Outsourced accounting services: What every public sector organization needs to know
These trends have left most public sector accounting departments in a position where they need to hire professionals who have expertise in this very specialized form of financial reporting at a time when few qualified people are available. While all of the public sector is feeling the crunch, a recent report by the Government Finance Officers Association (GFOA) found that, “The supply-demand gap for state and local public finance workers is widening faster than the same gap for the finance sector overall, the public sector overall, and the economy overall. The gap is growing because while state and local public finance is experiencing very strong demand for workers, it has seen net employment loss each year since 2019.” As more municipalities are learning every year, the best answer is often outsourced accounting and CFO services.
For many years, public sector accounting jobs could compete with higher paying private sector positions by offering better benefits and work-life balance.
The risks are high
Every organization needs reliable, accurate financial information reported to it in a timely manner, and they all need a dependable controllership function to maintain public trust in their stewardship of funds. What many organizations have learned in recent years as the government accounting talent pool has shrunk is that private sector job titles don’t always translate into the specialized environment of public sector financial management. With so few qualified government accountants available, key positions have been filled by executives with great accounting backgrounds but limited exposure to government accounting, or candidates who appeared ready to grow into an executive role but weren’t quite prepared for everything the job entailed.
The results have been striking. When public sector finance departments come up short:
- Legislative bodies don’t get the accurate financial information they need to make decisions in a timely manner.
- Filing deadlines get missed.
- In extreme cases they can wind up late in adopting its budget, which is technically illegal in many states.
Those who rely on the government finance professionals often don’t realize there’s a problem until it has reached a boiling point.
Outsourced accounting and CFO services can bridge the gap
In the absence of qualified public finance professionals available to fill full-time positions, many organizations have turned to just-in-time support offered by specialized contractors. These resources can offer as few or as many hours as an agency needs in any given week and can support anything from annual responsibilities like budgeting and audit preparation to monthly general ledger maintenance and bank reconciliations.
In the absence of qualified public finance professionals available to fill full-time positions, many organizations have turned to just-in-time support offered by specialized contractors.
Consider these three qualities when evaluating an outsourced accounting provider
If it seems like outsourced accounting or CFO services might be an effective solution, organizations looking to hire a resource should consider the following criteria when evaluating potential providers:
- Specialized expertise: Many of the problems that occur in public sector accounting positions arise from an assumption that all accounting is alike. In fact, government financial reporting is a very specialized type of accounting and it’s not an easy discipline to learn as you go. Any provider in this sector needs to demonstrate their capability in the field or they will more likely contribute to the problems rather than be part of a solution.
- Scalability: Some key government functions require significantly more hours for only a few weeks or months out of the year. Tasks like budgets and audits can require a lot of extra work from public sector finance professionals for short periods of time. An outsourced accounting provider in this sector should be able to deliver regular support for tasks like general ledger functions and bank reconciliations throughout the year as well as extra resources to support a department during a crunch time.
- Flexibility: Organizations need accounting resources that meet them on their terms. For most agencies looking for outsourced support, that will mean secure connections for offsite work to reduce office footprints and cut down on travel costs. But a provider also must be able to deliver people on-site when the situation calls for it. Those seeking outside help should evaluate proposals based on the security and quality of remote work as well as the availability of in-person resources as needed.
Good help will get harder to hire
The GFOA report points out that, “Nearly a third of incumbent state and local public finance workers will be retirement age within ten years. The current workforce includes nearly 50,000 workers who are of retirement age today.” In a field where it’s already extremely difficult to find qualified candidates for key positions, the future looks only more challenging. If you’re responsible for staffing a public sector accounting office, this is a critical time to consider seeking support from an outsourced accounting provider or to evaluate any resources you currently use to make sure that you’re getting the most out of your investment.