Auditing of In- & Outsourcing Partners
– audit procedures regarding internal and external sub-units in accordance with international best practices –
The in- and outsourcing of various sub-processes or also entire process chains within a company often harbors significant risks. With regard to audit examinations, the fragmentation of added-value chains and the associated specialization of individual companies for the achievement of economic effects of scale pose a particular challenge for the internal audit function. After all, it is the internal audit function’s assignment to examine the internal monitoring system in a process-oriented manner – without ultimately neglecting a risk-oriented blank spot in the audit landscape.
Due to the multitude of interfaces that exist, not only can IT-media gaps and the hugest variety of quality standards arise, but also restrictions with regard to the internal audit function’s right of examination. With the practical audit environment, the focus often is concentrated on numerous operative elements related to process-dependent components. As a result, the internal audit function’s process-independent monitor-control right regarding feedback to the executive or supervisory boards for securing a long-term quality level remains neglected.
The challenge exists to effectively audit company-internal process structures, the qualitative functional capacity of their key controls as well as their governance system. In addition, it is particularly important to be able to examine service level agreements (SLAs) pertaining to outsourced activities in a process-oriented manner. The recognition of available SLA-related best practices that comprise the underlying basis for claims between the contracting entity (as “outsourcer”) and the contractor (as “insourcer”) is indispensably linked with this task.
ARC’s active audit support or successful conclusion of its relevant workshops enables participants to implement a practical audit of in- and outsourced processes. Participants are familiarized with methodic procedures to evaluate outsourcing interfaces as well as their typical problem areas and fields of risk. At the same time and on the basis of a sample SLA or an order for effecting a transaction, the course of instruction illustrates how the best-practice concept can serve as a benchmark within a practical audit environment.
- Sourcing as an economic method for concentrating on fields of core capability
- Forms of outsourcing and strategic evaluation of types within the framework of a value-adding architecture for further assessment of risk
- Risk-oriented structuring of the outsourcing process
- The dimension of regulatory supervision with regard to outsourcing – the development and content of fundamental regulatory guidelines:
- EBA Guidelines on Internal Governannce (GL 44)
- as well as EBA Guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP),
- CEBS Outsourcing Guidelines
- BCBS 329 Corporate Governance Principles for Banks
- FCA Outsourcing Checklist
- and Regulation No. 2008/7 with regard to the “outsourcing of business processes in the banking and financial services sector” (Auslagerung von Geschäftsbereichen bei Finanzdienstleistungsinstituten) issued by the Swiss Financial Market Supervisory Authority (FINMA)
- Audit approaches to the responsibilities of a service-monitoring entity
- Typical problem areas and fields of risk related to outsourcing
- Administration, monitoring and control of outsourcing activities
- Formulation of service level agreements and orders for effecting transactions
- Case study: SLAs and orders for effecting transactions
- The internal audit function’s examination responsibilities in connection with major outsourcing measures
- Detailed implementation options for the practical audit environment
- Audit support in the examination of in- and outsourced processes
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