Enhancing corporate resilience: The business case for internal audit

In the fast-paced and ever-evolving modern business landscape, adaptability and foresight are critical for success. As companies navigate through various challenges and opportunities, having access to an internal audit function is truly an invaluable differentiator. However, many private companies that are not required to maintain an internal audit function might believe having such a function is out of their reach. The good news is that outsourcing can be a practical and extremely affordable option.

Here's why every company should consider establishing an outsourced internal audit function:

1. Access to specialized experience: An outsourced internal audit function allows companies to tap into a pool of specialized talent and experience to address whatever challenges or opportunities they face. This breadth of knowledge supports thorough audits across different areas of the business, from finance and operations to compliance and risk management.
   
   
2. Objective and independent assessment: An outsourced internal audit function brings objectivity and independence to the auditing process. External auditors can provide unbiased evaluations of the company's systems, processes and controls without being influenced by internal politics or preconceptions. This impartiality enhances the credibility of audit findings and recommendations, fostering a culture of transparency and accountability within the organization.
   
   
3. Scalability and flexibility: Outsourcing internal audit allows companies to scale their audit efforts (up or down) according to their needs and resource constraints. Whether it's conducting periodic risk assessments, addressing specific compliance requirements or investigating emerging issues, an outsourced function offers flexibility in adjusting the scope and frequency of audits. This adaptability enables companies to effectively allocate their own resources and focus on strategic priorities while maintaining comprehensive audit coverage.
   
   
4. Cost-effectiveness: Contrary to popular belief, outsourcing the internal audit function can be an extremely cost-effective solution for companies, especially middle market enterprises. By leveraging the services of a risk consulting firm, companies can avoid the overhead costs associated with hiring, training and retaining internal audit staff. Additionally, outsourcing eliminates the need for investments in audit technology, software licenses and infrastructure, further reducing operational expenses.
   
   
5. Continuous improvement and compliance: Establishing an outsourced internal audit function enables companies to proactively identify and address issues before they escalate into major problems. An outsourced internal audit function brings a fresh perspective to the table, identifying inefficiencies, gaps and potential risks that may have gone unnoticed internally. The outsourced team may also find previously overlooked opportunities. By implementing recommendations from audit reports, companies can enhance their internal controls, streamline processes and ensure compliance with regulatory requirements, thereby mitigating the risk of financial losses, legal liabilities and reputational damage.
   
   
6. Immediate response unit at the ready: Establishing an outsourced internal audit function (even if you only conduct one or two audits a year) provides companies with immediate access to a firm that knows the business if the need arises (such as responding to a cyberattack, a merger or acquisition, the occurrence of a fraudulent transaction, business continuity, etc.). Additionally, with an internal audit function in place, no time is wasted in working through legal to put a contract in place as a master services agreement is already in place. The audit committee also has ready access to the internal audit function to address any of their concerns on a real-time basis.
   
   
7. Alignment with strategic priorities: A common misunderstanding is that internal audit primarily (or exclusively) focuses on compliance-related audits or tasks. However, a highly effective internal audit function is aligned with a company’s strategic priorities and conducts consulting-related engagements to help ensure those priorities can be achieved.