How Outsourcing Can Help You Build A Better Startup

The revenue of the global outsourced services industry rose steadily year over year from 45.6 billion U.S. dollars in 2000 to 99.1 billion in 2012. –

When two college friends founded Macphun in 2008 and subsequently released their first wildly popular application Cartoonatic – they never would’ve anticipated the success (and increase in workflow) that they would face. Paul Muzok the founder of Macphun, is responsible for creating a software development company that specializes in providing user-friendly SaaS software to photographers of all skill levels, world-wide. After rave reviews on their debut app, they continued to produce photo-editing apps that consistently top the App Store charts.

While their applications were receiving awesome recognition and they grew to over 22 million customers worldwide, they still sought to streamline some of their essential business processes anyway they could. Kevin, VP of Macphun tells us that he considered outsourcing so they could be able to support their customers in a professional manner and free up the internal employees that were previous working with customer support in order to help Macphun grow and be more productive.

“We definitely did respond to customer inquiries by email and phone, but again it took man-power within the company that we could otherwise deploy in other ways.” – Kevin La Rue, Macphun.

Now this is just one small niche of outsourcing, but each sub-category all share the same purpose, which brings us to the core of this guide

HOW CAN OUTSOURCING HELP YOU GROW? (and what you need to know)

So incase you’ve gotten this far and still don’t know what outsourcing is exactly… here’s a short and straight to the point definition by Merrill Matthews of Forbes.

Outsourcing is when a company contracts with an outside person or company to provide some product or service, such as bookkeeping, payroll processing or janitorial services, or more complicated functions like marketing or IT services. And families do the same thing when they turn to professionals for major plumbing, air conditioner or car repairs.

While outsourcing is typically seen as a maintenance strategy for some immense corporations like GE, Microsoft, Intel, Oracle – it has also recently been popularized as a growth strategy for many lower-level startups that need to prioritize more important areas. Startups like Skype, Slack, Uber, AirBNB, etc., are known for their use of outsourcing processes from coding and development to marketing and customer support. Nancy Mann Jackson from Entrepreneur backs this up by saying, “Entrepreneurs have long seen outsourcing as a strategy reserved for big business, but technology has made it a more accessible tool for small businesses and for some small firms, outsourcing has made a powerful impact on their growth, productivity and bottom lines.”

As stated above, high-quality outsourcing is becoming more and more popular with small businesses, because of the increasing accessibility to technologies that make outsourcing smoother and more efficient. BUT, in addition to this, outsourcing is blowing up because, there are a extraordinary amount of qualified professionals that have chosen to leave the corporate world in favor of working in a less stressful environment like their homes or small startup offices. These professionals include: virtual assistants, marketing directors, copywriters, graphic designers, website/software developers, etc., that all have the ability to work from anywhere in the world.

Now you probably have a few questions that you need answered before even considering outsourcing like…

What to outsource?

When to outsource?

Where to outsource?

Concerns with outsourcing?

Cost vs. benefits of outsourcing?

Now that you’ve asked all of these questions, it’s time to make this guide as comprehensive as possible by simply going down the list.

Which Business Processes Should I Outsource? It’s likely that you’re already outsourcing some of your business tasks like payroll administration or background and criminal checks for employment. And with the points mentioned above, it’s easier than ever to outsource nearly any task that you see necessary. BUT this doesn’t always mean that you should outsource just because it is easy for you. Many processes are better off being taken care of in-house, depending on what your priority is… For example, if your priority is to generate huge amounts of revenue with your special sales technique that only your in-house team has perfected then it’s probably not the best idea to give that task to an offshore contractor. On the other end of the spectrum if your priority is customer support, then it’s probably OK to outsource something like graphic design.

Here’s a quick list of tasks that are better off left for an outsourced contractor to take care of:

Tasks that require highly skilled expertise. Let’s say you are a CEO of SaaS startup and don’t have a group of executives established yet, for example CFO, COO, CIO, etc. Outsourcing some of these positions (at least temporarily) can help get your startup off the ground. So in the end you will have a highly skilled task outsourced for much less than it would cost to have a full-time employee do it.

