Page 328 - Accounting Best Practices

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15–12 Outsource the Internal Audit Function
be given small bonuses or recognition awards for any best practices they uncover
and store in the database, which will have them enthusiastically rooting through
business units to uncover new best practices.
Spreading information about these best practices can take several forms. The
most passive approach is to simply have it available in the database, but this
approach requires auditors to actively review the database in their limited spare
time. A better approach is to actively push the information into the field through
the use of newsletters and e-mails to the audit staff. A particularly effective
approach is to e-mail best practice information directly to those business unit
managers who are most likely to use them; by doing so, the managers are more
likely to contact the internal audit department with requests for assistance in
installing the recommended best practices. The driving force behind the success
of best practices dissemination is the use of someone who regularly reviews the
best practices database for “hot” topics, and who also spends time matching best
practice possibilities with various business units. In a small company, this work
should be done by the internal audit manager, though a larger company may
choose to assign the task to a full-time senior audit position to ensure that the
company gains the most benefit from its best practices database.
Cost: Installation time:

15–12 OUTSOURCE THE INTERNAL AUDIT FUNCTION

Some organizations have their internal audit function report to the controller or
chief financial officer. In these situations, the manager of the accounting function
has the additional burden of selecting auditing targets, planning for audit teams to
review them, managing the teams, and acting on their findings. For a larger orga-
nization, this management work can be a considerable additional burden, for
there may be many auditors.
Though it is not possible to completely eliminate all management of the inter-
nal audit function, a controller or chief financial officer can outsource the function,
which removes selected management tasks. For example, giving all internal audit
work to an outside supplier keeps a manager from having to plan each audit or
review the teams as they conduct their work. It still requires a manager to select
audit targets and act on the results of the audits, but at least some activities have
been eliminated. Using an outside auditor carries with it the additional advantage of
reduced travel time to outlying company locations, since an audit firm with many
locations can assign local staff to each company facility. Further, outside auditors
do not have to be paid if they are not working on company-specific projects, nor
does a company have to pay for their ongoing training. These advantages have
pushed a number of companies into the arms of outside auditors.
However, there are problems with this best practice that have raised some ire
in the ranks of internal auditors. One issue is that many companies use their inter-