Understanding who outsources internal audit functions and why helps to address one of the key takeaways from this research: You look at the risk versus benefits and make a decision. For example, external auditors who deliver financial audits may not have the skills, business acumen, or knowledge to deliver audits of strategic or operational activities.
Consequently, creating and maintaining great relationships with third-party service providers can only bolster the effectiveness of an already-important function within any organization—the internal audit function. The report was a listing of five findings attached to eight pages of illegible chicken scrawl that was the only evidence of what had been audited.
Outsourcing the function adds a layer of complexity to that challenge. As always, I look forward to your comments.
Review outsourcing and co-sourcing options By outsourcing or co-sourcing critical elements of an internal audit function, your organisation can not only reduce costs, but also free up capital and key staff to refocus on core competencies, while tapping into specific skill sets, best practices, industry and corporate audit knowledge.
For this reason, it is critical that an organization maintain a separate internal audit function comprised of employees of their organization or outsourced internal audit consultants, or a combination of both. In some cases, part of the view through that window is provided by third-party service providers that the IAF Outsourcing of internal auditing engage to help meet both its long- and short-term assurance and consulting needs.
Zoch says co-sourcing can be particularly beneficial if the organisation has a continued relationship with the external IA supplier, so they can grow to understand the business. Having made the decision to hire a contractor to do the audits, there are several things to consider.
Advantages of each approach Each approach to IA can have advantages and challenges. Lending Reviews Internal Audit Outsourcing Outsourcing or co-sourcing internal audit functions are increasingly valuable solutions.
Interviews with audit committee members and prior auditing research by academics suggest that as markets continue to develop, the IAF is an important tool to ensure that the company respond to areas of inherent and emerging risk and can help ensure that controls are operating effectively and efficiently.
Have the auditor participate in the planning of the annual schedule. Deadlines, progress reports, access to staff for discussion of results, and follow-up should be addressed.
And always remember that you have ultimate ownership of the audit results. Consistently, interviewees suggested that asking the right questions up front can help create a good relationship, with CAEs clearly communicating objectives to the third party. Internal Auditor is pleased to provide you an opportunity to share your thoughts about these blog posts.
One criteria organizations use to choose the external vendor is knowledge of local factors i. Compensation issues should be clearly defined.
Review the reports when you get them. In addition to actively participating in the integration of disparate corporate cultures and control structures from nearly 10 institutions, the RSM team, in consultation with bank management, has successfully integrated the internal audit, enterprise risk management, Sarbanes-Oxley SOX and fiduciary processes.
Communication and influencing skills are also essential. While these are justifiable issues, organizations can solve them. Responses to these questions were only provided by CAEs, where other more general questions are answered by all levels of professionals within the IAF.
Our internal audit group is composed of professionals who have been on both sides of the table and understand that pointing out a problem is only the first step; what financial institutions need from their auditors is a pragmatic, innovative solution.
Comment on this blog post. First and foremost, never forget that you own this process. It can bring third-party assurance, as well as fresh industry or global perspectives.
From The IIA position paper: Every once in a while, especially as organizations look for ways to cut costs, the idea of outsourcing internal audit work goes on the agenda. Sticking to budgets and contracts The primary rationale for outsourcing is that it offers audit teams access to a wealth of technical skills.
This report is based on the three multi-part questions in the survey that relate to the use of third parties.
Having an internal audit partner that is experienced in numerous operational approaches and numerous industries allows for a more comprehensive plan and review.
Ownership of workpapers and use of results should be addressed. This demands that organizations give careful consideration to the content of contract and engagement letters of any outsourcing arrangement.Outsourcing means you can get each of those skill sets for 10 or 20 percent of their time.” Sharni Zoch, Partner, Internal Audit at KPMG Australia says after weighing up each model, many organisations arrive at the decision to co-source.
Changes to the audit planning process, improvements in the reporting structure, innovative audit methodology, use of SMEs and co-source arrangements and staff training are able to address concerns about the cost, quality, and value of in-house teams in a more reliable, sustainable manner than outsourcing.
The benefits of outsourcing or co-sourcing the internal audit function 26 July As well as being cost-effective, augmenting or completely replacing the internal audit function can deliver improved outcomes. The majority of publicly listed companies in Malaysia (54 percent) fully outsourced their internal audit functions inaccording to a survey conducted by The IIA's affiliate in that rapidly growing country.
The survey found that outsourcing is more prevalent in smaller companies and less so in the financial sector. The Institute of Internal Auditors (IIA) is an international professional association of more thanmembers. The IIA is recognized as the internal audit profession's leader in certification, education, research, and technical guidance.
Outsourcing and the role of internal audit | Page 3 Outsourcing is the process of contracting out one or more elements of operations to a supplier of services.Download