Repetitive tasks. This can be anywhere from outbound sales calls to get the word out about your product or conduct customer satisfaction surveys to very common troubleshooting issues. Let’s face it, giving these repetitive tasks to your highly qualified in-house team to worry about may be a HUGE waste of your company’s time and resources.

Also included in this list: Filtering Emails / Managing Spam, Answering Customer Service Emails / Tickets / Chat Support, Sending and Management of Newsletters, Data Entry in Word, or Google Docs, PDF Conversion, Splitting and Merging, Preparation of Training Materials, Social Media Management, and countless others. Basically almost any monotonous task you can think of can be outsourced by freelancers/virtual assistants/call centers.

Tasks that require unique talent or knowledge.

You may have a great idea for an app and some capital to fund it’s development, but no knowledge of coding/development/design. This is where you might need to consider outsourcing the development of your app. You can hand over your ideas to an experienced developer on the other side of the world and let them take care of the rest (of course with your supervision). Another example is if you don’t have the resources to employ full time IT support personnel to manage your IT systems, you can easily employ an IT expert from freelancer sites like Elance-Odesk or Guru.

To cut a long story short… you can easily and effectively outsource nearly any business process that isn’t a priority in your company, one that doesn’t require full attention from your in-house team, or any tasks that you’re not comfortable performing yourself.

When Should I Take The First Step? For the guys at Macphun, they finally made the decision to outsource when taking care of piles of support tickets became too much for their relatively small staff to handle. But it’s different for everybody.

The time to decide on outsourcing may come very early for somebody whose product development depends on it. OR it may come at a later time for those companies that just need a little support.

For Chris Devor of Macroplant Inc. the decision to outsource came about 1 year into starting his company:

After about 1 year in business, I needed help with our support e­mails. It was both a time issue and an issue of being able to properly respond to my users promptly and effectively. First I had another developer doing support e­mails. But given the cost of a developer’s salary, it didn’t make sense to have them answering support e­mails all day. So next I hired a freelancer or two to help with support e­mails.

Where Should I Outsource To? In the world of tech and IT outsourcing services, the most well known countries to outsource to are India, Philippines, Central America, and Eastern Europe with a total workforce of nearly 1.5bn (Statistic Brain). Due to the poor economies of third-world countries, many companies choose these regions simply because of the cost-savings.

With this said, you shouldn’t go into the recruitment process with a specific country in mind, but with an individual’s unique talents/skills in mind. Remember you are ultimately focusing on quality and not just prices. You can review thousands of freelancers on sites like or to pick and choose which ones will fit your needs best.

Why would your normal Silicon Valley CEO hire software developers for 100k+ a year, when he can hire equally qualified off-shore workers for less than $15 an hour?

This question may bring up some ethical concerns that I’ll address below, but it’s important to remember that your typical CEO’s job is to do what is in the company’s best interests. And more times than not, saving money and time by outsourcing… is usually a CEO’s best interest.

Concerns With Outsourcing

There are a few different concerns that you need to look at before thinking about outsourcing. Concerns such as security, quality, management, poor work environment, transparency, etc.

Here’s what to look at when choosing the right contractor…

Do they take data privacy and confidentiality measures to ensure the safety of your customers’ personal info?
Will they be available to communicate with whenever you have a question or concern?
Do they protect your best interest by taking legal measures?
How do they handle the management of their team can you routinely review your outsourced employee’s performance?
Are they performing a job that your in-house team genuinely can’t perform effectively?
Can you see/visit their office and evaluate working conditions?
Do they have reputable clients they already provide service for?

If they don’t follow one or any of these simply business measures… it’s a big red flag.

Another big concern with outsourcing is language barriers and cultural differences. But by following a strict training and recruitment process this one can be overcome easily.

Finally, communicate your expectations clearly and even write up a contract before hiring outsourced members to make sure there is no confusion anywhere.

“When there is a problem [with the work], I am often the one to blame, as my instructions may not have been clear enough,” says Jeremy Belcher, owner of

Risk Vs. Reward Of Outsourcing

Outsourcing is widely known as one of the best solutions to cut costs and many studies have been carried out to verify this fact. Booz Allen Hamilton, a leading management and technology consultancy, issued a report in 2014 describing “a mixed report card on traditional outsourcing”. It nevertheless pointed out: “Savings typically result because the outsourcing supplier can access a cheaper, more flexible workforce and the latest, most efficient technology. Organizations claim that they achieve, on average, a 15 % cost reduction through outsourcing.”

