In brief: Accounting in Morocco is governed by the General Code of Accounting Standards (CGNC) and Law 09-88, requiring all merchants to maintain compliant records. Companies may handle bookkeeping in-house or outsource to a chartered accountant. Outsourcing offers cost savings, compliance assurance, and access to professional expertise.
Accounting and Outsourced Bookkeeping
Accounting, a fundamental element of business management, plays a crucial role in monitoring financial flows and in strategic decision-making.
However, given the growing complexity of accounting and tax standards, many companies choose to outsource this essential function.
This practice, which involves entrusting accounting management to an external firm, offers notable advantages in terms of time savings, accuracy, and expertise.
In this article, we will explore the many facets of outsourced accounting: its advantages, selecting the right chartered accountant, financial aspects, as well as potential drawbacks. We will also discuss the key steps to setting up effective outsourced accounting, with the aim of helping businesses navigate this process as smoothly as possible.
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What Is Accounting?
Accounting is the process of recording financial transactions related to a business.
The accounting process involves summarizing, analyzing, and reporting these transactions in the form of financial statements as defined by applicable standards. These standards also define the accounting principles to be followed when preparing the accounts.
These reports are, in principle, intended for a broad audience. They serve to inform:
- Shareholders and partners at general meetings
- Supervisory bodies and regulators overseeing compliance
- Tax collection entities such as the DGI
- All third parties interested in the company’s financial position
The financial statements used in accounting are a concise summary of financial transactions over an accounting period, summarizing operations, financial position, and cash flows of a business.
How Does Accounting Work?
Accounting is one of the key functions of nearly every business. Within companies, this function is handled by either:
- In-house accountant — typically in small to medium-sized businesses (learn more)
- Financial management team — composed of several members in large companies
- External accounting firm — outsourced accounting, generally for very small and medium-sized enterprises
The process of preparing accounting records includes:
- Recording daily transactions in the company’s books
- Analyzing accounting entries for review and possible correction
- Reporting by preparing summary financial statements
The reports generated by accounting serve several purposes. They can help management make informed business decisions. In addition, they form the basis for calculating corporate taxes.
Accounting Obligations of Company Managers
In Morocco, under the provisions of Law 09-88, a company manager is responsible for maintaining proper accounting records. Article 1 of this law makes it mandatory to keep accounts for “any natural or legal person having the status of merchant within the meaning of the Commercial Code.”
These accounts must comply with the provisions of the Moroccan General Chart of Accounts. They must also follow the rules set out in the General Code of Accounting Standards.
Any accounting that does not comply with these provisions runs the risk of having its accounts rejected in the event of a tax audit.
It should also be noted that certain companies are required to appoint a statutory auditor. This applies in particular to:
- Public limited companies (SA) regardless of turnover
- Other legal forms when turnover exceeds 50 million dirhams
What Are the Responsibilities of an External Accounting Firm?
External accounting firms, when appointed, help businesses maintain accurate records that comply with applicable standards.
They are responsible for:
- Daily record-keeping: maintaining records of a company’s transactions
- Financial statement preparation: compiling these transactions into the balance sheet, the income statement, and the cash flow statement
A chartered accounting firm can also provide other services, such as conducting periodic audits or preparing ad hoc management reports.
Generally, this engagement is systematically accompanied by tax support in the form of advisory services (or sometimes the preparation of tax returns).
What Skills Are Required for Accounting?
Generally speaking, attention to detail is a key element of accounting, as accountants must be able to identify and correct subtle errors or discrepancies in a company’s accounts.
The ability to think logically is also essential for problem-solving.
Mathematical skills are useful but less important than in previous generations due to the wide availability of computers and calculators.
Frequently Asked Questions
Is it mandatory for all companies in Morocco to keep accounting records?
Yes, every company established in Morocco is legally required to maintain normalised accounting records in accordance with the General Code of Accounting Normalisation (CGNC) and Law 9-88. This obligation applies regardless of the company’s size, legal form, or sector of activity.
