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Question 79

Which of the following statements is true regarding outsourced business processes?

Outsourced business processes should not be considered in the internal audit universe because the controls are owned by the external service provider.

Generally, independence is improved when the internal audit activity reviews outsourced business processes.

The key controls of outsourced business processes typically are more difficult to audit because they are designed and managed externally.

The system of internal controls may be better and more efficient when the business process is outsourced compared to internally sourced.

Correct Answer: B

Generally, independence is improved when the internal audit activity reviews outsourced business processes. This is because internal auditors can objectively assess the controls and performance of the external service provider without being directly involved in the day-to-day operations, thus maintaining an unbiased perspective.

Discussion

ThilaOption: C

I think the answer should be C

Knot_Theory

Yeah, it's a strange answer. While it COULD BE better designed, that is certainly true, it is much less certain that D will be true than that C will be true.

DomiiiOption: B

. B. This statement is true. When the internal audit activity reviews outsourced business processes, it tends to enhance independence. This is because the internal auditors can assess the controls and performance of the external service provider objectively, without being directly involved in the day-to-day operations. C. This statement is not necessarily true. The difficulty of auditing key controls in outsourced business processes can vary depending on factors such as the nature of the process, the level of documentation and transparency provided by the external service provider, and the access granted to the internal auditors. D. This statement is not necessarily true. The efficiency and effectiveness of internal controls in outsourced business processes can vary.

Adarshiia

source

yomangOption: C

It definitely feels like it could be C or D; however, I can't find any evidence-to-the-contrary that would suggest it is TYPICAL for an outsourced business process to be more difficult to audit. In fact, it may actually be easier in some cases because that outsourced company likely SPECIALIZES in the field that the company needs help with, ergo: they do a BETTER job and would be easier to audit. With Answer D, it's the case in point that I just made - they do a better job than your internal folks. For instance, if you hired a limo service to drive your CEO around - they specialize in driving limos, vs. having an employee who's never driven a limo before.

iweihermueller

I guess it has to do with the fact that in case of outsourcing you have less control processes to implement. You might just have to watch the SLA or something like that and not the whole process