Due Diligence Red Flags When Evaluating Outsourcing Vendors
Many CPA and accounting firms now rely on outsourcing as a key business model. Firms often use outsourcing to handle tax prep, audit help, accounting tasks, or back-office work. Third-party providers play an essential part in getting these services done. When planned well, outsourcing helps firms grow, save time, and maintain steady performance. But outsourcing also brings responsibilities that firms cannot avoid or pass to others. Rules like IRS Section 7216 , the AICPA Code of Professional Conduct, and the FTC Safeguards Rule set clear standards for how firms must choose, review, and manage these external providers. Due diligence does not work as a single, one-time task. Firms need to treat it as a continuous approach to show they provide proper care, oversight, and safeguarding of client data. This guide highlights key warning signs CPA firms should watch out for when reviewing outsourcing vendors. It also discusses how these i...