Internal Audit

How to Optimize Value from an Internal Audit Co-Sourcing Partnership

Co-sourcing the internal audit function helps navigate the modern challenges, including the need for greater agility, subject matter expertise, and resourcing pressure and cost, for the practical steps to optimize the value from the right vendor and make this relationship as seamless, targeted, and cost-effective as possible.

Today’s internal audit team is expected to deliver more value faster in more disciplines than ever. In the need hour, the right expertise in subject matter helps deliver multidisciplinary assurance insights and advisory to identify the risks of technological and social change.

 The internal audit function is becoming the most prudent and cost-effective approach by following the practices to optimize the value of co-sourcing the internal audit function.

Development

Today’s business environment is rapidly changing, redefining the internal audit process and adding value. Assurance audits and finance are now the only means of delivering the value of audits and demand insight across a broad range of audit and advisory considerations. The chief audit executive (CAE) is expected to be a trusted advisor and anticipate future risks related to strategy.

Internal audit teams must recognize diverse issues that impact the business, from cyber risks^[1] and privacy to emerging technologies, economic headwinds, and disruptive pressures from current and potential competitors. Therefore, to be prepared for various scenarios and support organizational leaders in making informed and highly consequential decisions.

Organizations are only afforded multidisciplinary expertise with external audit support. Co-sourcing and services have continued to do so for years.

Co-sourcing should optimize value.

Organizations often recommend clients visualize the model as a value triangle with an internal audit. The management committee and co-source partner add strength and rigidity to the relationship, but only if all the points connect and continuously interact positively.

Most of the loopholes in the audit tend to follow predictable patterns by following the most common steps to add value in co-source relationships.

• Audit culture and strategy.
  When deciding to co-sourcing, many audit executives proceed with a request for proposal and select the lowest-cost vendor. However, this approach may only deliver the desired results with a clear internal audit strategy. 
  Define the capabilities and insights needed to deliver the internal audit strategy and plan: Create a list of loopholes the co-source partner needs to address and then determine the co-source partner for support. Communication with the co-source partner, including attendance at audit committee and management meetings. Service providers whose values must align with the organization’s objectives also address the priority areas and current weaknesses and help to ensure the finances.
• Understanding the business prospects
  Delegating third-party resources to complete the tasks can be tempting. However, understanding the business prospects and clarity on the scope will likely need more time to complete the task cost-effectively.
• Making a road Map
  Co-sourcing partnerships make a roadmap and engagements with the partner. Understanding the co-source partner adds the most value to designing a project that defines clear responsibilities and roles. Also, clarify the planning process, communication and risk assessment with the audit committee or management team, and assist with audit committee reports.
• Taking advantage of third-party objectivity.
  Co-source partners are positioned to deliver insights in the time of need. Acknowledge the existence of institutional gaps and embrace the opportunity at the time of need.
• Co-source partners should understand the industry.
  Use service providers who understand the organization’s needs: Ask prospective vendors for insights during the procurement process. The right partner is knowledgeable in existing and emerging trends and contributes expertise to advance the internal audit objectives.
• Transparency
  • Effective internal audits require complete transparency, trust and access to system, people, and information. The audit team introduced the audit committee and co-source partner and provided an opportunity.
  • Creating a transparent and collaborative environment keeps all stakeholders on the same footing and working toward organizational objectives.
  • Ensure partners and internal audit are maintaining their independence.
  • Independence is essential to check there is no conflicts exist.
• Partners help to manage the documents:
  High-value internal audit functions know that managing the committee’s and management’s expectations is critical. It is also essential that the documents made in statements of work or advisory reports are accurate and timely. Co-source partner and audit team holds a brief idea about extensive audits to determine what worked well and where there may be opportunities for improvement.

Conclusion

A solid and robust value triangle is essential for audit teams to extract value from limited budgets. The audit committee/management and co-source partner each have something uniquely valuable to offer and understands how to reinforce the others. These connection points make one another indispensable and ultimately strengthen the organization.

Also Read:
How Can Co-Sourcing Benefit Businesses?
Important Checklist for Internal Audit of Private Limited
Effective Steps of Performing an Internal Audit Successfully