Outsourcing of accounting functions amongst SME companies in Malaysia: An exploratory study

The challenges in sustaining a competitive advantage in the corporate world faced by businesses have become a major concern nowadays. Businesses are adopting the cutting edge technologies and best practices to champion the rapid changes in the world. Various business functions are being reengineered for this purpose. Typical accounting functions play an important role in businesses to maintain competitive advantages. However, some Small and Medium Enterprises (SMEs) face problem in handling their accounting functions. This is due to the lack of expertise as accounting functions do not only require knowledge of generally-accepted accounting rules or the tax regulation, but also require that one knows how to apply the rules in a given business environment (Everaert et al., 2006). This paper presents a case study on Malaysian SME’s accounting function outsourcing practices. A survey was conducted among SMEs to identify the overall scenario on outsourcing the accounting functions to third party organisation. A total of 1500 companies were selected through systematic sampling method for a total of 15,058 SMEs in Malaysia. However, only 164 companies responded the online questionnaires. The data were analysed to look at the level of participation of SMEs in terms of accounting outsourcing practices. The findings revealed various facets of outsourcing practices among SMEs touching the accounting functions