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Chapter 10

Outsourcing internal audit

5.1 Advantages of outsourcing internal audit

 Greater focus on cost and efficiency of the internal audit function.

 Staff may be drawn from a broader range of expertise.

 Risk of staff turnover is passed to the outsourcing firm.

 Specialist skills may be more readily available.

 Costs of employing permanent staff are avoided.

 May improve independence.

 Access to new market place technologies.

Reduced management time in administering an in-house department.

5.2 Disadvantages of outsourcing internal audit

 Possible conflict of interest if provided by the external auditors.

 Pressure on the independence of the outsourced function.

 Risk of lack of knowledge and understanding of the organisation.

 The decision may be based on cost with the effectiveness of the function being
reduced.

 Flexibility and availability may not be as high as with an in-house function.

 Lack of control over standard of service.

 Risk of blurring of roles between internal and external audit.

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