The Pros and Cons of Audit Support Outsourcing

Providing audit services is a great task, especially in the midst of the busy audit season. As the battle for qualified audit talent gets tougher, some companies are finding new ways to deliver quality audit solutions. 

One business model that offers a solution to the talent shortage is outsourcing.  

While outsourcing has been around for a long time, highly specialized industries such as audit are reluctant to the idea of outsourcing. Before we delve into the advantages and drawbacks of audit support outsourcing, it's crucial to understand the term itself. 

What is Audit Support Outsourcing? 

Audit support outsourcing is the process of subcontracting specific audit tasks and processes to an external firm, allowing internal teams to focus on core functions and decision-making. 

This can include areas such as preliminary engagement activities, preliminary analytics procedures, risk assessment procedures, materiality calculation, development of audit strategy, going concern assessment, completion checklist, understanding the process and walkthroughs, test of controls, journal entry testing including opening balances, related party transaction documentation, review of board minutes, primary substantive procedures, test of details, substantive analytical procedures, final analytical procedures, review of financial statements, preparation of audit closing meeting materials, preparation of management letter comments, accomplish disclosure checklist and routing slip. 

Pros and Cons of Outsourcing in the Audit Industry 

Below are some of the pros and cons of outsourcing in the audit industry. 

Pros of audit support outsourcing 

1. Additional talents at lower costs 

This is one of the main reasons why businesses outsource. The ever-changing demands of the audit industry have made it difficult to find desirable talents in just one area. But when you tap into the talent pool of other countries, you can widen your scope and find auditors who meet your requirements.  

While a number of other staffing solutions can help you with this, audit support outsourcing is one of the most cost-effective options since outsourcing tasks in offshore locations can be done for a fraction of the cost. Some outsourcing firms also offer a model where you pay for the services instead of the overhead costs of employees. 

Read: Why Consider Internal Audit Outsourcing for Your Company? 

2. Expertise and quality of work 

A number of outsourcing firms have specialized in offering a certain type of service. Whether IT, human resource, finance, accounting, or audit outsourcing, these specialized providers employ qualified professionals who can deliver quality and value-adding services to your business. These firms also have their own quality assurance mechanisms to maintain their service delivery standards. 

3. Additional working hours 

Most audit support outsourcing companies are located in Asian countries like India, Indonesia, Vietnam, and the Philippines. The time difference in these areas can work in favor of your business by adding working hours to your business processes. A number of audit tasks can be relayed to your audit support outsourcing partner by the end of your business hours and receive the completed documents by the start of the next business day. 

Cons of audit support outsourcing 

1. Communication and coordination issues 

One of the main trade-offs of outsourcing audit services is coordination.  

Outsourcing means working with auditors who may be located from the other side of the world. Since they are not physically present in your office, communication and coordination may not always happen in an instant.  

Aside from which, some firms accommodate their clients by adjusting their schedules based on the client's time zone. These firms operate with a shifting work structure to ensure availability despite differing time zones. This minimizes communication delays and fosters effective collaboration. 

Moreover, it is crucial to select a service provider capable of working within the client's time zone to minimize delayed communications. Time differences can limit real-time communication opportunities, emphasizing the importance of choosing an outsourcing partner that caters to your specific time zone requirements. 

2. Adjustments in your audit service delivery 

Adding outsourcing to your firm’s process requires you to adjust how you deliver your audit services. Aside from quality service delivery, your in-house staff are also expected to make adjustments to how they perform their roles. this means that you need to spend time in training both your in-house and outsourced talents in catering to your overall process adjustments from software, service-level agreements, communication and working lines. 

Is Audit Support Worth It? 

In answering this, it's crucial to consider not only the outlined pros and cons but also to evaluate your firm's business model, operational processes, and unique aspects. Keep in mind that integrating audit support, particularly of an outsourced nature, is a significant decision that demands thorough consideration. 

Read Next: Should You Outsource Your Internal Audit Function? 

The Bottom Line 

Outsourcing some of your audit functions is a big decision, especially if you have not yet tried outsourcing. In evaluating its pros and cons, consider whether outsourcing can enhance the efficiency, effectiveness, and overall quality of your audit processes while managing costs in the long run. 

By reviewing the pros and cons outlined above, as well as your firm's particular needs and goals, you can make an informed decision about whether audit support outsourcing is the right solution for your business.  

To further help you in your decision to outsource your 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 audit support solutions can help you deliver quality services even during the busy audit season. 

This post was first published on 18 September 2018 and edited on 06 December 2023 by Angelica Garcia