivity of team members as they are no longer burdened with the tasks of developing and maintaining the firm’s procedures and templates. Even if you wish to review the external provider’s new or updated documents before approving them for use across the firm, the time involved is substantially less than that involved in developing or updating documents from scratch.

Training for team members

In-house model: A reason often cited for developing and maintaining templates in-house is that it provides training for team members. However, typically more than one team member is required to research a particular change in legislation and determine how it should be reflected in the firm’s templates. This is costly and time consuming.

Outsourced model: A reputable, quality provider of templates should include training as part of their service (eg. live or online training for team members on how to use new or updated templates, or video training which covers the same content).

Preparedness for quality assurance audits / reviews by accounting membership bodies

In-house model: A firm who relies on its own team members to develop and maintain its procedures and templates is less likely to have procedures and templates  in place which are accurate and  up-to-date (due to a lack of time or adequate quality assurance processes), matters which are likely to be assessed or identified as part of any quality assurance audit or review.

Outsourced: Because external providers (assuming they are reputable and their service is of the highest standard) have the requisite time and quality assurance processes in place, a firm relying on the service of an external provider is more likely to ‘pass’ any quality assurance audit or review.

Also, importantly, a key area of assessment for any quality assurance audit or review is that a firm must be able to demonstrate a link between the firm’s mandatory policies and procedures and the firm’s day-to-day processes and template documents. A firm that can show they subscribe to an ongoing procedures and templates service – which not only includes purchasing the documents in the first place, but also includes subscribing to regular updates to those documents – is well placed to be able to demonstrate this link.

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