Accountant for government agencies – should you be outsourcing?

Accountant for Government

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Three challenges stand out for government entities in the post-COVID world: increased demand for services, tighter budgets and higher expectations for service delivery.  Leveraging the expertise of an accountant for government agencies could be a great way to meet these challenges.  But how do you know if outsourcing accounting, tax or controller services is right for your organisation?

Let’s dive in break it down for you.

Outsourcing from a cost perspective – save money with an accountant for government agencies

Cost is an important consideration when deciding whether to hire an external accountant for government agencies.

To this end, outsourcing is likely to be less expensive because you’ll only pay for the services you need.

Salary packages vary greatly between government jobs for accounting graduates and senior accountants, so the cost of bringing in an employee depends on the position to be filled.

But there are overhead costs to factor in – direct costs include training, workers compensation, and sick, annual or long-service leave. Indirect costs associated with workplace integration might be new computer equipment, desks, chairs and potentially additional software too.

Tapping into expert knowledge

Many government agency leaders don’t have an accounting background or experience in financial reporting.  This makes the availability of knowledgeable experts through outsourcing so valuable.

What’s more, accounting firms tend to tackle client work in teams. Should you choose to outsource, you’ll potentially benefit from an entire team’s accounting expertise.  As opposed to the knowledge of one individual, if you decide to recruit.

accountant for government agencies - leverage expert knowledge

Hiring someone who understands government accounting

That said, it’s important to hire an accountant with a solid understanding of how government accounting differs to commercial accounting.

The accounting profession as a whole is subject to oversight and regulation from government regulatory agencies for accounting.

Professional firms have differing levels of expertise in government accounting because some specialise in private sector clients.

The right accountant should be well versed on the implications of the following characteristics common to government entities:

  • They’re created to produce or distribute goods or services, not for financial gain. As such, cost management and minimisation plays a big role in the organisation’s success.
  • Unlike for-profit businesses, non-exchange transactions are common. Revenue mainly comes from taxation, grants or transfers rather than the sale of goods or services.
  • There is a bigger emphasis on reporting actual amounts against approved budgeted amounts. This reporting is key to demonstrate transparency and compliance with legal requirements.
  • Assets are held to enable service delivery rather than create cash flows.
  • Safeguarding public interest – and public finances – is a key expectation and objective for government agencies.

These attributes lead to differences in how financial transactions are reported and the way financial statements are presented for government entities, when compared with private sector businesses.

Additionally, as many government entities are exempt from income tax, tax minimisation isn’t a focus from a tax perspective.

What services can you outsource to an accountant for government agencies?

Different components of your accounting processes can be outsourced.

Tax compliance

Public sector organisations that are exempt from income tax are subject to a range of tax compliance obligations.  These obligations can include FBT, GST, PAYG withholding, payroll tax, superannuation guarantee, and excise and annual taxable payment reporting.  You can outsource these tasks to an accountant for government agencies.

Your accountant can help you keep track of filing deadlines, make submissions on your behalf and let staff know what’s required throughout the year. While tax minimisation isn’t the goal here, an accounting professional can still offer tax advice ensuring the entity remains compliant.  This way you’ll be up to date with all the latest ATO requirements.

Financial Reporting

Government agencies have to meet rigorous accounting and reporting obligations. An independent accountant could assist in the year-end reporting process and the preparation or review of financial reports. This way you can ensure these reports are accurate and include relevant disclosures.

Where you have a technical accounting concern, an independent accountant can help you understand financial policies and disclosure requirements.  They can help with situations such as accounting for government grants journal entries, or fair value measurement of physical assets.

financial reporting for government entities

Making improvements

Arguably the greatest value an accountant for government agencies adds relates to finding ways to do things more efficiently.

This could be as simple as helping you get more out of accounting software for government agencies like yours.

There has been growing recognition that the better use of technology helps streamline processes and improve customer experiences.

For example, the Victorian Government now offers a rebate to for-profit entities on the cost of buying digital products.  This program also extends to getting appropriate training to use these products.

Though the initiative is aimed at small businesses, this government grant for accounting software and digital tools highlights the need to build digital capability for all entities.

Because when your organisational processes are streamlined, the cost of duplicated efforts and human errors are minimised. You have more visibility of high cost areas, which allows you to find ways to control and lower them.

Internal Audit

Internal audit services such as developing audit plans and programs, reviewing processes to identify and address internal control weaknesses, and checking compliance to regulations, means your organisation is ready when it’s time for an external audit.

Having answers on demand

One of the advantages of hiring an employee is that it’ll be far easier to get quick answers to questions or concerns you raise.

In contrast, an external accountant is unlikely to provide you with an instantaneous response. But you’ll have the peace of mind knowing that your accountant’s feedback and comments have been well researched.

If you’re concerned about how easy it would be to reach them, or their availability to provide help when you need it, it’s best to agree on a communication schedule upfront.

Preventing blowout costs

Accountable governance demands government organisations to be transparent and responsible when it comes to the expenditure of taxpayer money.  The leaders of these government entities have a responsibility to the communities they serve to ensure funds are spent wisely.

Therefore, there must be a clear agreement of the scope of accounting services to be provided and their expected costs. Many accounting firms bill by the hour and costs can spiral if there is no prior agreement.  One of the great things about POP is that we offer an advisory service with scheduled monthly consultations.  This is offered through our PB Partner service, where you can access this advice and more for a fixed monthly fee – no hourly rates!

Key takeaways

At a time when government entities are vying to do more with less, hiring an external accountant can be a great way to look after your organisation’s financial health and improve its ability to deliver services cost-effectively.

For government accounting and tax services with straightforward pricing, contact POP Business. We’ve turned traditional accountancy on its head and we’re proudly cloud-based and paperless. Our experts are technology-driven and are ready to streamline your organisational processes to make them more efficient and cost effective.

Picture of Sidney Cachuela

Sidney Cachuela

I am a business mentor, an associate financial advisor and one of the co-founders at POP that genuinely revels in solving complex problems that businesses face. I’ve worked with high profile wealth managers, financial advisors and business owners to drive innovation and achieve success. My expertise includes helping small businesses with a range of accounting services, including: financial advice, accounting and bookkeeping, GST tax planning, as well as company, trust and partnership tax returns and more.

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