- Review and make recommendations with regard to the financial and accounting internal control systems within the Company.
- Check, review, and make recommendation reports on the following broad areas:
(i) Completeness and accuracy of revenue recorded in the books of account.
(ii) Completeness and accuracy with regard to all investment income which may include Interest & Dividend incomes and any other income.
(iii) Assess and report the adequacy of the direct costs and expenses incurred by the company.
(iv) Assess and report on the compliance or otherwise with the financial procedures and policies of the company and/or any other legislative compliance requirements.
(v) Ascertain and assess if the company complies with the laid down procedures and policies regarding sourcing for services and goods for use by the company.
(vi) Consider any other audit area that we may deem necessary.
The audit reporting frequency would be on a quarterly basis or for such period as shall be agreed in the contract.
Merits of Outsourcing Internal Audit Services:
(i) Outsourcing Allows Management to Focus on Core Competencies outsourcing frees management to focus on pursuing more strategic objectives instead of focusing on the day-to-day activities that tend to take a great deal of time with lower payback.
(ii) Economies of Scale Should Result in Cost Savings for the Same Services, or Improved Services for the Same Cost -- Some outsourcing providers can bring in improved technology to assist organizations in dealing with increasingly complex and diverse business issues.
(iii) Flexibility in Staffing leads to better resource allocation & Quality Assurance: Outsourcing allows the organization to take advantage of help when it is needed without having to pay for it when it is not needed.
Generally, external auditing firms are very conscious of quality services and have built a proven process to guide their staff and ensure work is carried out and documented properly. Their reports are well founded and presented.
In addition, their larger pool of skilled resources may enable them to tap into knowledge about best practices and the ways other businesses handle similar problems while honoring and respecting confidentiality requirements.
(iv) Access to Leading Practices -- The argument is that the outside provider has access to a broad array of other company practices and can bring those best practices into your organization. They are also able to perform benchmarking and give advice on "best practices."
(v) A Clear Customer Focus -- The introduction of market discipline creates a customer focus that may be lacking within existing internal departments.
(vi) Organizational Size -- Virtually every organization will attain value from an internal auditing function. However, organizations with small numbers of technical and professional staff may find it difficult to build sufficient expertise in a one - or two-person internal auditing function.
Hence there may be a serious lack in the segregation of duties one of the key internal control requirements. However, the organization can purchase whatever specialized skills it needs from the outsourcing provider.
(vii) Independence & Objectivity: With an internally staffed department there is a concern that the staff may become less diligent, consciously, or not, in the audit and review of areas that they grow comfortable with or perhaps becoming overly friendly with other company staff and executives. Alternatively, personality conflicts and group dynamics within an organization may undermine constructive comments by the internal auditor. However, an outside provider is less likely to lose the objectivity that is critical for the service provided by this function.
Demerits of Outsourcing Professional Services:
(i) For complex business models, an external provider may not know the business as well as an Internal Auditing Department -- Internal auditors develop a unique perspective of the organization. The internal auditing function is often staffed with individuals from other parts of the organization who have developed a broad perspective of the organization and have an institutional knowledge of the corporate culture.
(ii) A valuable management training ground may be lost -- Many internal auditing departments have served as a significant source of future managers in their organizations. Internal auditing exposes talented individuals to significant strategic operations and controls of the organization. This breadth and depth of knowledge prepares them for future management positions.
Internal Audit Reviews