Outsourcing Internal Auditing Function:
Internal Auditing Function is an independent consulting activity that assures objective of the organization. Since, it helps in accomplishing the aims and goals of the company in a systematic and disciplined way, therefore it becomes utterly important to carry out this function in a very professional and effective manner. With growing business world and that too at fast pace, new technologies have evolved and so does new techniques and services. Internal Auditing Function outsourcing means to give the comprehensive internal audit service to professional outsourcing companies that will handle this function for the organization. With major challenges of Internal Auditing in Future, the outsourcing function can actually provide with expert and professional services evaluating the company’s key areas and focusing on the key risks at a particular time.
Necessity for Internal Auditing Function Outsourcing:
The pros and cons of outsourcing the Internal Auditing Function of a company has always been a topic of debate. The concerns are connected with the choice of external consultants and are mainly derived from the issues related with the reliability, risks and their responsibility. There are necessary internal audit checkpoints that have to be fulfilled by any Internal Auditing Function Outsourcing arrangement together with the organization and its management. These checkpoints are-
- The objectives of the audit are defined clearly.
- There must be transparency in the scope of services.
- A proper identification of the level of expertise is required.
- The organization must possess the ability to review and agree on the performance metrics of the Internal Auditing Function.
- It provides with assistance for creating programs for assuring quality and improvement.
- Together they are able to plan for the remediation and establish a plan on who will take forward the remediation and the follow-up thereafter.
- Defining clear rules for deliverables like work papers etc.
- Also, a limit can be applied on the outsourcing company regarding the work they provide to the competitors.
The process of Internal Auditing Function and the professionals involved in it must represent an in-house solution that is true and objective fulfilling. And this can be achieved by having right people in the team, correct methodologies and using the appropriate technologies.
Process involved in Internal Auditing Function Outsourcing:
There are five phases involved in an outsourced Internal Auditing Function. These phases are-
- Selection: The organization-wide areas are pre-selected for the assessment of project-risks. This is done for defining the objectives, goals and surface for the Internal Audit.
- Planning: The relevant information is gathered to stipulate the reporting or commanding chain in the organization. An audit plan is drafted based on that with timing and area of scope.
- Execution: At this phase of Outsourced Internal Auditing Function, the fieldwork commences with discussions over observations at status meetings regularly. Any potential findings and observations and recommendations are being provided in these meetings.
- Reporting: In this phase, the recommendations, conclusions and drafted and final report on the findings is being communicated to the board in the organization.
- Follow-up: The findings are considered here at this level by the management of the company. Any remediation action plans are approved by the organization. And if a re-audit is required, then it is applied accordingly.