However effective outsourcing is in saving a company money – it still has the potential to harm a company’s reputation. There is a huge stigma against outsourcing. The word “outsourcing” brings to mind different things to different people. If you live in a community that has an outsourcing company and they employ your friends and neighbors, outsourcing is awesome. But if your friends and neighbors lost their jobs because they were shipped across the world, outsourcing will bring bad publicity. If you outsource part of your operations, morale may suffer in the remaining work force.


Seven Reasons the Restaurant Industry is Still a Great Bet

I placed my first bet on the restaurant industry years ago. I was a young army non-commissioned officer with a promising military career for the taking. The only problem was, I wanted to return to the civilian world and build a career in the restaurant industry.

Just three days before my discharge date my unit’s Sergeant Major, who had been both a supporter and mentor, dropped by the dining facility. In a comical attempt to encourage me to re-enlist he said “Wallace, it’s not too late to change your mind and save yourself. I hear that in the civilian world, the lines for soup in New York stretch all the way to California”. I smiled and replied, “With all do respect Sergeant Major, I guess that means the civilian world is in need of some well trained foodservice people”. I noticed him chuckle and shake his head as he walked away. A few months later I was in college pursuing my degree in Hotel & Restaurant Management.

Since then the industry has grown in ways that few could have predicted. My initial bet on the industry has paid off in spades. As a hospitality student, classically trained chef, restaurateur, and corporate executive, I have been privileged to experience the restaurant industry from several perspectives. Personal bias aside, I can say with certainty that there are many good reasons to know that the restaurant industry is still a great bet, in spite of our current economic storm. Here are seven reasons worth considering:

1. Needs Based – Restaurants serve two basic needs that are not going away any time soon. I am talking about the need to eat and the need to connect with others. When it comes to eating options, the industry has gone to great lengths to provide convenience. You can walk up, sit down, take it out, drive-through, and even drive up for curb-side services. When I travel outside of America, I am always amazed at how common it is for people to gather in town centers and open air cafes in the evenings to connect. Here at home, operations like Starbucks and casual bars have become our necessary “Third Place” for connecting away from home and work.

2. Lifestyle Driven – Generations “X” and “Y” have grown up eating meals prepared away from home. For them it is as common and expected as electric washers and dryers became for the previous generation. For these Americans, I don’t envision a massive or permanent return to cooking any more than I envision a return to scrubbing boards and clotheslines.

3. Decentralized – Unlike some industries that have suffered the most recently, the restaurant industry has remained decentralized with resources and assets dispersed across the country. In the case of some of the biggest industry players, use of a franchise business model, has also provided dispersing of capital investment and risk. What this means is that the industry is not subject to a massive implosion like the automobile or banking industries have experienced.

4. Massive Scale – With more than a half trillion dollars in annual U.S. Sales and nearly a million restaurants nation wide, the restaurant industry’s size attracts support from a wide range of industries. From back office technology to cooking equipment, companies across the globe invest heavily in research and development with the understanding that there will be a market for their best innovations.

5. Developed Infrastructure – Over the past few decades the restaurant industry has amassed an enviable infrastructure. From state-of-the-art distribution and logistics to national online reservations and employee training systems the industry has moved closer to being “Plug-and-Play” for even the smallest operators.

6. Entrepreneurial – In spite of the industry’s size, according to national restaurant association statistics, 7 out of 10 restaurants are single unit operations. Fortunately, the barriers to entry into the industry have remained relatively low. As a result the industry enjoys constant bottom up innovation. The next trend is as likely to come from a small Cuban Diner in Miami as a heavily staffed test kitchen in Dallas.

7. An Affordable Luxury – Now once the economy begins to recover there will be some industries that will come back slower than others. One of the reasons restaurants in general have not fallen as sharply as others sectors, is that, eating out is still an affordable luxury even in difficult times. Most consumers don’t have to take out a loan to enjoy a meal out. For this same reason pinned-up demand should drive strong growth as things recover.

