ACCA Strategic Professional · Strategic Business Leader · Management and internal control systems

Norvale Foods plc has a small finance team and no internal audit function. The audit committee asks whether it should set up an in-house internal audit department or outsource. Which factor most strongly favours an in-house function?

Accumulated knowledge of the company's culture, systems and risks favours an in-house function, because permanent staff can monitor continuously and respond quickly. Occasional specialist skills, avoiding recruitment cost and temporary workload peaks are typical arguments for outsourcing rather than building a permanent internal audit department.

AThe need for specialist IT audit skills used only once every three years
BA requirement for accumulated knowledge of the company's culture, systems and risks to support continuous monitoringCorrect
CA wish to avoid the cost of recruiting and training permanent staff
DA short-term need to cover a peak workload in one quarter

Explanation

In-house internal audit builds deep understanding of the organisation and allows continuous, responsive monitoring. Specialist occasional skills, avoiding recruitment costs and peaks in workload are classic reasons to outsource or co-source, not to build a permanent team.

Did you get it right without looking?

One question tells you little. A timed set on Management and internal control systems shows your real accuracy, how long you take and where you lose marks.

Practise Management and internal control systems Free diagnostic mock

More Management and internal control systems questions