Internal auditing for “one & all” (second edition)
EY FSO Internal Audit Services_final
1. In-house
1. Highest cost model
2. Longer time frame to achieve desired
transformation
3. Increased and continuous investment
in methodology, people and tools
Co-sourcing
1. Cultural integration of different audit
teams
2. Existing personnel development
challenges
3. HR process around identifying
employees to retain/terminate
Out-sourcing
1. Significant change management
considerations
2. Cultural change for the organization
3. Potential loss of organizational
knowledge/relationships
In-house
1. Least disruptive to employees and
organization
2. Maximize organizational knowledge/
relationships
3. Historical knowledge of IAD is maintained
Co-sourcing
1. Higher productivity while expanding risk
coverage
2. Ability to leverage third party’s investment
in tools, methodology, etc.
3. Consideration given to hiring certain
in-house resources to help with
the transition process.
Out-sourcing
1. Fastest route to desired state
2. Least expensive option – investment
in methodology, technology, training,
recruiting/retention are born by third
party
3. Consideration given to hiring certain
in-house resources to help with the
transition process
Internal Audit Improvement
EY’s vision on Internal Audit improvement is to assist financial institutions
in the transformation to a well-aligned Internal Audit strategy. Internal
Audit improvement can be realized by focusing on strategic planning, the
expansion of the overall risk coverage, and adding value by the usage of
technology and data analytics.
Our vision of a future state of the Internal Audit function includes:
► A mature Three Lines of Defense model. Meaning that the second line
takes on more responsibilities for risk management, controls and
compliance.
► The Internal Audit function will shifts its focus to the identification and
assessment of emerging risks thereby expanding the risk coverage
across the organization.
► Digital transformation of businesses will create an opportunity for the
Internal Audit function. By using digital technology and data analytics
the focus will shift from periodical reporting perspective to real-time
reporting. With new methods that strongly focus on root cause analysis
and tactical change recommendations.
EY can help you to improve the Internal Audit function by leveraging on
the organizational strategy and employing critical enablers throughout. EY
can assist in the development of a well-aligned Internal Audit strategy in
which Internal Audit operations are run like a business, making an impact
and adding value to the whole organization.
Internal Audit co-sourcing and outsourcing
EY’s vision on Internal Audit co-sourcing and outsourcing is to assist
financial institutions and their Chief (Audit) Executives to deliver on their
Internal Audit plan. Institutions can decide to co-source certain elements
of their Internal Audit function or completely outsource their Internal Audit
function to an external party.
EY Internal Audit services is tailored to your organization’s situation,
needs and stakeholders’ expectations. Different Internal Audit strategies
require specific approaches that yield the best benefits for your
organization. Below we have included an overview of the key
characteristics of the EY Internal Audit co-sourcing / outsourcing concept
We have also included the benefits and challenges of these concepts in
comparison with an in-house Internal Audit function.
Financial institutions can also combine elements of the Internal Audit co-
sourcing and outsourcing concepts (as outlined above) and choose to
adopt a hybrid model.
Why now?
Due to increasing regulations and high expectations from stakeholders,
financial institutions are facing more challenges regarding organizational
performance and reputation. A strong Internal Audit function can add
significant impact on long-term performance. Financial institutions are
focusing on the development and transformation of the Internal Audit
function. This requires an alignment with the organization's strategy and
an investment in adequate resources. EY’s Global Internal Audit survey
results show the top priorities for an Internal Audit function as presented
in the figure below.
A strong and solid Internal Audit function helps to secure a financial
institutions’ (future) earnings and enhances the strategic planning of the
organization. As EY Internal Audit services we can assist you by
providing support for the entire Internal Audit cycle, whether it consists
of standard audits (such as compliance audit or implementation review),
complex audits (such as end-to-end process audit or investigations) or
second line effectiveness testing. Our subject matter experts have
performed audits on several topics, including Compliance and Integrity
topics, Regulatory developments (such as MiFID II), Sanctions, Risk
culture, Transaction monitoring, Market Risk and Credit Risk.
In this flyer we will explain how we can work together with your Internal
Audit department for complex Internal Audits (co-sourcing) or how we
can take responsibility for your entire Internal Audit activities
(outsourcing). In addition we can help you to transform your Internal
Audit function to the level of maturity that fits your ambition and is
aligned with the strategic objectives of your organization.
“The success of your Internal Audit function is
dependent on your people. Creating a sound
culture that is aligned with the organizations’
ambitions will see most impact and relevance for
Internal Audit.“
Daniël Smidts, Internal Audit leader Financial
Services.
In-house Co-sourcing Outsourcing
Characteristics
►Resources and
capability retained
within the
organization
►Third-party provider
appointed to support
the organization in the
undertaking of
IA function
►Nature of relationship
is one of support and
joint working
►Responsibility for
activities remains with
the organization
►SLAs in place between
operating units and
third party
►Third-party provider
appointed to
undertake activities
within IA function
►Responsibility
wholly transferred
to the third party
►SLAs in place
between operating
units and third party
Benefits Challenges
The advantage of Internal Audit co-sourcing
and outsourcing
We can contribute with proven methodologies and audit tools providing
your organization access to a variety of resources. As an external party
we present an objective and independent view on your organization,
Audit Committee and management creating an opportunity to provide
new insights.
Why EY Internal Audit Services
EY is working with an integrated approach by having multidisciplinary
teams across our Advisory, Legal, Assurance and Tax services. We have
a proven track record in supporting financial institutions to perform
complex Internal Audits.
Our team is globally connected and our experts include experienced
professionals with a proven set of global tools, techniques,
methodologies and approaches. EY’s culture is known for its integrity,
respect, team spirit, energy, enthusiasm and the courage to build on
relationships based on ‘doing the right thing’.
We tailor the outsourcing / co-sourcing model to your organization and
help you with the implementation focusing on sustainable value, cost
efficiency and balanced risk coverage. Due to our commitment to
innovate and focus on high quality delivery we have become market
leader in the field of Internal Audit services. Therefore EY has an unique
position and can assist you with your Internal Audit improvement
challenges. With our outsourcing / co-sourcing models we stimulate
performance improvement for your organization and increase the return
on your Internal Audit investment.
Leverage work of risk/ control/ compliance functions
Ability to identify and assess emerging risks
Usage of data analytics
Compliant to IIA standards
Maximize usage of technology
Report findings in perspective to risks
Leading Class
Internal Audit
Function
