Why Consider Internal Audit Outsourcing for Your Company?

Internal audit outsourcing has been a contentious topic in the past years. Some believe that the internal audit process should be kept in-house, partly because outsourcing the audit planning process could be both costly and complicated. 

Preparing for an internal financial audit can be a challenging endeavor, one that should be considered thoroughly. As businesses expand and evolve, so should the scope and competencies of your internal audit team. 

The decision of whether to partially or fully outsource the internal audit process can determine how much value you want to get from the activity. In a survey conducted by the Institute of Internal Auditors in 2022, 54% of Chief Audit Executives answered that they either outsource or co-source their internal audit services to supplement their in-house staff. 

In this article, we will examine the benefits and disadvantages of outsourcing audit support services to conduct your regular financial audit. 

Read: Why Outsource Internal Accounting And Auditing Services? 

Advantages of Internal Audit Outsourcing 

Here are some of the benefits of outsourcing your company's internal audit: 

Cost Savings 

Outsourcing internal audit functions can help you save on business costs. Here’s how this initiative makes it possible: 

• Lower Overhead Cost 

Maintaining an in-house team can be more expensive than having it outsourced since you have to pay for your employees’ salaries, benefits and other overhead expenses. You also have to provide them with a place to work, equipment, software, and other resources. All these things can be quite expensive and can be a burden on your company’s budget. 

By outsourcing, you can keep the number of in-house internal auditors to a minimum — your in-house team can focus on the front-end and more strategic roles while your outsourced team takes care of back-end tasks.  

• Pay Only for the Services You Need 

Most outsourcing companies offer flexible pricing that allows you to pay only for the specific services you require, and only when you need them. This pay-as-you-go model is often more cost-effective than committing to the fixed salaries of full-time staff, giving your company greater control over its budget. 

Flexibility  

If your company has limited capability to build an entire internal audit team, working with outsourced auditors can help you augment your audit function. 

Scalability  

With an outsourcing partner, you can easily scale your audit team to meet the needs of your organization. In the case of co-sourcing, having an external resource can add value to your internal audit team by bringing in industry expertise. 

Fresh Perspectives  

Third-party providers offer their services to businesses from different verticals. With their expertise and familiarity with companies in your industry, they can bring fresh perspectives to the table. As a result, your organization can benefit from new ideas that can improve your operations, internal risk, and risk control. 
 

Disadvantages of Outsourcing Your Internal Audit Process 

While outsourcing your internal audit process offers numerous benefits, it's essential to consider some of the potential disadvantages as well: 

Security Concerns 

Just as with any service provided by a third party, there are inherent risks when you outsource any business process. Look for an outsourcing firm that understands the importance of keeping your proprietary information, as well as your client’s, secure. 

 
Continuity 

As with any outsourcing engagement, continuity can be an issue if there are frequent changes in your team. Challenges may arise during the internal audit if your otusourced team does not have a thorough understanding of your work processes. 

 
Confusion  

In the case of co-sourcing, confusion about your responsibilities may arise if there’s no alignment with your in-house and outsourced teams. 

Read Next: Comprehensive Guide on Outsourcing Audit Support Services 

The Bottom Line

Regardless of which option your corporation goes for, your internal audit should, as an independent assurance activity, add value to your organization and enhance your financial, control, and operational processes. 

To help you in your decision to outsource your internal audit tasks, you may contact us today or visit our website to know more about our audit support solution.  

You can also download our Seasonal Audit Support for US Audit Firms and discover how our end-to-end audit support solutions can help you deliver quality services. 

This post was first published on 30 October 2018 and edited on 01 October 2024. Edited by: Angelica Garcia