What is co-sourcing the internal audit function?

The Internal Audit function has experienced an increasing level of relevance over the last years accross industries and types of organizations. As a consequence of numerous cases of internal control failures, fraud and risks not properly managed, which have impacted not only the ability of an organization to deliver the expected value and return to its stakeholders but also its survival,

regulators over the world have expanded their level of scrutiny over both the financial information and the internal control framework at companies.

But this is not the only reason behind the necessity of having a supervising function like Internal Audit in an organization. Internal Audit provides assurance to the board of directors that the risks a company is facing are properly mitigated, evaluates the level of compliance with internal and external regulations, identifies potential gaps and emerging risks, and finally ensures that action plans are implemented to mitigate the potential consequences of those risks.

However, many organizations face difficulties when trying to build their own Internal Audit function. The most common ones are budget restrictions to create a new non-revenue team and the lack of proper expertise to perform the job.

This is when Co-sourcing the Internal Audit function comes into place. The idea behind is to combine existing resources within the organization with an external partner that provides the expertise in performing internal audit projects. Building such a mixed team benefits from the business understanding of the existing members of the organization that are allocated to this new team, and also from the best in class practices that provides the external expert.

The increased benefits of this model , as opposed to building a fully internal team are the following:

• Budget efficiency: Internal Audit projects can be budgeted on a yearly, hourly or project basis, and the organization only pays for the services it needs, as opposed to hiring full-time employees that represent a constant commitment and higher labor costs.

• Niche expertise: The Board of Directors receive a wider range of deliverables with an increased level of expertise per topic, addressing the concerns and expectations of the most sophisticated leaders.

• Internal consulting: As a consequence of the increased level of business understanding and its associated risks, co-sourced Internal Audit teams are well positioned to provide additional strategic analyses that help high executives make well informed decisions.

• Problem solver in charge: Acting as the necessary coordinator to move forward with ideas, projects or implementations that have stallen thanks to the industry expertise and benchmark that the external expert provides.

Archer Adelman provides the required expertise to build co-sourced Internal Audit functions that deliver results at the highest standards. Just get in touch to have a conversation about it.