Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What primarily defines a shared service organization?

1. Independent units providing individual services

2. Units providing services only to external clients

3. Units within an organization serving the entire organization

4. Units that operate with complete autonomy

The correct answer is: Units within an organization serving the entire organization

A shared service organization is primarily defined by units within an organization that provide services to the entire organization, rather than functioning independently or serving only external clients. The main objective of such units is to centralize support services, which can lead to improved efficiency, reduced costs, and enhanced service quality across the organization. By consolidating services like human resources, finance, IT, or customer support, a shared service organization facilitates standardization and streamlining of processes. This enables different departments to focus on their core functions while relying on the shared service units for specialized support. In contrast, independent units providing individual services do not align with the concept of shared services, as they operate separately and do not deliver collective benefits to the wider organization. Similarly, units that serve only external clients would not qualify as shared services, since their focus is outside the organization rather than supporting internal needs. Finally, units that operate with complete autonomy lack the collaborative and interconnected approach characteristic of shared service models.