What are the main accounting documents required in Morocco?
Moroccan companies must produce five mandatory summary statements: the balance sheet, the income statement, the cash flow statement, the statement of changes in equity, and the notes to the financial statements. These documents must be prepared at the end of each fiscal year and kept for a minimum of ten years.
What is the difference between general accounting and analytical accounting in Morocco?
General accounting records all financial transactions of the company for external reporting purposes and is governed by the CGNC. Analytical accounting, also known as management accounting, is an internal tool used to analyse costs, margins, and profitability by activity, product, or department. Only general accounting is legally mandatory.
When should a company in Morocco consider outsourcing its accounting?
Outsourcing accounting is particularly beneficial for small and medium-sized enterprises that lack the resources to maintain a full in-house accounting department. It provides access to professional expertise, ensures compliance with current regulations, and allows business owners to focus on their core activities. The cost is generally lower than hiring dedicated staff.
FURTHER READING
Financial Audit: How Does the Engagement Work?
Rejection of Accounts in Moroccan Tax Law
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The Advantages of Outsourced Accounting
Outsourcing accounting offers several significant benefits for businesses, whether small or medium-sized. The first notable advantage is time savings. By delegating accounting tasks to a chartered accountant, businesses free up valuable time that can be devoted to developing their core activity, allowing better focus on the company’s main business. Outsourced accounting also helps compensate for a lack of internal resources, providing access to specialized skills without needing to hire dedicated accounting staff.
Another major advantage is cost reduction. Outsourcing accounting can result in significant savings in terms of salaries, social contributions, and training costs. Moreover, it helps avoid costly errors in accounting, taxation, and employment law, thereby reducing the risk of penalties and fines for non-compliance with legal obligations.
Outsourced accounting also provides increased security and peace of mind. By entrusting accounting to experts, businesses ensure that their accounts are managed in compliance with legal requirements, thereby minimizing the risk of errors or omissions. Furthermore, chartered accountants registered with the Order of Chartered Accountants carry professional liability insurance, providing additional coverage in case of errors.
Finally, outsourcing accounting allows businesses to benefit from expert recommendations for establishing financial forecasts and optimizing financial management. This helps improve the company’s image and credibility with the tax authorities, while bringing an external strategic perspective for business decisions.
In conclusion, outsourcing accounting is a strategy that allows businesses to refocus on their core activity while benefiting from professional expertise, cost reduction, and assured legal compliance.
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The Cost of Outsourced Accounting
One of the most important aspects to consider when outsourcing accounting is its cost. This cost varies depending on several factors, including the complexity of accounting tasks, the volume of transactions, and the geographic area where the chartered accountant is located. On average, a chartered accountant’s fees are approximately 300 to 500 dirhams (excluding VAT) per hour. However, these rates may be higher in major cities such as Casablanca.
Depending on the size of your business, maintaining your accounting records and filing your returns may require 2 to 25 hours per month. For a small business (5 to 10 invoices, 1 to 2 employees), fees can start at 1,200 dirhams per month.
To control the cost of outsourced accounting, it is advisable to consider a sensible division of tasks between the chartered accountant and the company. For example, some businesses may choose to handle routine accounting tasks internally, which are relatively simple, and entrust the chartered accountant with more complex operations, such as preparing annual accounts and year-end tax returns. This approach not only reduces costs but also maintains a degree of control over the accounting process.
It is also recommended to request several quotes for different engagements before making a decision. Comparing offers for full and partial outsourced accounting can help businesses evaluate the most cost-effective option. Finally, it is important to consider not only the direct cost of outsourced accounting, but also the potential savings in terms of time, human resources, and reduced accounting errors.
In summary, although outsourcing accounting involves certain costs, the benefits in terms of professionalism, efficiency, and legal compliance can more than justify this investment.
