It’s Hard to Get a Qualified Provider And Stick To Budget and Contracting Preferences
In most cases, audit committees and the CFO seek a single vendor contract that costs roughly the same as what they spend on an in-house department, and that gives them flexible access to scarce skills, rather than having to employ expensive specialists full time.But this can lead to some uncomfortable trade-offs.
For example, the best way to get flexible access to scare skills is by using multiple vendors – including smaller (regional) accounting firms or specialist consultants — which would lose the administrative simplicity of a single contract.
The “Big 4” audit firms can provide services under a single contract but, given a lot companies use these firms as their independent external auditors, this can limit options to only one or two of them. The involvement of a Big 4 firm in internal audit services will be questioned if the firm also acts (now or in the future) as tax advisor, external auditor, or consultant to the company.
It’s Hard to Set Up a Satisfactory Outsourcing Contract
Organizations who do find a qualified supplier, or collection of suppliers, must overcome many legal and regulatory hurdles:
- Internal audit outsourcing may require regulator approval in certain sectors or jurisdictions prior to appointing an outsourced provider and regularly thereafter.
- Audit teams will need to address concerns about whether auditors from the outsourced firm will be working with competitors in between assignments or after the contract ends. Asking for the same person for multiple audits is difficult for the precise reason (the flexible access to skills) that outsourcing is attractive to begin with.
- Within the agreed contract terms and after any minimum spend the work will be treated a variable cost, as outsourced staff are only used when needed. It is vital, therefore, to have clarity on permissible overruns, work variations, travel and expenses (T&E), and extra costs.
- Audit teams will need to manage differences in the working practices (e.g., hours worked, working style, T&E) used by outsourced providers and the policies and norms followed by company staff.
- There must be absolute clarity about contract terminations; the triggers for termination and the process to transfer auditing back in-house or to another outsourced provider. The contract must clearly define ownership of audit working papers, audit reports, and the like. Find out if you will be able to access them following termination of the contract.
- Budgeting and planning will be complicated after the first year of the engagement, as the outsourced provider will conduct the risk assessment and audit planning, which will then be difficult for management and the audit committee to challenge.To know more visit our site http://allindiayellowpage.com/.