6 questions you need to ask about internal audit outsourcing

Faced with labor shortages and an unsteady economy, more organizations that used to perform internal audit functions in-house are turning to outsourcing. However, knowing whether outsourcing an internal audit is right for your company requires thorough and thoughtful analysis. In this article, we answer a handful of the questions we most often hear from our clients to help with your deliberation.

Q: Why should we consider outsourcing our internal audit function?

A: There are a variety of reasons organizations outsource their internal audit functions, from cutting costs to labor shortages. We’ll delve deeper into other reasons throughout, but one primary motivation for outsourcing is the internal audit function’s purpose at the organization has evolved and its value has grown.

Traditionally, internal audit has been focused on compliance. But now companies are using it to help with strategy and growth. Instead of looking backward, they’re using the internal audit to look forward—as a windshield rather than a rearview mirror. It’s a valuable approach that requires experienced auditors; the kind of professionals an outsourcing provider already has on its team.

Q: Shouldn’t we hire our own auditors and have them on staff?

A: Some companies have full-time teams handling their internal audit functions, but it’s become harder to hire and retain those employees. Skilled talent is at a premium right now and hiring those experienced candidates is expensive. You’re also competing against organizations of all sizes, which can pose a real challenge for middle market companies.

By outsourcing your internal audit function, you can eliminate the need to search, locate, interview, hire and retain those employees. And you don’t have to concern yourself with all the additional staffing expenses like training, insurance, or benefits. With an outsourced provider, you start on day one with a full team of professionals whose combined experience offers a breadth and depth of knowledge very difficult to assemble otherwise.

Q: Doesn’t outsourcing complicate the process and communication?

A: On the contrary, outsourcing your internal audit should simplify and strengthen the process. An experienced outsourcing provider can meet all your needs, regardless of the challenges that arise. A skilled firm will have a broad range of advisors at the ready in any field—from cyber to supply chain—so you don’t have to hire more people in-house or outsource to multiple vendors.

An experienced provider like RSM employs thousands of internal audit professionals around the world who already have experience communicating with senior managers, external auditors, an audit committee, and a board. If you have turnover within a small in-house staff, you lose all that institutional knowledge and have to find a way to manage while trying to hire and replace that person. But at an outsourcing provider like RSM, its deep bench of internal audit professionals ensures seamless continuity.

Q: How else does an outsourcing provider add value?

A: It isn’t just that an outsourcing firm has more advisors and subject matter experts. An outsourcing provider helps to save time and money when it comes to the extensive training those advisors receive. For example, when you implement new software, your company incurs thousands of hours of training and hundreds of thousands in costs to upskill the in-house team.

However, when you outsource your internal audit function, those outside professionals come to the job already trained and knowledgeable on that new software. Your third-party provider is already utilizing that software with other clients. They aren’t just trained in it; they’re experienced in it.

Another real-world example is when you have a specialty audit. You may have professionals on staff, but a specialty audit can still be outside their comfort zone. Outsourcing allows a trained partner to come in already up-to-speed in IT, privacy, ESG, supply chain, fraud, etc. You once again save the time and expense of training your staff to get them to the level of an outsourced specialist.