Research On Outsourcing The Internal Audit Function

Internal Audit rooted in relation of entrusted economic responsibility. It is now focused on optimization of business management and decision-making, improvement of effectiveness and efficiency of economic activity. It's an essential and important function in modern corporate governance. Since 80s of last century, China has started the implementation of internal audit, which ever played a positive role in strengthening enterprise supervision and improvement of the economic efficiency of enterprises. As economic environment changes and requirements of modern increases, many aspects of our internal audit shortcomings increasingly expose. Only business solve these problems, our internal audit in the modern economic environment can make effective and enough service for business development.The late 20th century as economic communication all over the world become increasingly closer, and division of labor got increasingly sophisticated, many traditional concepts and practices changed. Companies began to outsource some operations or functions. There're twenty years' audit outsourcing practice in foreign and positive results are achieved. This new trend should provide a reference for Chinese enterprises to solve the plight of the internal audit. but we should first do systematic analysis of internal audit outsourcing, and then appropriately make use of outsourcing.This includes four parts:the first part is Introduction, it first outlines study significance and background of the paper, by reviewing the literature summarizes research situation on internal audit outsourcing, followed by introduces innovations in study. The second part first introduces the meaning of internal audit and outsourcing internal audit, the difference between outsourcing internal audit and external audit, and then makes analysis of the motives of outsourcing internal audit:cost-effective, outsourcing help improve audit independence and quality, outsourcing can help accounting firms achieve new business growth, meet the fierce market competition, and establish a brand. The third part describes three forms of outsourcing, highlighting part outsourcing is a more reasonable form. Then it analyzes the core values of internal audit function, introduces work content of internal audit derived by internal audit function, and by the core values makes analysis of whether various work content of internal audit should be outsourced. Finally there're three aspects about the feasibility of outsourcing the internal audit:the possibility of accounting firms' providing internal audit services, internal audit services become a standardized product, the effect of outsourcing internal audit on the independence of external audit. The fourth part stressed that risks may arise on the process of outsourcing internal audit, and proposed risk control measures:choose proper outsourcing units, review outsourcing contract, co-ordination and supervision of internal audit institutions, and build a reasonable quality evaluation system.Outsourcing Internal audit is the result of integration of business' internal and external audit resource. Thus, according to the external environment and business circumstances, appropriate use of internal audit outsourcing doesn't mean to restrict or replace the internal audit, but makes up for disadvantages of internal audit staff through the combination of internal and external audit resources. So that internal audit will play function better, serve the corporate strategic objectives, but also can improve the competitiveness of internal audit institutions.