Effective internal control is the foundation of a sound financial institution, and today’s financial institutions are successfully outsourcing all or part of their internal audit function.

By contracting with an independent firm, an institution entrusts its internal audit work to an outside entity but maintains its oversight and ultimate responsibility. An outsourcing agreement can be very beneficial to the institution, as long as it’s properly structured, carefully conducted, and prudently managed. In the process, an institution can gain both operational and financial efficiencies.

Here are five good reasons to consider outsourcing your internal audit function to a qualified firm.

1. You get access to best practices and the latest technologies. An outside provider can bring a broader perspective of risk mitigation and controls to the internal audit task and can introduce the institution to some new best practices. Many firms also rely on improved technologies, which can help institutions better handle increasingly complex issues.
   
   
2. You can concentrate on core competencies. Internal audit activities can consume an inordinate amount of time on the part of  management. Confidently outsourcing the task instead allows managers and boards to focus on more strategic initiatives that also deliver higher returns for the institution.
   
   
3. You receive specialized audit expertise. Outsourcing firms that provide internal audit functions for a variety of financial institutions must continually demonstrate their knowledge of requirements and risks. Financial institutions can benefit from their experience, competence, and up-to-date proficiencies.
   
   
4. You gain cost-effectiveness. Outsourcing allows institutions to remain flexible in their resource allocation and staffing needs, which can save in employee training, turnover, and benefit costs.
   
   
5. You choose services to suit your size and needs. Outsourcing arrangements take many forms, and institutions can select the assignments they’d like performed by an outside firm. Larger institutions with internal audit personnel may desire only specific and targeted assistance, while smaller institutions with fewer resources could rely entirely on the internal audit services of an outside provider.

Regardless of an institution’s size, an effective system of internal control is crucial. An outsourcing arrangement can be a reliable way to enhance the quality of the internal audit function.