For all the reasons listed the restaurant industry is an exceptional source of opportunity for millions of Americans, who own, manage, and work in the industry across the nation. It stands and will continue to stand as an excellent example of sustainable healthy capitalism at its best. You can bet on it!


Resume Cover Letter Template Blunders!

One spends hours perfecting their resume when job hunting. They ensure that all their skills are well defined, and their job duties and titles sounds more professional than they really are. However, when it comes time to really sell themselves, they fall prey to a resume cover letter template. Why would they pair a well-written resume with a resume cover letter template which does nothing to compliment their job skills? I don’t know either. A resume cover letter template’s intention is to ease the stress of job-seekers. Yet it only makes it worse by ensuring an applicant does not get the desired position. One who uses a resume cover letter template does nothing to assist one from standing out to the hiring manager, which is the only way to earn an interview amongst hundreds, if not thoughts, of other job hunters.

A resume cover letter template does not contain the most important elements of any cover letter. The whole point behind a resume cover letter is to get an interview. In order to do this, a resume cover letter must be convincing and demonstrate all the skills one so painstakingly perfected on their resume. After committing so much time on creating a resume that looks professional, it makes little sense to leave the job underdone by using a resume cover letter template.

What is a resume cover letter template? A resume cover letter template is a pre-generated cover letter where one only has to “fill in the blanks”. Resume cover letter templates can be found included in most word processing software (which I will never understand) or by doing a search on the internet. With resume cover letters so readily available, it goes to show that most people use this method when applying for jobs. It is also an assumption that the way to land an interview is by being one of the first applicants for the job. This is not necessarily the case. A hiring manager is looking for the best candidate for the job and is not simply going to choose the first person to come along. They want to find the best applicant. If a resume cover letter does not grab their attention, which is what a resume cover letter achieves, then they are not going to waste time reviewing the applicant further.

Using a resume cover letter template is the quickest way for one’s resume to end in the trash pile. A resume cover letter template gives the impression that one is a nameless, faceless, and mindless individual who just wants to get a job, any job. This is not a promising characteristic of a potential employee. A company is looking for an individual which has passion and enthusiasm. They also want an employee who is dedicates to the company and wants to see the company excel. How is one going to convey this to a hiring manager when they are just blanks filled into a resume cover letter template?

The answer is simple. They aren’t. It is important to move away from using resume cover letter templates and begin using a personalized resume cover letter that makes the hiring manager convinced that one is the right person for the position. It is definitely more work, at least a first, but the process of a personalized cover letter reaps greater benefits. The percentage of positive responses to a personalized cover letter, versus a resume cover letter template, is greater. Thus the amount of resumes a job-seeker has to send out is lessened. This makes the initial work of writing a resume cover letter even out against the traditional job-seeker which uses a resume cover letter template.

A personalized resume cover letter should, first and foremost, have a beginning sentence which makes the hiring manager interested enough to continue reading. If one can learn this value skill in writing a resume cover letter, then half the word is already done! A resume cover letter template will never be able to do this, no matter how special it or, or how much a website promises positive results. A resume cover letter template is just too general to be able to reach this accomplishment. So spend a little time learning what it is that makes a resume cover letter special, and then do it.


How to Turn Retail Failure Into Success

I once worked as a store detective for one of the UK’s top ten retailers. Many of the incidents of shoplifting that took place during my time at this retailer were not the result of shoplifters outsmarting us, rather they were a result of the store design or the policies and procedures that the retailer had in place.

I remember working in stores where the toilets were located outside the store. This meant that a shoplifter could literally walk out of the store with a trolley full of merchandise and could not be legally arrested because he could claim he was going to the toilet. On many occasions I was the only security personnel assigned to the 30,000 sq. ft. store with multiple exits.

On Sundays, we opened the entrances at 10:30 to allow customers to start browsing. However, we were scheduled to start at 11:00. When we started at 11:00, we would notice people pushing trollies full of merchandise out of the store. Someone in the head office, in their infinite wisdom, decided it was more cost effective to leave the store at the mercy of shoplifters than make a half an hour payment for security. This retailer is one the top ten retailers in the UK, yet senior management were unable to devise a coherent strategy for profit protection.

