Can Internal Audit be Outsourced?

Can internal audit be outsourced without compromising quality? 

The quick answer is yes; it can be outsourced. In fact, it might just be what your organization needs to address its longstanding problems concerning operational capacity and talent shortage. 

But that’s not the ultimate answer. Similar to how you make business decisions, there are always multiple angles to consider.

Can internal audit be outsourced? The answer depends on the function you’re trying to outsource

Like any business functions, you must outsource internal audit with caution. Outsource areas that are too time-consuming and repetitive but make sure to retain the processes that in-house auditors must complete themselves. This way, you can retain balance without the risk of losing institutional knowledge or missing nuanced information. 

Get this Free Guide: Outsource with Caution: An Outsourcing Due Diligence Handbook

The Institute of Internal Auditors (The IIA) also shares the same view. In their position paper titled Staffing Considerations for Internal Audit Activity, the international professional association stated that the actual oversight and responsibility for the internal audit activity cannot be outsourced. 

Despite their stand, IIA still acknowledges that it’s nearly impossible for an internal audit team to handle everything on their own without using some external resources. Thus, outsourcing internal audit support becomes a more acceptable idea given that the organization must designate an in-house liaison who’ll be responsible for managing the internal audit activity. 

To make it short, the best practice is to outsource internal audit support, an outsourced solution concerning the back-office and administrative areas of internal audit. This service aims to help ease the workload of your internal auditors rather than replacing them altogether.  

The section below shows us why audit support outsourcing can be a beneficial move. 

6 reasons why you should outsource internal audit support

Outsourcing internal audit services has gained traction as companies recognize the challenges of sustaining an in-house audit function.  

In fact, a global average of 38% chief audit executive officers say they outsource an average of 23% of their internal audit activity to third parties. The usage of these services, the same study revealed, is based on the characteristics of the organization. 

For instance, chief audit executive officers outsource to: 

• Provide specialty skills not available in the internal audit department 

• Solve staff shortages 

• Supplement staff on an ongoing basis 

• Cover remote business locations 

• Perform special projects 

For specificity, here are the reasons why you should consider outsourcing internal audit support services.

1. Gain specialized knowledge from experienced internal auditors

In-house teams often only see how things work inside their own company. This limited view makes it harder for them to know if there are better ways to handle risks or improve processes. 

Outsourced audit providers bring experience from working with many different businesses. Because of this, they also develop a wider perspective. In turn, they can highlight issues your team may not notice and suggest solutions that have already been tested elsewhere. 

You can leverage their extensive knowledge in strengthening your processes and avoiding potential mistakes you might have failed to catch.  

You might be interested: How to Prepare your Company for an Audit of your Internal Processes 

2. Stay updated with regulatory changes

New updates in audit regulations and accounting standards happen almost yearly.  

For example, the IIA updated its International Professional Practices Framework (IPPF) last year. IPPF is IIA’s authoritative body of knowledge on the professional practice of internal auditing, which is made up of the Global Internal Audit Standards, Topical Requirements, and Global Guidance.  

Early this year, the ICAEW also listed a couple of changes that auditors need to be aware of. 

This includes: 

• Revisions to the ISA 600 

• Revisions to FRC Ethical Standard 

• Changes to company size thresholds 

For internal auditors already balancing heavy tasks, staying updated with shifting regulations can feel overwhelming. Partnering with an outsourced audit team ensures you get timely expertise and practical help in updating your practices. 

3. Reduce overhead costs through flexible engagements

Maintaining an in-house internal audit team translates to significant, recurring overhead costs. On top of their monthly payroll, you stillalso need to invest in their professional development, benefits, and equipment, among other things. 

When you outsource, you can work with top-performing audit professionals without incurring the fixed costs of permanent employees.  

External providers typically operate on a project or retainer basis. As such, this setup makes spending more predictable and aligned with actual audit needs. This flexibility can then help you allocate resources more efficiently. 

Related: Key Differences Between Employee vs Independent Contractor vs Outsourcing 

4. Strengthen the independence and objectivity of audit results

Internal auditors who work within the organization may sometimes encounter conflicts of interest. Consciously or unconsciously, internal politics or pressure from management can influence their evaluations. 

This goes against the actual purpose of conducting internal audits. If left unmanaged, it can: 

• Lead to biased reporting 

• Compromise objectivity 

• Weaken corporate governance 

• Increase the organization’s risk exposure 

• Reduce stakeholder trust 

Audit support outsourcing reduces this risk by engaging external professionals who can provide independent perspectives. Because they’re not immersed with internal politics or departmental pressures, outsourced internal auditors are able to evaluate internal controls and risk management systems more objectively. 

5. Scale the support you’re receiving to match organizational needs

As your business grows, the scope of your audit processes grows with it. Regulations may expand, and risks may become more complex. Most of the time, your internal resources can be stretched too thin, especially during the busy season. It usually happens either before regulatory deadlines or major financial reporting cycles. 

During this period, you may need to have a comprehensive review of your controls and compliance practices. Your audit needs are usually at their peak, which causes your internal auditors to be stretched too thin.  

However, there are also times when only lighter checks or targeted reviews are necessary to confirm that systems are still working as intended. During these times, resources may sit idle. 

Outsourced audit support addresses this through their scalable services. This ensures that you can stay prepared during busy periods without carrying unnecessary costs when workloads ease. 

6. Leverage advanced audit technology without heavy investments

Technology has improved the efficiency and effectiveness of internal audit processes. Routine checks that previously consumed days are now completed in hours. This gives auditors more time to dive into risk assessment and provide meaningful recommendations for the business. 

