A new study shows companies plan to outsource more internal audit activities
Internal audit is becoming, well, less internal.
Increasingly, companies are looking to third parties to provide internal audit services. A new study from the Institute of Internal Auditors finds that 56 percent of the North American executives surveyed said their companies use third parties for some internal audit activity. That number is expected to climb, especially among large companies. That’s because 28 percent of North American respondents said they were increasing internal audit outsourcing budgets, while 56 percent said they would remain the same.
Roughly 40 percent of companies with an internal audit department of more than 50 people expect to increase the use of third parties. Companies are using third party internal audit services to provide specialty skills they lack internally, to fill in for staff shortages, and to cover remote business locations.
The report finds that the financial sector is the biggest user of outside help, where 45 percent of organizations use third parties for internal audit activities. This is followed by publicly traded companies, excluding the financial sector, at 43 percent. Overall, companies are relying on third parties to complete about a quarter of their internal audit work.
The report also offers important insights into the best practices when using third-party services, including clearly identifying objectives, scope of services, level of expertise needed, performance metrics, and responsibilities for remediation and follow up. Finally, the report looks at how CAEs can take advantage of knowledge and expertise offered by third-party providers.
“This report offers an important snapshot on the profession’s use of third-party services,” says IIA CEO Richard Chambers. “As demands on internal audit evolve, we will need to turn increasingly to third-party services, so it is imperative that CAEs understand best practices in this area.”
The report bases its findings on the CBOK 2015 Global Practitioners Survey, which drew more than 14,500 respondents from 166 countries earlier this year. The survey is part of the CBOK study, the largest ongoing study of internal audit practitioners and their stakeholders.