Why Outsource Internal Accounting And Auditing Services?

Outsourcing internal accounting and auditing services is a smart move for companies aiming to streamline their operations while staying compliant with regulations.  

This initiative allows you to bring in external experts who provide fresh, objective insights and specialized skills. This approach not only saves time and money but also improves the quality of your financial oversight and risk management.  

In this article, we’ll explore why outsourcing internal accounting and auditing services can be a game-changer for your organization. 

What is Internal Audit Outsourcing 

Internal audit outsourcing refers to the practice of hiring external service providers to perform internal audit functions that would traditionally be conducted by an organization's in-house audit team. These external providers bring specialized expertise, advanced technologies, and an independent perspective to evaluate and improve the effectiveness of risk management, control, and governance processes within the organization. 

Related: The Pros and Cons of Audit Support Outsourcing 

The Role of Outsourced Internal Auditors 

Outsourced internal auditors can function the same way as in-house internal auditors do. They work across all areas and apply a systematic, disciplined and independent evaluation on both the tangible and intangible aspects of the operations.  

Here’s a sample breakdown of the different areas they typically cover: 

Financial Audits 

• Review Financial Statements: Ensure accuracy and compliance with accounting standards. 

• Evaluate Internal Controls: Assess the effectiveness of financial controls to prevent fraud and errors. 

• Audit Financial Transactions: Verify the integrity of transactions, from income to expenses. 

Operational Audits 

• Efficiency Evaluation: Assess the efficiency and effectiveness of operational processes. 

• Process Improvement: Recommend improvements to streamline operations and reduce waste. 

• Policy Compliance: Ensure operations comply with internal policies and external regulations. 

Compliance Audits 

• Regulation Adherence: Check adherence to laws, regulations, and industry standards. 

• Risk Management: Evaluate the risk management practices and suggest risk mitigation strategies. 

• Documentation Review: Ensure proper documentation and record-keeping for compliance purposes. 

After which, outsourced internal auditors present their report that contains the status of the company in connection with its goals – the risk that they are currently facing, the risks that they may face in the future, how the risks are being handled, and the areas they can improve.  Given these tasks, is it really wise to outsource internal audit?  

Why You Should Outsource Internal Audit Functions

Outsourcing internal audit services gives you the ability to work with outsourced professional auditors in cases where you cannot commit to hiring a full-time in-house auditor yet. Meanwhile, if you already have an in-house audit team, outsourced auditors can supplement their efforts and support them at the back end.  

Aside from this, here are the other benefits of outsourcing internal audit. 

1. Objectivity and independence are ensured. 

Working with a specialized accounting outsourcing company lets you work with a professional auditor. They will match you up with someone who’s knowledgeable of your company’s industry and other applicable regulations.  

Objectivity and independence are must-haves for the internal audit process as it affects the auditor’s evaluation. Without it, the organization will be misled, and risks might be underestimated or worse, they might be ignored. 

2. It is easier and more practical to outsource services than recruit and employ experts.

Experts are like gems; they are both rare and expensive. Aside from which, there is also a cost associated with maintaining in-house experts in your company.  

Outsourcing companies provide experts to work for your companies for a relatively lower cost. In addition, employers may face problems when an in-house auditor is unavailable, gets sick or decides to leave the company. It may take weeks or sometimes even months to get a replacement compared to outsourcing services, where outsourcing companies have business continuity plans (BCP) to deal with emergency situations. 

3. Receive specialised auditing services. 

Internal audit is not an easy task. Outsourcing your internal audit to specialized providers ensures that the people working in your audit know what they are doing. They have been trained to do these things and there are also experts checking the quality of their work. In addition, specialized providers offer a wide range of skills that you may need after the results of the internal auditors have been reported. These include accountants, data analysts, financial analysts, etc.  

4. You have more time for managing more urgent tasks.

Having in-house auditors means that you also have to look out for what they are doing and the things that you need to prepare for them to do their work properly, among others.  

However, outsourcing your internal audit will give you the luxury of using your time to do the things that you really need to do for your company. 

5. Access to advanced tools and technologies.

Outsourcing firms often have access to advanced tools and technologies for auditing and accounting, which may be too costly for a single organisation to invest in. These tools can provide deeper insights, more accurate data analysis, and comprehensive reports that can enhance the overall quality of your company’s internal audit process. 

6. You can scale services up or down based on your company’s needs.

Outsourcing provides the flexibility to scale services up or down based on your company’s needs. Whether you need additional audits during a busy period or fewer services when things are slower, outsourcing firms can quickly adjust their resources to meet your requirements without the complications of hiring or laying off staff. 

7. Bring fresh perspective and innovation.

Lastly, an outsourced internal audit team brings a fresh perspective to your operations since these professionals are not influenced by internal politics or historical practices. As a result, they can be better at identifying inefficiencies and suggesting innovative solutions for your organisation. This outside viewpoint can also lead to more effective risk management and process improvements, which can drive your business toward greater success. 

Considerations When Selecting an Internal Audit Outsourcing Company 

Aside from understanding the benefits of audit outsourcing, it is equally important to consider the factors involved in selecting the right outsourcing partner. Here are some key considerations: 

Reputation and experience 

Research the service provider’s track record and expertise in handling similar projects in your industry. 

Offered services 

See to it that the service provider offers the actual services you require to meet your specific needs. 

Technological capabilities 

The service provider should have access to advanced tools and technologies that can add value to your auditing process. 

Communication and reporting 

Clear communication channels and transparent reporting methods are essential for a successful outsourcing engagement.

References and reviews 

Check client testimonials and reviews to gauge the firm’s reliability and service quality. 

Cost-effectiveness 

While cost is a factor, it should be weighed against the value and quality of the services provided. 

By meticulously considering these factors, you can ensure a successful partnership that maximises the benefits of outsourcing your internal audit functions. If you want to learn more about the audit support services, you may check out this page. 

How D&V Philippines can help 

Are you searching for a dependable outsourcing partner for your internal accounting and auditing needs? Look no further than D&V Philippines. With over a decade of expertise in providing top-tier finance, accounting, and audit support services to clients worldwide, you can be sure that we can be your trusted audit outsourcing partner. Schedule a free consultation with us today.   

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 13 March 2015 and edited on 03 September 2024. Edited by: Angelica Garcia