The challenge is that not all organizations can afford the systems needed to make this possible. Outsourcing solves that gap because providers bring industry-standard tools you can benefit from without the expense of purchasing or maintaining them. 

Signs your organization is ready to outsource internal audit support

Here are the key signs your organization is ready to outsource internal audit support. 

1. Budget constraints limit audit scope

As mentioned above, the scope of your audit grows with your business. However, a growing business doesn’t necessarily mean you have the needed capital to increase your audit capacity. 

When financial constraints prevent you from expanding your audit team, you’re putting them at the risk of being stretched too thin. This can then result in a series of negative impacts: 

• Burnout 

• Increased human error 

• Inability to focus on core tasks 

• Inaccuracies  

• High turnover rate 

If you're at this point, take it as a sign to outsource internal audit support. 

2. Staff turnover is disrupting audit continuity

A high staff turnover is often the result of an overworked audit team. Obviously, this isn’t good for your organization. When your tenured internal auditors leave, knowledge gaps widen. It also disrupts business continuity. 

External providers can help you minimize such occurrences. Aside from giving your in-house team the support they need, outsourced auditors can also become part of your business continuity plan due to their ability to provide continuous support all the time.  

3. Technology investments are becoming prohibitive

Modern audit techniques require sophisticated software and analytics tools. Ideally, it’s good to invest in top-tier audit technology. But once you are aware of the price, it might make you take a few steps back to reassess. 

A modern governance, risk, and compliance (GRC) software used for streamlining internal audit procedures, for example, can range between $7,000 to $25,000 per year. It can already be a huge investment given that it’s only under a specific department. 

But if you choose to work with an internal audit support provider, specifically those with advanced technological capabilities, you can have access to their existing audit tools and workflows.  

The best part about it? You're getting access to both technology and their internal audit expertise. 

4. Your audit findings lack actionable insights

If your audits only give you generic reports that list problems without suggesting real solutions, then you’re not getting much value out of them.  

If that’s the case, it might also be a sign that you need to bring in external expertise. 

It's normal for outsourced auditors, especially those from an audit firm, a BPO company, or a CPA firm, to have worked with several clients from different industries. This work experience gave them both skills and knowledge needed in conducting internal audits. Thus, this gives them the expertise to produce audit findings you can actually use to improve your business operations. 

5. Seasonal or project-based audit needs fluctuate

Keeping a full-time internal audit team can feel like paying for something you don’t always use when your organization only experiences seasonal internal audit needs. 

During slow months, you end up with underutilized resources, and when the busy season hits, your team can easily get overworked. 

Outsourcing gives you the flexibility to bring in experts exactly when you need them. You avoid the cost of maintaining a permanent team while still ensuring your audits are thorough, timely, and aligned with your business goals. It’s a smarter way to manage resources without sacrificing quality. 

Best practices for outsourcing internal audit support solutions 

Successful internal audit support outsourcing requires careful planning and implementation. Following these best practices will help you maximize the benefits while minimizing potential risks. 

1. Conduct thorough due diligence

Evaluate the expertise, credibility, reputation, and capacity of your shortlisted internal audit support vendors. Make sure to look into their track record so you can make informed decisions.  

The best way to start is to request legal documents you can use as a reference. You can also ask around your network or do an intensive online search to confirm their credibility and expertise. 

2. Establish service level agreements

Clear service level agreements prevent misunderstandings and ensure accountability from your outsourcing partner.  

That's why before starting any outsourcing engagement, you must define specific expectations for the following:  

• Deliverables 

• Timelines 

• Reporting formats 

• Communication protocols 

Add provisions concerning regular performance reviews and quality assessment checks. Having a legally binding document likes this can protect you from any potential risk that may arise as the engagement progresses. 

3. Maintain strategic oversight and governance

Internal audit support, as the term suggests, only aims to give your team their much-needed assistance in completing back-end tasks.  

The performance and work quality of both sides should remain interconnected. This is the reason why you need to maintain strategic oversight and establish clear governance structures. 

With these mechanisms in place, you can align your outsourced activities with your organization's risk appetite and strategic objectives. 

4. Implement strict data security measures

The fact that you’re outsourcing parts of your internal audit operations is an indication that you need to take extra measures in securing your data. 

Because of this, you have to ensure your provider has comprehensive data protection policies, secure communication channels, and appropriate confidentiality agreements. 

5. Conduct regular performance monitoring and evaluation

You also need to conduct systematic approaches to monitor and evaluate your outsourcing partner's performance.  

Use key performance indicators to track audit quality, timeliness, cost-effectiveness, and business impact. Doing so enables you to optimize your outsourcing arrangement and demonstrate value to stakeholders. 

Keep in mind that regular reviews should assess not only compliance with service level agreements but also the value and impact of audit activities on your organization. 

Increase your internal audit capacity

Ready to explore how outsourced audit support services can transform your risk management approach?  

D&V Philippines specializes in providing comprehensive audit support services that can help your internal auditors keep up with changing regulations and increasing internal audit requirements. 

To learn more about our specialized services, check out our audit support services page or contact us directly to discuss your specific requirements. 

You can also download our comprehensive whitepaper on Seasonal Audit Support Solutions for additional insights into our audit support capabilities and methodologies. 

 This post was first published on 30 September 2018 and was updated on 14 October 2025.

Edited and updated by: Mary Milorrie Campos