Among companies that are looking to set up an internal audit function in their organization, outsourcing internal audit goes on the agenda.
However, the decision on whether to pursue internal audit outsourcing or not is fraught. As in outsourcing any other function, no one size fits all; what worked for a company might not be applicable for another.
What is Internal Audit?
Given the current climate of the regulatory environment in the US today, internal audit is crucial in the success and growth of any organization.
According to the Institute of Internal Auditors, internal audit can be defined as an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations.
The internal audit function helps an organization to achieve its goals and objectives by putting in place a system by which to evaluate the effectiveness of its business processes.
Unlike an external auditor, the internal auditor focuses not on the review of financial information and past reports, but also on the company’s financial performance, operational objectives, compliance, and risk management activities.
Should You Opt for Internal Audit Outsourcing?
If your organization does not have the internally trained audit professionals at present, outsourcing internal audit could be a good option for you.
However, you must first consider the cost of insourcing and developing internal talents -- would it be more cost-efficient, in the long run, to keep this function in-house? A service provider usually charges on a per-hour basis, which may be expensive for some.
However, you also need to take into consideration the remuneration, benefits, and other costs associated with having an in-house talent. Consider the cost of internal and external training activities, public holidays, leaves, and the time involved in the staff’s handling of other administrative tasks. In addition to that, consider the operational costs – the office space, electricity, telecommunications, and so forth – to find the actual cost of the employee.
Another consideration to make is the competency and skills of the internally trained staff. While it is possible that your staff can be trained to handle the internal audit activities, not everyone will have the knowledge and experience of the fundamental aspects of a successful internal audit.
They will have to know the latest trends and practices in audit, skills in change management, and knowledge of other organizational processes (which can be used as a benchmark for internal performance), among others. They will also need to be able to have the “soft skills” needed for the audit to succeed, such as skills in negotiation, planning, analysis, and communication.
Having an external resource can guarantee that your internal audit talent will have all the above-mentioned competencies.
Not all organizations are the same. Ultimately, the scope of the internal auditor’s work, your current resources, and the staffing demands will determine whether or not outsourcing internal audit functions can be good for your organization.
Your Talent Sourcing Partner
Are you considering outsourcing part of your internal audit activities? We can help. D&V Philippines can give you the audit support that your organization needs without the overhead costs involved in traditional sourcing and recruitment.
Download our primer on our audit solutions Audit Support Group today and learn what types of financial audit services we offer to help you and your growing team. Contact us today to schedule a consultation.