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The Drawbacks of Outsourced Accounting
Although outsourcing accounting has many advantages, there are also certain drawbacks that are important to consider. The first notable drawback is the cost of outsourcing, which can be significant, especially if the business chooses to entrust a wide range of tasks to the chartered accountant. The average fees for a chartered accountant are approximately 300 to 500 dirhams (excluding VAT) per hour, and this amount can increase depending on the complexity and volume of delegated tasks.
Another major drawback is the potential loss of control over accounting management. By entrusting accounting to an external provider, managers may feel they are losing control of their company’s accounting operations. This can also slow down the decision-making process, as managers often need to consult the chartered accountant before making important strategic decisions.
Confidentiality is also a major concern. When outsourcing accounting, businesses must share sensitive financial information with an external provider, which raises questions about data security and confidentiality.
Finally, it is important to choose the provider carefully to avoid misunderstandings and to ensure that the services provided meet the company’s expectations. Poor communication or a lack of understanding between the company and its chartered accountant can lead to frustration and inefficiency.
It is therefore essential for businesses to carefully weigh these drawbacks against the advantages before deciding to outsource their accounting.
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The Outsourced Accounting Process
Outsourcing accounting is a process that involves several key steps to be carried out successfully. Initially, it is crucial to conduct a comprehensive analysis of the company’s organizational structure, which includes examining current accounting methods, legal obligations, the volume of accounting items to be processed, and the necessary reporting requirements. This analysis makes it possible to clearly determine the specific activities and tasks to be outsourced.
Once this analysis has been completed, the company must decide on the desired level of outsourcing, whether partial or total. This involves choosing the specific tasks to be entrusted to the external provider, such as data entry, tax and payroll management, inventory work, and other accounting-related tasks.
The formalization of outsourcing is generally done through the signing of an engagement letter between the company and the chartered accountant. This letter must detail the nature of the chartered accountant’s engagement, the fees, the specific tasks to be performed, and the conditions for terminating the engagement. It serves as the contractual basis for the relationship between the two parties and ensures that the expectations and obligations of each party are clearly defined.
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Advantages of Outsourced Accounting
Outsourcing accounting is a management strategy increasingly adopted by companies, and for several good reasons:
- Professional Expertise and Quality: By outsourcing accounting, businesses benefit from the expertise and specialized skills of professional accountants and auditors. This ensures high-quality accounting management that complies with current accounting and tax standards.
- Cost and Resource Savings: Outsourcing allows companies to reduce costs related to hiring, training, and maintaining an in-house accounting department. It also offers a flexible cost structure tailored to the company’s needs and size.
- Focus on Core Business: By delegating accounting tasks, managers and employees can concentrate on the company’s main activities and strategic development, rather than on time-consuming administrative operations.
- Compliance and Risk Reduction: External chartered accountants ensure that the company’s accounting complies with current laws and regulations, thereby reducing the risk of errors, fraud, and penalties.
- Access to Advanced Technology: Accounting service providers often use cutting-edge accounting software and tools, providing increased efficiency and accuracy in managing accounting data.
- Flexibility and Scalability: Outsourced accounting offers great flexibility, allowing companies to easily adapt accounting services to their changing needs, particularly during periods of growth or restructuring.
- Strategic Advice and Tax Planning: External accountants are not limited to bookkeeping; they can also offer strategic advice, particularly in tax planning and financial optimization.
In summary, outsourced accounting offers an advantageous combination of professional expertise, operational efficiency, compliance, and strategic advice, contributing significantly to the financial health and growth of businesses.
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Upsilon Consulting offers a comprehensive range of accounting, outsourced accounting, tax, and legal services, primarily targeting Moroccan and multinational companies. Our services encompass essential aspects such as VAT management, including collection, filing, and tax optimization in accordance with recent tax reforms in Morocco, such as the introduction of changes to the VAT system through the 2024 Finance Act.
In addition to these tax services, Upsilon Consulting also provides specialized VAT advisory services, including the application of appropriate rates and deduction rules. We offer audit services to ensure accuracy and compliance, as well as training to help businesses understand and comply with tax requirements.
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