Advantages and disadvantages of outsourcing internal audit
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The following article describes the types of outsourcing arrangements often used and reviews the pros and cons of outsourcing internal audit.IntroductionTraditionally, internal audit work was undertaken mainly by in-house teams. Through time this has changed and now many organisations outsource, either completely or partially, their internal audit function. Modern internal audit functions need a broad range of skills to provide an effective and comprehensive service. An organisation may employ only a small number of internal auditors, but their responsibilities can require expertise in a growing range of specialist skills such as IT audit; data mining; data analytics and, (depending on the type of industry and size of the organisation), in depth knowledge of different regulatory regimes. It can be difficult and expensive to recruit, retain and invest in those people with specialist skills. To circumvent this difficulty, many organisations carry out some degree of outsourcing of the internal audit function. Some smaller organisations, required by a regulatory agency or by funding covenant to have an internal audit function, may find that they want to outsource internal audit wholly to an external provider rather than incurring the cost burden of recruiting and training their own in-house internal audit section. Types of internal audit outsourcing arrangements
The pros and cons of outsourcing internal audit v an in-house internal audit functionSome of the benefits of outsourcing the internal audit function include the following:
Some of the drawbacks of outsourcing the internal audit function include the following:
Further pointsIt is important to emphasise that the oversight and responsibility for the internal audit function cannot be outsourced (per the Institute of Internal Auditors). The board, through the audit committee, is ultimately responsible for oversight of internal audit. Consequently, there is a need for more formal documentation and channels of reporting and approval when a large part of the internal audit function is outsourced. What are the advantages of outsourcing internal audit?Advantages To Outsourcing Internal Audits (Opportunities)
In-depth knowledge of the standard's requirements, Experience in the field and can share best practices, An understanding and use of the process audit approach and risk-based auditing. The ability to provide consulting while auditing.
What are disadvantages of outsourcing the internal audit function?Cons of Outsourcing Internal Auditing Function:
It will take some time to get used to the whole processes and the system of the entity. The Outsourcing of Internal Auditing Function can be time constraining and expensive sometimes depending upon the service areas one wants to have from the outsourcer.
What are some advantages and disadvantages of outsourcing?And it's also very important to understand the effect outsourcing can have on company culture.. Advantages Of Outsourcing. ... . You Don't Have To Hire More Employees. ... . Access To A Larger Talent Pool. ... . Lower Labor Cost. ... . Cons Of Outsourcing. ... . Lack Of Control. ... . Communication Issues. ... . Problems With Quality.. What is outsourcing in internal audit?Internal Audit Outsourcing allows your organization to employ a temporary staff of audit experts to perform objective analysis and tests, and issue reports. Internal Audit Co-sourcing allows your organization to leverage I.S. Partners, LLC's knowledgeable staff with your existing in-house audit employees. I.S.
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