Record to report services are usually sold as one block, and that is the part to slow down on. Half of what sits inside record to report is recording work that transfers cleanly to a provider. The other half is judgment that stays with the firm whose name is on the statements. The line between the two runs through the journal entry, and it is the line a scope document has to draw.
What Record to Report Covers, and What Sits Either Side
Record to report, shortened to R2R, is the end-to-end process that runs from recording a transaction through to the financial statements and the analysis built on them. Finance functions get mapped into a handful of these end-to-end processes, each named for where it starts and where it ends.
Microsoft's process guidance for Dynamics 365 breaks the record to report process into areas that include recording financial transactions, closing financial periods and analyzing financial performance, alongside accounting policy, cash and budgets (Microsoft Learn). The same guidance puts order to cash and source to pay on either side of it, first as processes that feed the ledger and then as processes that pick up again after the record to report process has run. The buying half of that upstream process, running from the request to spend through to the supplier being paid, is the procure to pay process.
The general ledger is not the same thing as record to report. The ledger is the record. R2R is the work that fills it, proves it, closes it and reports off it, so a provider selling record to report services is offering to run a process rather than to operate a system.
The Split Inside Record to Report Outsourcing
The recording half transfers. The reporting half does not.
Recording is the work that produces something checkable against a source outside it: a posted entry with support behind it, a reconciliation that ties, a sub-ledger that agrees to its control account, a period rolled forward. That is the same output test that sorts which accounting tasks move and which do not, applied to one process instead of to a whole firm.
Reporting is the work that produces an assertion. Which entries get approved, why a balance moved, what the statements say about the client's business. None of that is transcription, and it is hard to stand behind when it comes from someone who has never spoken to the client.
Step by step, the split looks like this.
| Step in the process | Prepared by | Approved by |
|---|---|---|
| Standing and routine journal entries | The provider, from the schedule agreed at onboarding | A named person in your firm |
| Reconciliations and support schedules | The provider | Your reviewer, on the exceptions rather than the tie |
| Sub-ledger tie-out to control accounts | The provider | Your reviewer |
| Accruals and estimates that need a judgment | The provider builds the schedule | Your firm decides the number |
| Variance and flux commentary | The provider produces the movement | Your firm writes the explanation |
| Rolling the period forward and locking it | The provider executes | Your firm decides the period is closeable |
| What the statements assert | Your firm | Your firm |
Two rows get misread. Flux commentary, the written explanation of why a balance moved against the prior period, looks like one deliverable and is two. The movement is arithmetic and it transfers. The explanation is an assertion about the client's business, so a provider can compute the movement while only your firm can say what caused it. The mechanics of running that review before anything leaves the office sit in the month-end close checklist, along with the close sequence itself and the internal version of this handoff.
The accrual row is the other one. A provider can maintain the standing schedule, pull the support and show the calculation, and the number that lands in the ledger is still a position your firm is taking on the client's behalf.
Who Approves a Journal Entry When the Preparer Sits at a Provider
Approval stays with your firm. A provider's internal review is quality control, and quality control is not authorization.
Segregation of duties, splitting a transaction so that authorizing it, recording it and reviewing it are not the same pair of hands, is already worked through for payables and for a one-person payroll function, including what the federal internal control standards say to do when the split is not practical. The general ledger raises a question neither of those answers. When the preparer sits at a provider, who holds the authority to approve the entry?
The answer comes from two paragraphs about delegation rather than from anything about vendors. Those in key roles can further assign responsibility for internal control to roles below them in the organizational structure, but they retain ownership for fulfilling the overall responsibilities assigned to them, and as part of delegating authority, management evaluates each delegation for proper segregation of duties within the organizational structure (GAO, Standards for Internal Control in the Federal Government, paragraphs 3.07 and 3.08). The standards are issued for federal entities, and the control logic in them does not change with the size of the organization applying it. The current edition is the 2025 revision, GAO-25-107721, effective beginning with fiscal year 2026, with early adoption permitted.
Read the two paragraphs together and the sequence for an outsourced ledger is plain. You can delegate the posting. You evaluate that delegation for the split it breaks. The ownership stays where it was.
The standards also name what a provider is. An external party running a business process for you is a service organization, and management retains responsibility for the effectiveness of controls over business processes assigned to service organizations. Where the provider's controls are necessary for you to achieve your control objectives, those controls are considered part of your own system of internal control, so you need to understand what the provider designs, implements and operates (GAO, Standards for Internal Control in the Federal Government, paragraph OV4.03). Applied to a ledger engagement, that puts the provider's own close controls inside your file rather than beside it.
The awkward part is that the concentration of duties that makes a small firm hard to segregate does not go away when the posting moves out. The standards name that problem directly: a smaller entity faces greater challenges in segregating duties because of its concentration of responsibilities and authorities in the organizational structure, and the examples given for responding to that risk include adding additional levels of review for key processes, reviewing randomly selected transactions and their supporting documentation, taking periodic asset counts, or checking supervisor reconciliations (GAO, Standards for Internal Control in the Federal Government, paragraph OV4.14).
So write the approval rule by entry type before the first close rather than during one. Standing entries that run off a schedule agreed at onboarding, such as depreciation, prepaid releases and recurring accruals, can carry a standing approval of the schedule itself. Everything else needs a named approver each time: one-off entries, anything posted after the reporting pack has been drafted, any entry that moves a balance past a threshold you set per client, and any reclass that changes what a line on the statements says.
The approver also has to be able to reject. An approval given by someone who cannot say what the entry was for is the same control as no approval, and it leaves behind an audit trail that looks complete.
What the Scope Schedule for Record to Report Services Has to Name
A schedule that names units and rates is a price list. Ask for the priced list and the scope list separately, a distinction worked through at contract level in what a finance and accounting BPO agreement actually sells, then check that the scope list answers four things.
The close calendar, per client. Two dates rather than one: the date the provider's work has to be complete, and the date reviewed statements leave your office. A single delivery date with no internal deadline behind it puts every late client into your reviewer's last day.
The cutoff dates, and who chases what before them. Name the person on each side who owns the chase, and write down what is already known to run late, so the first close is not spent discovering it.
The owner of each step, written as preparer and approver. A team name in that column is not an owner. If a step cannot be written that way, it is a judgment, and judgments belong on your side of the line.
The approval authority for journal entries, by type, with an escalation route. Include who approves when the named approver is unreachable in the delivery week, because that is when a standing approval quietly turns into the provider approving its own work.
Then name what is excluded, because a ledger engagement attracts work that looks like the close and is not. Catch-up periods, cleanup of prior-year balances, a chart of accounts redesign and a new entity added mid-year are each a project with a price of its own, and none of them belongs inside a recurring close fee.
If your firm is carrying client closes and the approval queue is what slips, don't trust us, test us. Accountably places trained offshore accountants inside US CPA and EA firms, and the low-risk way to start is a Free 40-Hour Proof Pilot, a fixed block of your own representative work put through multi-layer review so your reviewer grades real output before a client file depends on it.
Draw the Line Before You Price the Work
Record to report services are worth buying and worth scoping narrowly. The recording half of the process is repeatable, checkable and genuinely transferable. The reporting half is where your firm's judgment lives, and a provider offering to take that half is selling something it cannot deliver.
Take one client's close and mark every step as prepared or approved. Whatever lands in the approved column is your scope boundary, and it is the list your approval rule and the provider's schedule both have to match.