(Accounting Today, 12 August 2011)
In Brief: A company?s internal audit function is uniquely positioned to help embed key controls in outsourcing processes to aid in mitigating the multitude of operational, strategic, and reputation risks associated with the activity, says the writer.
Our View: Despite carefully orchestrated plans for outsourcing transaction-based processes, many companies still fail to realize desired efficiency gains. Risks of key employee turnover, low-quality processing, misaligned pricing, data loss, and limited process improvement opportunities commonly hamper outsourcing success. Efforts to mitigate these risks are tough because the company must manage a third party. Progressive companies collaborate with vendors and deconstruct processes into steps to understand where problems develop, then they build metrics and embed controls where needed. A well-crafted governance model is key to ensuring the vendor relationship realizes the benefits of the outsourcing contract.
Source: http://cebviews.com/2011/08/15/idti-internal-audits-role-in-business-process-outsourcing/