A Survey of Outsourcing of Accounting Services in Firms Listed in the Nairobi Stock Exchange

Abstract

Accounting play a significant role in the achievement of business objectives of an organization and in fact no business can operate without an accounting function. Accounting is the way of recording, classifying and summarizing business transactions, preparing and interpreting financial statements and reports, Gautier & Underdown (200 1 ). Outsourcing of accounting services has become a common phenomenon in both the developed and the developing countries. Companies outsource financial services such as payroll, billing, accounts payable, tax services, internal auditing, assets management and other accounting services. Despite today's global popularity of outsourcing accounting services, few studies have been done in Kenya in this area. This study sought to determine the extent of outsourcing of accounting services in firms listed in the Nairobi stock exchange; benefits arising from outsourcing and the factors that influence outsourcing of accounting services . In order to determine this, a census study was done. The population of interest was all the forty eight firms listed in the Nairobi stock exchange as at 31st October 2005. A questionnaire including both open ended and close ended questions was used to collect. For the purpose of showing the relationship among various variables, quantitative analysis was done on the data collected using descriptive statistics such as percentages, bar charts, pie charts and tables to describe the distributions. From the study it was found that seventy three percent of the firms had practiced outsourcing of accounting services between 2001 and 2005. However the extent and the categories of tasks outsourced varied across the firms covered by the study.