ber_ex1


Exhibit 1: Outsourcing Diagnostic Tool
Lang offers this checklist to clients as a self-evaluation tool to help them determine whether to outsource a particular function. The client identifies the activity it is considering outsourcing and then rates it from 0 to10, to represent the degree to which it is core or noncore. A task that’s a core function of the operation gets a low number (meaning “don’t outsource”). A high number, corresponding to the degree to which it is noncore, indicates “do outsource.” A total higher than 70 indicates an activity the client probably could benefit from outsourcing. Items 1 through 8 pertain to operational issues; 8, 9, 10, 11 deal with staffing considerations; and 12, 13 and 14 address cost.

Here’s how it might be filled in by the CEO of a midsize education association, with an annual budget of $5 million and a staff of 16, who needs to determine whether to outsource accounting or replace a staff person who has just announced she’s leaving. The department also has an administrative assistant who has responsibilities besides accounting.

Name of business activity: “accounting functions.”

1. Core/noncore _____ (Accounting is not a core activity for the organization: 10 .)

2. Reduce service/increase service _____ (We’d have more time for serving our clientele: 10 .)

3. Less flexible/more flexible _____ (Arrangement might be more flexible, to vary with our seasonal needs: 8 .)

4. High risk/lower risk _____ (We don’t know how hiring an employee will work out. With outsourcing there’s less risk, and we can find the right skills quickly: 10 .)

5. Easy to maintain/difficult to maintain _____ (We’ve had luck with our accounting department in the past, but the future is uncertain: 5 .)

6. Difficult to outsource/easy to outsource _____ (It’s easy to find an outsource firm to provide the accounting services we need: 10 .)

7. Inability to grow/ability to grow _____ (If our organization grows, we can easily add services if we outsource: 8 .)

8. Inefficiencies/increased efficiency _____ (Efficiency could increase if specialists do the accounting and the administrative staff member takes on additional work: 8 .)

9. Instability/stability _____ (Not much turnover: 5 .)

10. Stagnant ideas/new ideas _____ (The outsourcing firm is up to date on all the latest accounting information: 10 .)

11. Basic skills/cutting edge skills _____ (A candidate with new ideas and top skills probably will require too high a salary: 10 .)

12. Higher operating costs/lower operating costs _____ (Cost of outsourcing may be lower based on proposals received: 7 .)

13. Fixed costs/variable costs _____ (Our organization likes fixed costs, such as knowing the salary of the hire: 3 .)

14. Small capital requirements/large capital requirements _____ (Does not apply here.)

Results: 70 and below: Don’t outsource.
  71 to 100: Consider outsourcing.
  101 and above: Outsourcing is likely to be beneficial.

In the example above, the total is 104 . Outsourcing the organization’s accounting probably would work out well.

Source: Lang Group.

SPONSORED REPORT

Revenue recognition: A complex effort

Implementing the new standard requires careful judgment. Learn how to make significant accounting judgments and document them and collaborate with peers for consistent application.

VIDEO

How to Excel pivot a general ledger

The general ledger is a vast historical data archive of your company's financial activities, including revenue, expenses, adjustments, and account balances. J. Carlton Collins, CPA, shows how to prepare data for, and mine data with, PivotTables.

QUIZ

News quiz: Taking an economic snapshot and looking to the future

Recent news included IRS actions that affect individuals and partnerships and a possibly influential move by a Big Four accounting firm.Take this short quiz to see how much you know about the news.