Co-sourced Internal Audit
Many companies have gone on “crash diets,” using outsourcing to shed non-core tasks such as internal audit to outside vendors. In the process they’ve lost day-to-day control over a department to a professional service firm and often gained new problems. Proposed solutions from outside consultants—strangers to the organization—don’t always work. As a result, quality, profitability and employee morale can suffer.
Co-sourcing is another way to get a company into shape, trimming costs while maximizing internal audit capabilities and still retaining control.
Since our focus is with Small to Mid-Sized entities (SME’s) only, ECS Consultants LLC is well suited to perform co-sourced audit projects based on the needs of our clients. In house auditors retain responsibility for the internal audit process, which, in turn, allows us to be called on to provide specialized technical skills and personnel. Our team provides support to companies that don’t have the capacity to perform all its internal audit tasks.
Our internal audit co-sourcing solutions enable SME organizations to determine how to best fit not only their project needs, but also their budgets. Carrying underutilized Full Time Equivalents (FTEs) in terms of salary and benefits for an entire year can be very costly, not only for an Internal Audit Department but for an organization as whole.
Few Common Procedures to Select a Co-Sourced Firm
It is important that the executives and accounting team take into consideration the following factors before they decide to co-source a particular project activity:
Dynamic contract arrangements
The agreement between ECS Consultants LLC and the service provider need to be flexible enough to accommodate the evolving needs of our team. For example, if sample size has to be increased after initial field work, the agreement should be flexible that the provider can meet those needs. Or, there could be a case that ECS Consultants LLC has to delay the fieldwork to meet an emergency, and there should be provisions that ECS Consultants LLC does not get charged for ideal time.
Selection of consultants / auditors
Just because the co-sourcing provider is a big name in its chosen field, it does not mean that the individuals they assign to serve your organization are the best. Executives should ensure that the auditors assigned to them are of a certain caliber and possess adequate technical knowledge to meet the demands of audit. This is the most important aspect in the co-sourcing model. When the consultant has started on an assignment and if any doubts arise as to their technical expertise, a replacement will cost more time and may affect the quality of the output. It is better to get the consultant screened before the commencement of assignment.
ECS Consultants LLC needs to check the quality of the work delivered by service providers so that they meet their internal guidelines. Work by a big firm does not necessarily assume that documentation of issues analysis are in the correct format; filed the work papers in the appropriate location; prompt follow up on the action plans.. This issue is generally picked up by a subsequent auditor who is unable to find the document in the correct place or when certain issues are not cross-referenced appropriately.
ECS Consultants LLC has to ensure co-sourced provider brings more to the table by way of industry best practices, emerging themes, views from the regulators etc. This will enhance the in house audit team’s knowledge and will provide continuity to the audit once the co-sourced audit is completed.