Advantages and disadvantages of outsourcing internal audit functions essay
Why outsourcing internal audits is a big risk. It is almost always better for organizations to stick with an in-house team rather than outsource the internal audit function. Every now and then, especially as organizations look for ways to cut costs, the idea of outsourcing internal audit work comes up. And yet the vast majority of these, in my opinion, internal audit departments reap a number of important benefits when they enter into a sourcing relationship. First, the department becomes scalable. The internal team can easily be supplemented. Internal audit is an assessment or monitoring activity established within an entity as a service to the entity. The functions include examining, evaluating and reporting to management and directors on the adequacy and effectiveness of components of the accounting and internal control systems. Because outsourcing companies provide talent with specific areas of expertise, it reduces the chance of inadequate employee performance. In fact, it ensures continuity in your daily operations, especially during those times when your employee turnover is at its peak. Most importantly, outsourcing your services is a great way to realize that quality suffers. If the organization you hire for supply chain management has no experience in your industry, the quality of your products may decrease. If the organization cuts corners and uses less expensively, some of the negative consequences of outsourcing create additional threat vectors and reduced operational control. The biggest drawback is granting an outside entity access to your corporate network and potentially proprietary information. This adds a certain level of risk. By outsourcing their audit functions, companies can reduce costs, improve operational efficiency and ensure regulatory requirements are met. V. Challenges and Risks of Audit Outsourcing. While outsourcing audits can provide numerous benefits, it also comes with challenges and risks that organizations must consider. Disadvantages of IT outsourcing. Finding the best mix of IT outsourcing resources is quite a journey, and you may encounter some drawbacks along the way. You may: Lose some control over your IT: When you entrust your IT to a third-party service provider, you lose a degree of control. You knew this going in, but once the results show there are differences in the status of internal audit in the two sectors, with public sector internal auditors less likely to report to the chief financial officer. Although a similar amount of work is outsourced, public sector organizations are more likely than private sector organizations to outsource this work to the external auditor. In contrast, the main disadvantages and obstacles to the use of computer-assisted audit techniques were identified. They are associated with high costs and complexity.