A business needs to see itself through a big mirror – Internal audit reviews

Internal audit is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations.

Internal audit reviews enable businesses to have a strong and adequate system of internal controls; enhance compliance with policies and procedures and sound business practices; among other benefits.

Internal audit plays a critical role in a Company’s operation and Governance structure. It is a key monitoring mechanism for which entities can benefit as follows:

  1. Offers risk management and safeguard against potential fraud and abuse;
  2. Evaluates the effectiveness of processes and controls of the company;
  3. Ensures compliance with laws and regulations;
  4. Provides management and the board of directors with a value-added service where flaws in a process may be identified and corrected prior to external audits;
  5. Enhances the efficiency of operations; and
  6. Allows management to explore specific areas of the entity’s operations.

Organizations are increasingly choosing to outsource, either completely or partially. Internal audit outsourcing arrangements may take the following form;

Full outsourcing

The entire function is carried out by an external service provider usually a professional firm.

Co-sourcing

The company outsources the supervision of the internal audit team and reports to the audit and risk committee (ARC).

Capacity building

The company outsources the set-up of the internal audit function including the team and processes.

Outsourcing has its benefits as follows:

  1. Professional and timely reporting;
  2. Cost and time effective thereby freeing up internal resources;
  3. Better internal response and acceptance of findings and suggested opportunities for improvement;
  4. Reduces the organization’s investment in continual training on changing requirements or frequent turnover of internal auditors; and
  5. A fresh set of expert eyes from outside the organization which is independent, objective, and unbiased.

Internal audit is a key function in ensuring that organizations attain both operational and strategic objectives efficiently and effectively. Outsourcing this function allows entities to reap the benefit of independent oversight, as well as the expertise and skills necessary to carry out the audit. More importantly, it helps entities focus on what they do best – run their business!

For more information on the outsourcing options, reach out to our risk management team or your RSM contact.