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    Audit and Assurance BPO

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    Johann Villegas
    The document discusses auditing of the business process outsourcing industry. It covers types of BPO, typical BPO processes, statutory laws applicable to BPO in India, major areas of audit like invoicing, service level agreements, payroll, operating costs, and risks faced by BPO companies.

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    Audit and Assurance BPO

    Uploaded by

    Johann Villegas
    69 views15 pages
    The document discusses auditing of the business process outsourcing industry. It covers types of BPO, typical BPO processes, statutory laws applicable to BPO in India, major areas of audit like invoicing, service level agreements, payroll, operating costs, and risks faced by BPO companies.

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    Audit and assurance BPO

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    The document discusses auditing of the business process outsourcing industry. It covers types of BPO, typical BPO processes, statutory laws applicable to BPO in India, major areas of audit like invoicing, service level agreements, payroll, operating costs, and risks faced by BPO companies.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    69 views15 pages

    Audit and Assurance BPO

    Uploaded by

    Johann Villegas
    The document discusses auditing of the business process outsourcing industry. It covers types of BPO, typical BPO processes, statutory laws applicable to BPO in India, major areas of audit like invoicing, service level agreements, payroll, operating costs, and risks faced by BPO companies.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 15

    AUDIT OF BUSINESS

    PROCESS OUTSOURCING
    (BPO) INDUSTRY
    AUDIT AND ASSURANCE: SPECIALIZED INDUSTRY
    BUSINESS PROCESS
    OUTSOURCING
    AUDIT AND ASSURANCE: SPECIALIZED INDUSTRY
    TYPES OF BPO
    BPO 2 main areas
    ◦ Back-office services - include internal business processes, such as
    billing or purchasing.
    ◦ Front-office services - pertain to the contracting company’s customers,
    such as marketing and tech support.
    BPO 7 Sub-sectors
    TYPICAL
    PROCESS
    OF BPO
    STATUTORY LAWS APPLICABLE TO BPO INDUSTRY
    1. Omnibus Investments Code (OIC)
    Income tax holiday
    Additional deductions for labor expenses
    Exemptions from import duties and taxes
    Zero rate VAT
    2. Special Economic Zone of Act of 1995 (PEZA Law)
    Income Tax Holiday
    Special Income Tax Rate of 5%
    Exemption from National and Local Taxes and Licenses
    Zero-Rate Value-Added Tax (VAT)
    Deduction for Organization and Pre-Operating Expenses
    Tax and Duty-Free Importation of Materials, Capital Equipment,
    Machineries and Spare Parts
    Additional Deductions from Taxable Income
    STATUTORY LAWS APPLICABLE TO BPO
    INDUSTRY
    3. Cagayan Special Economic Zone Act of 1995 (CEZA Law)
    Income Tax Holiday
    Special Income Tax Rate of 5%
    Other applicable incentives under EPZA Law and OIC, such as:
    THE AUDIT ON BPO INDUSTRY
    MAJOR AREAS OF AUDIT SIGNIFICANT
    ON A BPO INDUSTRY
    1. INVOICING
    per call
    per transaction
    per time
    full time equivalent
    cost plus basis
    Analytical procedures under invoicing
    a) Operational Margins Period
    b) Significant fluctuations in Revenue from a Contract
    c) Revenue per Employee Project-wise
    d) Operating Costs to Revenue Ratio
    e) Revenue Earned per Hour (Project-wise)
    f) Total Calls Handled to Total Calls Received, Calls Resolved to Calls
    Handled
    g) Project-wise Profitability and Budgeted Profit Margins Comparison
    h) Delays in Raising Invoices to Total Invoices
    i) Percentage of Errors and Rejections
    MAJOR AREAS OF AUDIT SIGNIFICANT
    ON A BPO INDUSTRY
    2. SLA (Service Level Agreement ) ADHERENCE
    3. PAYROLL
    4. OPERATING COSTS
    5. FIXED ASSETS
    6. RELATED PARTY TRANSACTIONS
    7. DATA SECURITY
    RISKS FACED BY A BPO INDUSTRY
    ◦ Business risk
    ◦ Price risk
    ◦ Political risk
    ◦ Process risk
    ◦ Human capital risk
    ◦ Brand/ Reputation risk
    ◦ Systemic risk
    ◦ Accessibility risk, Business continuity, Security risks
    ◦ Technology risk
    Maintenance of Books of Accounts and
    Documents
    The internal auditor is required to verify the sufficiency of controls related to
    maintenance of books of accounts by the entity. The internal auditor is also
    required to verify the controls for allocation of costs between different
    project, different undertakings and for DTA and non-DTA are adequate and
    reliable in the light of the business operations.
    Compliance with Regulations
    The internal auditor is required to verify the compliance of these
    statutes and report thereon as part of his internal audit. The internal
    auditor also needs to verify registration with various statutory
    authorities and renewal of the same as part of his internal audit
    procedures.

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