I once consulted a $25 billion retailer. As I perused the company I noticed that not a single person in the company knew their shrinkage figure therefore not even the financial director knew the profit margin of the company.

According to Dunn and Bradstreet “Of the small businesses that fail, 90% do so because of a lack of skills and knowledge on the part of the owner”.

Based upon my experience in retail, I believe it would not be too much of a fat claim to make that 90% of retail failures are the result of a lack of skills and knowledge on the part of senior retail management.

There are circumstances beyond the control of the individual retailer that they can do nothing about. There are circumstances in which location and demographic changes affect the retail organisation. Yes it is true that people would rather go to Asda or Tesco to buy meat than to their local butcher because of price difference.

It would not be fair to suggest that all retail failures are the result of bad leadership or incompetency. However, what I have tried to point out is that in the majority of cases, especially in the case of High Street retailers, the failure can be directly linked to their inability to embrace change.

The problems of major book, DVD, music and electronic retailers do not rest solely on difficult trading conditions, rather they rest on their inability to grasp the concept of the “Long Tail”.

The “Long Tail”, a concept popularised by author Chris Anderson in his book, “The Long Tail: Why the Future of Business Is Selling Less of More”, examines the changing consumer behaviours based upon the changes in distribution curve.

The proliferation of niche markets brought about by the internet has completely altered the factors of distribution. Consumers are exposed to more choices than ever before in the history of mankind.

While writing this article, I decided to test the “Long Tail” theory. I keyed into Google: “how many types of breakfast cereals are there”. Result: thousands. They were arranged in alphabetical order and it was from A to Y. The average supermarket carries thousands of different product lines.

Furthermore, with the internet consumers are becoming more and more overwhelmed with choices. Amazon and its distributors carry more inventory than a lot of High Street retail organisations combined.

In the “Long Tail” century, how can retailers survive? They can survive by adapting to their environment.

In the “Evolution Theory” Charles Darwin introduced the concept of “Survival of the fittest”. The fittest in Mr. Darwin’s lexicon is not the strongest or the fastest but those who are better equipped for survival or those who are better adapted for their immediate, local environment.

We are already witnessing the “Evolution Theory” at play in the luxury market. Despite the downturn in the economy, luxury retailers are still raking in profit. Even in Spain where the country is on the brink of collapse, the luxury retail sector is booming.

The excuse might be because the rich are getting richer so of course the luxury market will continue to boom. This is partly the case but the main reason is luxury retailers are more adaptive to the changing retail environment.

Luxury retailers run their organisations like a real business with good system, good people, good leadership and effective marketing system. The luxury retailers that are failing are those that have both luxury brands and non-luxury brands and they bring the non-luxury culture into the luxury market.

In order for the retail industry to survive, firstly retailers need to understand that their problem is not somewhere out there, it is right in their board rooms.

Secondly, the industry needs to come to the realisation that there is now a new problem on the horizon and they cannot solve a new problem with old solutions.

What is the new problem?

The new problem is technology and the internet. Just as technology changed the manufacturing and automotive industries, technology is changing the retail industry.

Online shopping grew by 14% in 2011 whilst bricks and mortar retail sales grew by just 1.4%. According to research, conducted by food and grocery analysts IGD, online grocery shopping is expected to rise to 11.2 billion by 2016. The research also revealed that more than 44% of adults will be shopping online for their groceries in the next ten years.

The internet is here to stay and it is going to have a tremendous effect on the industry. As new technologies make our lives easier, it also produces an adverse effect on the world around us.

The High Street is in ruins, retailers big and small are going out of business, however, instead of the industry screaming “Chicken little the sky is falling” it needs to respond to the threat by coming up with innovative “Blue Ocean” strategies.

The difference between the few successful retailers such as Tesco, WalMart, The Body Shop, Harrods, Ann Summers, Holland & Barrett and struggling retailers such as La Senza, Jane Norman, Mothercare, JJB Sports, Clinton Cards, Thorntons and HMV is that successful retailers understand that change is constant, therefore, they are constantly evolving to stay ahead of change while the struggling retailers remain static hoping that change will not last.

Albert Einstein once said “Problems cannot be solved by the same level of thinking that created them.”

