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INTERNAL AUDIT FUNCTION |
Internal Audit is an independent,
objective assurance and consulting activity
designed to add value and improve an organisation’s
operation. The Internal Audit function should
be independent of the activities they audit
and should be performed with impartiality,
proficiency and due professional care.
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OUTSOURCING
THE INTERNAL AUDIT FUNCTION
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Nowadays, it is difficult
for the GLCs and other Public Companies
to get the right and competent internal
auditors that can add value to management.
It is also expensive to maintain an internal
audit function consisting of employees.
Therefore, most of the GLCs and other Public
Companies such as Perbadanan Nasional Berhad,
Pernas International Holdings Berhad, Telekom
Malaysia and Syarikat Perumahan Negara Berhad
has outsourced their internal audit function
to professional accountancy firms that offer
internal audit services.
* Interpretation
of Standard 1210.A1 from the International
Standards for the Professional Practise
of Internal Auditing
1210.A1 The
chief audit executive(CAE) should
obtain competent advice and assistance if
the internal audit staff lacks the knowledge,
skills, or other competencies needed to
perform all or part of the engagement.
The internal audit activity should engage
the services of outside service providers
who are qualified in disciplines such as
accounting, information technology, economics,
finance, taxation, mergers and acquisitions,
risk management, and such other
areas as needed to meet the internal audit
activity’s responsibilities
An outside service provider may be engaged
by the Board, Senior Management or the chief
audit executive (CAE)
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| Advantages
of Outsourcing the Internal Audit Function: |
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Saving in direct and
indirect costs such as:
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Office space and other
support facilities including furniture
and fittings, office equipments and
stationery. |
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Staff related costs including training,
salary, EPF, SOCSO, Annual Leave, Sick
Leave, Overtime expenses, Allowances
also Bonus. |
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Other overheads such as utilities
expenses.
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Outsourcing can provide
an immediate internal audit department.
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Available
Resources - Appropriate internal
audit resources may be scarce or unavailable
in certain situations and for a number of
reasons.
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Size
of the Organisation - Both large
and small organisations may take advantage
of outsourcing alternatives. Common reasons
include staff shortages, coverage of remote
business locations, special projects and
the inability to hire permanent or full
time internal audit staff.
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Independence
– The external team is free from interference
compared to an internal team. They will
not be influenced by management during the
course of their audit and will enable them
to furnish Management with an independent
analysis, appraisal, counsel and information
on the activities they review.
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Professional
Expertise – Professional
firms have qualified accountants, and experience
expertise in related fields. They are professionally
trained in performing internal audit functions
of the company and have appropriate levels
of expertise.
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Professional
firm also has specialist skills
and can assess what management
requires them to do. As they are external
to the operation, this will not cause operational
problems.
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Continuity
of operation – There are
always staff to continue the duty if one
personnel is not available compared to limited
key staff if the Company has its own internal
audit department.
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Additional
areas to be covered by external
team compared to internal team as they have
more exposure in the field and this will
improve organisation’s focus and objective.
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The service contract
can be for the appropriate time scale.
For example, a two week project, a month,
etc.
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The professional
firm is responsible for professional training
of its staff and not the GLC.
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CONCLUSION
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Outsourcing
the Internal Audit Function offers more
advantages when compared to traditional
in-house staffing. |
