An International Meeting of the American Accounting Association 2005 Annual Meeting August 7–10, 2005 San Francisco, California Come to the City by the Bay!

Effective Learning Strategies Forum
Monday, August 8, 2005

Session 5
Illustrating the Outsourcing Decision Process: A Classroom Exercise/Application

Presenters:
Hubert D. Glover, Howard University
Jeffrey J. McMillan, Clemson University
Jean T. Wells-Jessup, Howard University

Description:
This classroom exercise exposes students to the strategic, analytical, financial and operational decisions involved in making an outsourcing decision. A realistic scenario outlines the steps management goes through when deciding whether to outsource various core and noncore functions of a manufacturing company. The logic and supporting reasons for the decisions to outsource or insource various operational functions of the company are provided. Summary financial and nonfinancial information examined by management during the decision process is supplied.

The final decision regarding the company’s internal audit function has been left undecided. Thus, the application part of this exercise has students review the information provided, to review additional information on outsourcing (sources and links listed), and last, to make a recommendation concerning the status of the company’s internal audit function. Guidance on alternative ways the illustrative material can be implemented is provided.

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