Using subcontractors or outsourced providers does not automatically remove an accounting practice’s responsibility to its clients. The arrangements should be disclosed and reflected in the insurance program.

Which services may be outsourced? #

Examples include bookkeeping, tax preparation, payroll processing, SMSF administration, data processing, offshore support and specialist advice.

Explain which services are outsourced, where the provider is located and how much of the practice’s work they perform.

Can the accounting practice remain liable? #

Potentially. If the client engages the practice to provide the overall service, the practice may still face a claim arising from work performed by an external provider.

The engagement terms with both the client and provider are important.

Should providers maintain their own insurance? #

Consider the provider’s:

• Professional Indemnity and Cyber Insurance.
• Insured activities and policy limits.
• Qualifications and experience.
• Contractual responsibilities.
• Privacy and cybersecurity controls.

Their insurance protects their business and does not automatically replace the accounting practice’s cover.

What about offshore outsourcing? #

Offshore arrangements can introduce jurisdiction, privacy, cybersecurity, data-handling and recovery issues. Relevant regulatory and professional obligations should also be considered.

Should outsourcing be disclosed? #

Tell Webber Insurance where external providers perform professional services, particularly when outsourcing is material or involves client data.

Insurers need to understand how the practice delivers its services, supervises providers and manages quality, privacy and security.