Audit Outsourcing to Improve Your Audit Function and Reduce Cost
Organisations that engage in audit outsourcing services, from the most uncomplicated single supplier relationship to complex global supply chains, seek to gain an advantage. However, in finding this edge, organisations may overlook risks which they wrongly believed they have thrown “over the fence” through outsourcing. Ultimately, reputational damage is done to the commissioning organisation and there are many obstacles and impediments to the effective use of third parties in the delivery of an organisations business.
There should be an appetite at the board and senior management level for assurance that the risk of audit outsourcing is being managed in a way that the organisations achievement of its strategic objectives is not compromised. Over time audit outsourcing is likely to become a regular feature of internal audits in all sectors.
The Benefits of Audit Outsourcing
- Provide the organisation with a higher level of assurance and risk coverage.
- To provide added value and fill gaps in skills and talent.
- Offer short and long term cost flexibility and scalability.
- Save the organisation between 20-40percent in cost.
- Audit outsourcing boost operational efficiency and performance.
- Identify and manage emerging risks more effectively.
- Provide broader skills sets and more in depth industry specialisation on an as needed basis.
- Supply intellectual capital, offering proactive insights and recommendations on leading practices.
- Provide access to leading edge tools and methodologies, such as data analysis.
- Redeploy valuable internal resources toward core business activities.
- Execute on business strategy more efficiently and achieve strategic goals and objectives.
An audit outsourcing service provider can offer a consultative mind set on a range of risks and issues, as well as industry specific leading practices and knowledge acquired by working with other clients.
Up until the early 1990s, it was not unusual for companies to have internal audit functions adequately catered for in-house. But in an attempt to rationalize resources and implement a more dynamic risk environment at a reduced cost, dedicated in-house audit functions have progressively given way to varying forms of audit co-sourcing or outsourcing options.
Apart from reducing operating expenditure, many companies find that audit outsourcing or even co-sourcing internal audit expertise to specialists better equipped to cater for a fast changing regulatory environment and heightened exposure to fraud, leads to improved service levels, plus a better return on investment.
In addition to the knowledge transfer to help raise the competency of full time employees and a variable cost arrangement, other benefits of outsourcing or co-sourcing include access to significantly higher resources, immediate execution of work using pre-existing methodologies, plus greater objectivity and independence.
Audit outsourcing is an attractive option for organisations that either needs to quickly establish an internal audit function or struggle to maintain a high quality service internally, especially in light of an ever changing regulatory environment. Organisations that don’t want to invest in appropriate levels of audit talent internally can choose to access significantly greater skills externally while having the ability to shrink or expand their internal audit activities to meet the ongoing demands of their business. As businesses become more complicated and as organisations demand greater value from internal audit, the internal audit’s functions are increasingly stretched to do more with less. Audit outsourcing can help the internal audit department meet this array of demands, from reducing cost to improving performance and boosting operational efficiency. Outsourced internal audit functions can also provide insights beyond assurance and compliance by offering a genuinely strategic capability.