Co-sourcing internal audit has emerged as a highly effective model in the middle market.
Key takeaways
Co-sourcing can enhance audit quality, close capability gaps and drive greater value.
With co-sourcing, companies can create a more resilient and future-ready internal audit function.
As internal audit functions continue to evolve, many organizations are rethinking how they structure and manage this critical capability. For middle market companies in particular, co-sourcing has emerged as a highly effective model—offering the flexibility to scale, the depth to address complex risks and the strategic alignment needed to support business growth.
With co-sourcing, companies can enhance audit quality, close capability gaps and drive greater value from their internal audit programs.
What co-sourcing looks like today
Co-sourcing is not a one-size-fits-all solution. It exists on a spectrum between fully in-house and fully outsourced models. In a co-sourced arrangement, internal audit responsibilities are shared between your organization’s internal team and an external provider like RSM.
A co-sourced model allows your company to:
Retain institutional knowledge while gaining access to specialized experience.
Scale resources up or down based on audit plan needs.
Leverage advanced tools and methodologies without the overhead of building them in-house.
Maintain independence and objectivity while staying closely aligned with business strategy.
As the strategy evolves, co-sourcing is increasingly being used not just to fill resource gaps, but to bring in targeted capabilities—such as IT audit, data analytics, or environmental, social and governance (ESG) assurance—on demand.
Why organizations are choosing co-sourcing
Several factors are driving the shift toward co-sourcing:
Talent shortages: The demand for experienced internal auditors continues to outpace supply, especially in specialized areas like cybersecurity and regulatory compliance.
Rising expectations: Boards and regulators expect internal audit to deliver more insights, faster—often with fewer resources.
Increased complexity: As organizations grow and digitize, the risk landscape becomes more dynamic, requiring broader and deeper audit coverage.
Co-sourcing provides a practical way to meet these challenges without overextending internal teams or compromising audit quality.
Keys to a successful co-sourcing relationship
Based on RSM’s experience supporting co-sourced internal audit functions across industries, several best practices stand out:
Clear role definition: Establishing who owns what—from planning and execution to reporting and follow-up—is essential to avoid duplication or gaps.
Strong communication: Regular touchpoints between internal and external teams help establish alignment, transparency and responsiveness.
Cultural fit: A successful co-sourcing provider should understand your organization’s values, risk appetite and operating environment.
Scalability: The ability to flex resources and experience as needs change is a core advantage of co-sourcing—and should be built into the engagement model.
Real-world benefits
Organizations that co-source effectively often realize benefits beyond audit execution. These include:
Accelerated audit cycles through access to proven methodologies and tools
Enhanced audit committee reporting with deeper insights and benchmarking
Improved risk coverage across emerging areas like AI governance, third-party risk and ESG
Upskilling of internal teams through knowledge transfer and collaboration
In many cases, co-sourcing also helps internal audit functions elevate their role within the organization—moving from a compliance focus to a more strategic advisory position.
The takeaway
As internal audit continues to expand its scope, co-sourcing will remain a valuable strategy for organizations seeking agility, knowledge and impact. Whether supplementing a lean team or building a hybrid model for the long term, co-sourcing offers a path to a more resilient and future-ready internal audit function.
At RSM, we’re committed to helping clients design co-sourcing models that align with their goals, enhance their capabilities and deliver measurable value.
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