During the initial part of the 21st century, various regulatory and security acts have been passed due to the several business scandals and other related occurring events. The purpose of these acts is to give confident assurance to shareholders, corporate individuals, and the boards and management of business entities about the operational reliability of these Organisations.
It is important that business entities assess their internal control processes on continuous basis in order to work more proficiently. When they evaluate the quality and improve the effectiveness of these measures, then they facilitate to go in the right direction for success. When an Organisation utilizes the services of outsourcing audit program, it can help in defining areas of improvement as well as provide them information required to achieve its desired goals. This is possible when the auditor presents the organisation with a disciplined way for these purposes. Those business entities that bring in a third party auditor periodically have better chances of improved performance, have better risk management, enhanced regulatory conformity, improved management control and best quality governance methods.
Significance of Internal Auditors over External Auditors
If we want to realize the significance of internal against external auditors, then it is important to clearly understand and consider the difference in both approaches. In light of the external auditor, they keep a particular focus, evaluating primary information, and exploring mainly into the previous records of the organisation. In contrast, when it comes to the internal auditor, they have got a much wider focus consisting of operational objectives, concerns regarding risk management and compliance.
Generally, it is usually complicated or impractical for the team of external auditors to broaden their horizons and offer internal audit assistance and services in the existing regulatory atmosphere and at the same time keeping up the mandatory independence. This factor is critical in the external evaluation process of a company’s business outcomes and reporting. In light of the given fact it is vital for an entity to keep a separate internal audit job consisting of company’s employees or outsourcing audit program to specialists.
Outsourcing Audit Program
Definitely, the practice of outsourcing a few or the entire internal audit program to an third-party firm that works independently presents a company with lots of benefits as compared to keeping an internal audit task comprising of company employees only.
Furthermore, an independent internal audit assessment facilitates in controlling the employment cost associated to the internal audit task. A lot of organisations may lack the amount and cash flow to maintain a full-time audit team. Even in bigger business entities, by means of a combination of company employee’s and professional internal auditors, it is possible to have flexibility regarding occurring costs in this part.
An important benefit of outsourcing audit program is that independent consultants have mostly specialized knowledge in specific industries and offer an in-depth understanding of that particular industry. An organisation can utilize their special expertise to support an internal audit task in a company, in spite of the time or experience of the specific organisation. Independent professionals are mostly aware of the issues, both that are general or industry-specific, that the particular organisation may not be aware of, in this manner by being in a position to offer their assistance across those areas to facilitate in mitigating the risks and potential harmful effect on the company.
Moreover, an independent internal audit evaluation facilitates in having an impartial review in relation to the Organisation’s operation specific to the industry. It gives an opportunity to share new ideas in order to improve the efficiency and effectiveness of business operations, develop internal management systems and decrease risk elements. Likewise, this activity usually causes the development of benchmarks that can be utilized by the company management and its workforce to measure and improve an organisation’s performance.
In addition to that an independent approach can be quite handy for external consulting and careful consideration of best practices for the specific industry. It allows an Organisation to create a series of operational standards that can be helpful for the internal audit team to observe and review conformity which results in a more in depth internal audit function.
Contact us if you are interested in outsourcing your internal audit program and the benefits it brings to your organisation.