«If a company decides to constantly improve its performance, including through outsourcing, then it is important to approach the project comprehensively and transfer a diverse range of business processes. In this case, the transfer plan may have different deadlines depending on the processes. The areas of accounting the most in demand today are comprehensive financial and HR functions as well as back-office processes for sales and purchases».
— What factors did significantly affect the development of accounting outsourcing in 2020 and 2021 in Russia and how?
The topics of performance, reliability, safety of processes and IT, and how to improve them are raised with renewed vigor in companies when they go through turbulent times. We were fully prepared for this and helped our clients getting through this bumpy period, making sense of various legislative initiatives, switching to remote work, returning to office work, reviewing their processes and IT systems to ensure their reliability and security.
— What current and last year's labor and accounting regulations do you think are noteworthy?
The most important events in labor law in 2020 were the switch to electronic employment record books and the electronic document management experiment conducted by the Ministry of Labor. And in 2021, it was the introduction of amendments to the Russian Labor Code to regulate remote work.
These amendments were dictated, among other things, by the situation that arose in 2020 due to the coronavirus pandemic. And although not directly related to labor law, another important event should also be noted, i.e. the switch in 2021 of all regions to Social Insurance Fund Direct Payments.
— What are the changes in the financial accounting?
Changes are consistently being made to accounting as part of the national Accounting Reform Program in accordance with IFRS. In practice, this means further convergence of Russian accounting standards with international ones, which is a positive development. The latest amendments were made to Federal Accounting Standard FSBU 25 Rent. This standard will be mandatory from January 1, 2022. Companies are actively preparing for it, although this is a rather difficult task as it requires continuous testing and readjustment of lease agreements.
FSBU 5 Inventories was adopted at the end of 2019 and has been applied by companies since January 1, 2021. Another two new FSBU standards were adopted in 2020: FSBU 6 Fixed Assets and FSBU 26 Capital Investments. They will be mandatory from January 1, 2022 onwards.
It is also worth noting that draft FSBU 27/2021 Documents and Document Management in Accounting was published in March. This standard will set out the requirements for documents and document management in the accounting of business entities. The following draft FSBU are being developed: intangible assets, non-profit activity, and financial instruments.
— Can you please provide the examples of legislative initiatives in tax administration?
Significant changes were introduced in legislative initiatives for tax administration. From the developments of 2020, I can highlight that the preferential income tax rate (0%) granted to educational and medical organizations will be enjoyed by these entities indefinitely and not only until January 1, 2020 as previously prescribed (Federal Law N 210-FZ dated July 26, 2019).
A number of amendments such as the postponement of deadlines for tax payments, for filing tax returns, individual benefits for small businesses were introduced to tax laws in 2020 due to the coronavirus pandemic.
Special rules on the recognition of individuals as tax residents of the Russian Federation were also introduced. Individuals were recognized as tax residents in 2020 if they had stayed in the Russian Federation from 90 to 182 calendar days inclusive and thereby were entitled to apply the general personal income tax rate, i.e. 13% rather than 30%. Special rules were also introduced in the Russian Tax Code in 2020 to provide for exemption from monthly payments and switch to advance payments based on actual profits. These provisions were repealed on January 1, 2021.
The highlight of changes in tax legislation in 2021 is the abolition the single tax on imputed income when small businesses had to switch to other taxation systems, and many found out about the rules for working under the simplified taxation system and the general taxation system. Some even ended up saving on taxes, optimized their expenses and began drawing up expense documents. Important and substantial changes were introduced in the IT industry by implementing a tax maneuver program in this sector and introducing a progressive scale for personal income tax.
— How important is the role of consultant here?
Having experts in various fields as well as broad and varied experience in the application of regulations, a consultant may propose action plans for various situations, explain how to correctly apply this or another rule, thoroughly assess the risks that could arise from the solution chosen by the client.
— Based on your experience, what areas of accounting outsourcing have been the most in demand over the past year? What do clients get from them?
If a company decides to constantly improve its performance, including through outsourcing, then it is important to approach the project comprehensively and transfer a diverse range of business processes. In this case, the transfer plan may have different deadlines depending on the processes. The areas of accounting the most in demand today are comprehensive financial and HR functions as well as back-office processes for sales and purchases.
In addition, the most beneficial outsourcing transfer is one which is done together with the deployment of IT systems as this allows companies to outsource and constantly improve and support IT systems for support processes. This is especially relevant when laws are constantly changing.
I would also like to add that, in addition to outsourcing services, our consulting services such as legal support, consultations on IT and information security have become increasingly relevant over the past year.
— Have you noticed a surge in demand for electronic document management services? Do you think that outsourcing business processes (including accounting) will become more relevant in view of the pandemic and global crisis?
One of the latest sectors where we see an increase in interest in electronic document management is HR processes (in addition to the traditional financial sphere). HR electronic document management allows not only significantly optimizing existing processes, but it is also the most important tool for risk management.
Outsourcing is becoming "smarter". It is no longer just about outsourcing routine operations; it is about being a full-fledged participant in the company's business processes.
— How is IT technology transforming business process outsourcing, and why is its introduction in this service industry speeding up? Please give an example from your practical experience.
In any field, IT tools are meant to achieve two main goals: 1) improve performance and quality through automation, and 2) improve customer experience by expanding current services and/or introducing new ones.
We work in these two directions: we introduce new and improved robotization and automation mechanisms for settlement and support systems to improve performance, including systems monitoring employee performance and responsiveness of our processes, and we also create new portal solutions for our clients ranging from remote processing of certificates and, for example, vacation applications to tax deduction processing and receipt.
— Has the quarantine affected the activities of the companies you serve? How has the demand for services changed?
Most companies were quarantined for quite a long time.
Aspects that previously were not a priority for many companies, such as remote digital business processes, IT infrastructure, remote management, reliable video communication platforms, cybersecurity, are now coming to the fore.
Digitalization projects began to move faster – companies are striving to move away from paper and towards electronic interaction with employees. We get a lot of requests for the implementation of portal services for employees, for the deployment of HR electronic document management.