The retail industry cannot navigate the 21st century with 19th century thinking or skill sets. It would be like riding a horse on the motorway. I don’t need to tell you what would happen to anyone who decided to ride a horse to London on the motorway.


Risk Management in Accounting Firms: Overview of The New Australian Standards


At its most basic level, risk is defined as the probability of not achieving, or reaching, certain outcomes (goals). Risk is measured in terms of the effect that an event will have on the degree of uncertainty of reaching stated objectives. Risk is commonly thought of in this context as a negative connotation: the risk of an adverse event occurring.

This article discusses the risks faced by accounting firms in Australia, and gives an overview of the new risk management standard (APES 325) issued by the professional standards board.


In the context of the professional Accounting Firm, risk is not a new concept for practitioners: it has been attached to the profession for as long as accountants have offered services in a commercial setting. However, as the number and size of legal claims against professional public accountants has increased over the years, so too has the issue of risk and risk management also increased in importance.

Risk management is the system by which the firm seeks to manage its over-arching (and sometimes, conflicting) public-interest obligations combined with managing its business objectives. An effective risk management system will facilitate business continuity, enabling quality and ethical services to be supplied and delivered to clients, in conjunction with ensuring that the reputation and credibility of the firm is protected.


The Accounting Professional & Ethical Standards Board (APESB) recognised that public interest and business risks had not been adequately covered in existing APES standards, notably APES 320 (Quality Control for Firms). In releasing the standard, the APESB replaces and extends the focus of a range of risk management documents issued by the various accounting bodies. Accordingly, APES 325 (Risk Management for Firms) was released, with mandatory status from 1 January, 2013.

The intention of APES 325 is not to impose onerous obligations on accounting firms who are already complying with existing requirements addressing engagement risks. All professional firms are currently required to document and implement quality control policies and procedures in accordance with APES 320/ASQC 1. Effective quality control systems, tailored to the activities of the firm, will already be designed to deal with most risk issues that arise in professional public accounting firm. However, APES 325 does expect firms to consider the broader risks that impact the business generally, particularly its continuity.


The process of risk management in the Professional Accounting Firm requires a consideration of the risks around governance, business continuity, human resources, technology, and business, financial and regulatory environments. While this is a useful list of risks to consider, it will be risks that are relevant to the operations of the practice that should be given closest attention.


The ultimate objective for compliance with the Risk Management standard is the creation of an effective Risk Management Framework which allows a firm to meet its overarching public interest obligations as well as its business goals. This framework will consist of policies directed towards risk management, and the procedures necessary to implement and monitor compliance with those policies. It is expected that the bulk of the Firm’s quality control policies and procedures, (developed in accordance with APES 320) will be embedded within the Risk Management Framework, thus facilitating integration of the requirements of this standard and that of APES 320, and ensuring consistency across all the Firm’s policies and procedures.

A critical component of the Risk Management Framework is the consideration and integration of the Firm’s overall strategic and operational policies and practices, which also needs to take account of the Firm’s Risk appetite in undertaking potentially risky activities.

Whilst the standard allows for the vast majority of situations that are likely to be encountered by the accounting firm, the owners should also consider if there are particular activities or circumstances that require the Firm to establish policies and procedures in addition to those required by the Standard to meet the stated aims.

Establishing & Maintaining

Ultimately, it is the partners (or owners) of the Accounting Firm that will bear the ultimate responsibility for the Firm’s Risk Management Framework. So it is this group (or person if solely owned) that must take the lead in establishing and maintaining a Risk Management Framework, as with periodic evaluation of its design and effectiveness.

Often times, the establishment and maintenance of the Risk Management Framework is delegated to a single person (sometimes not an owner), so the Firm must ensure that any Personnel assigned responsibility for establishing and maintaining its Risk Management Framework in accordance with this Standard have the necessary skills, experience, commitment and (especially), authority.

When designing the framework, the firm requires policies and procedures to be developed that identify, assess and manage the key organisational risks being faced. These risks generally fall into 8 areas:

Governance risks and management of the firm;
Business continuity risks (including succession planning, and disaster recovery (non-technology related);
Business operational risks;
Financial risks;
Regulatory change risks;
Technology risks (including disaster recovery);
Human resources; and
Stakeholder risks.

