Management control in accounting outsourcing services

Purpose – The purpose of this paper is to provide evidence of accounting outsourcing practices in Malaysia and the management control strategies undertaken by these practising firms to mitigate inherent risks.Design /methodology/approach – This study employs survey methodology using structured questionnaires and case studies using interviews. A total of 51 companies responded to the questionnaires and two companies participated in the interview.Findings – The survey data revealed that the primary reason for engaging in accounting outsourcing was to gain quality accounting service from the experts. With regard to management control strategies, it was shown that respondents place high emphasis of behavior, output and social controls. Further investigation using case studies involving a vendor and client companies reveal that the control mechanisms involved were stated in the outsourcing contract, namely the use of Key Performance Indicators (KPIs) and penalties. Informal controls were also used in both case...