New Outsourcing Standards
These days, more and more companies are outsourcing business functions. Services being outsourced include a wide variety of HR services (benefits, risk management, payroll processing, etc.), as well as accounting, IT data center hosting, printing services, processing orders and more. While outsourcing helps process business operations, there is also a risk work is not being controlled or governed. Because of this, new standards for U.S. and International service organizations will soon be implemented.
The new standard, Statement on Standards for Attestation Engagements (SSAE) 16, goes into effect June 15, 2011. There are certain things companies can discuss with a service auditor now to be sure they are prepared for the new standards.
- Try to implement the new standards as soon as possible.
- Determine the implications of an SSAE 16 report for your company.
- Figure out if a U.S. or international report would be necessary.
- Determine any risks.
- Take a look at current testing or monitoring processes that support the businesses third-party services offered to customers.
- Discuss to see if a written statement is necessary from the subservice organization (that is considered a company that provides a third-party service to another company providing a third-party service).
- Review the previous standards and make any necessary adjustments.
- Take a look at current customer contracts to see if any revisions should be made.
The original U.S. standard to report on controls (the U.S. Statement on Auditing Standards No. 70) came out in 1992. In an effort to provide additional protection for companies in the U.S., a new standard (SAS 70) was issued by the American Institute of Certified Public Accountants in 2010.
For companies, the extent of changes to be made will depend on what is already in place. Service organizations who obtained the SAS 70 report previously will have an easier time adjusting to the new outsourcing standards.
Modern Business Associates is an HR company that focuses on payroll and HR outsourcing. We routinely work with clients on outsourcing and many other relevant topics. As a Professional Payroll and HR outsource organization, our clients rely on us to help them effectively deal with these kinds of topics.
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