The nature and extent of the policies and procedures developed will depend on various factors such as the size and operating characteristics of the Firm and whether it is part of a Network. In addition, if there are any risks that happen to be specific to a particular firm – caused by its particular operating characteristics – these also need to be identified and catered for. At all times, a Firms public interest obligation must be considered.

A key factor in any risk management process is the leadership of the firm, as it is the example that is set and maintained by the Firms leadership that sets the tone for the rest of the firm. Consequently, adopting a risk-aware culture by a Firm is dependent on the clear, consistent and frequent actions and messages from and to all levels within the Firm. These messages and actions need to constantly emphasise the Firm’s Risk Management policies and procedures.


An essential component of the Risk Management process is monitoring the system, to enable the Firm overall to have reasonable confidence that the system works. The system works when risks are properly identified and either eliminated, managed, or mitigated. Most risks cannot be entirely eliminated, so the focus of the system needs to be on managing risks down (preventing occurrences as far as practicable), or mitigating the risk (handling the event should it occur).

As part of the system, a process needs to be installed that constantly ensures that the Framework is – and will continue to be – relevant, adequate and operating effectively, and that any instances of non-compliance with the Firm’s Risk Management policies and procedures are detected and dealt with. This includes bringing such instances to the attention of the Firm’s leadership who are required to take appropriate corrective action.

The Framework needs regular monitoring (at least annually), and by someone from within the Firm’s leadership (either a person or persons) with sufficient and appropriate experience, authority and responsibility for ensuring that such regular reviews of the Firm’s Risk Management Framework occurs when necessary.


A Risk Management system needs to be properly and adequately documented, so that all the necessary requirements can be complied with, and referred to (if necessary). The form and content of the documentation is a matter of judgment, and depends on a number of factors, including: the number of people in the firm; the number of offices the Firm operates, and; the nature and complexity of the Firm’s practice and the services it provides.

Proper and adequate documentation enables the Risk Management policies and procedures to be effectively communicated to the Firm’s personnel. A key message that must be included in all such communications is that each individual in the firm has a personal responsibility for Risk Management and are required to comply with all such policies and procedures. In addition, and in recognition of the importance of obtaining feedback, personnel should be encouraged to communicate their views and concerns on Risk Management matters.

In documenting the risk framework, the Firm needs to include and cover following aspects:

The procedures to be followed for identifying potential Risks;
The Firm’s risk appetite;
The actual identification of risks;
Procedures for assessing and managing, and treating the identified risks;
Documentation processes;
Procedures for dealing with non-compliance with the framework;
Training of Staff in relation to Risk Management; and
Procedures for regular review of the Risk Management Framework.

In alignment with the monitoring of the Risk Management system, all instances of non-compliance with the Firm’s Risk Management policies and procedures detected though its Monitoring process need to be documented, as with the actions taken by the Firm’s leadership in respect of the non-compliance.

Finally, all relevant documentation pertinent to the Risk Management process needs to be retained by the Firm for sufficient time to permit those performing the monitoring process to evaluate compliance with the Risk Management Framework, and also to follow applicable legal or regulatory requirements for record retention.


Risk is an ever-present and growing component of delivering professional accounting services to clients, and is not confined to taking on client work that can put the firm’s reputation into decline. It is the everyday business conditions and decisions made that can weigh heavily on a firm.

The modern accounting firm is in the unique position of having all the operating risks of a main-stream business, with the addition of those imposed by the various regulators and authorities.

A comprehensive and effective Risk Management Framework will assist owners of firm in identifying deficiencies and blind-spots that can impact a firm, as well as placing a commercial assessment on the probability of an occurrence, and putting in place clear plans on what to do and when.

With more than twenty years in the fields of accounting and finance, sales and marketing, and operational activity, Michael (MK) has an extensive understanding how businesses succeed in a holistic manner.

He is also the Director of Insignia Consulting, accounting and business management consultants. Insignia Consulting has particular expertise, and specialises in The Quality Control Manual for Accounting Firms in Australia, with experience with QA Audits and developing customised manuals for public practice firms.