問題：You are an audit manager in NAB & Co, a large audit firm which specialises in the audit of retailers. The firm currently audits Goofy Co, a food retailer, but Goofy Co’s main competitor, Mickey Co, has approached the audit firm to act as auditors. Both companies are highly competitive and Goofy Co is concerned that if NAB & Co audits both companies then confidential information could pass across to Mickey Co.
　　Goofy Co’s year end is 31 December, which is traditionally a busy time for NAB & Co. Goofy Co currently has an internal audit department of five employees but they have struggled to undertake the variety and extent of work required by the company, hence Goofy Co is considering whether to recruit to expand the department or to outsource the internal audit department. If outsourced, Goofy Co would require a team to undertake monthly visits to test controls at the various shops across the country, and to perform ad hoc operational reviews at shops and head office.
　　Goofy Co is considering using NAB & Co to provide the internal audit services as well as remain as external auditors.
　　(b) Discuss the advantages and disadvantages to both Goofy Co and NAB & Co of outsourcing their internal audit department.
　　解析：(b) Advantages of outsourcing Goofy Co’s internal audit department
　　Staffing
　　Goofy Co needs to expand its internal audit department from five employees as it is too small; however, if they outsource then there will be no need to recruit as NAB & Co will provide the staff members and this will be an instant solution.
　　Skills and experience
　　NAB & Co is a large firm and so will have a large pool of staff available to provide the internal audit service. In addition, Goofy Co has requested that ad hoc reviews are performed and, depending on the nature of these, it may find that the firm has specialist skills that Goofy Co may not be able to afford if the internal audit department continues to be run internally.
　　Costs
　　Any associated costs such as training will be eliminated as NAB & Co will train its own employees. In addition, the costs for the internal audit service will be agreed in advance. This will ensure that Goofy Co can budget accordingly.
　　As NAB & Co will be performing both the external and internal audit there is a possibility that the fees may be reduced.
　　Flexibility
　　With the department being outsourced Goofy Co will have total flexibility in its internal audit service. Staff can be requested from NAB & Co to suit Goofy Co’s workloads and requirements. This will ensure that, when required, extra staff can be used to visit a large number of shops and in quieter times there may be no internal audit presence.
　　Additional fees
　　NAB & Co will benefit from the internal audit service being outsourced as this will generate additional fee income. However, the firm will need to monitor the fees to ensure that they do not represent too high a percentage of their total fee income.
　　Disadvantages of outsourcing Goofy Co’s internal audit department
　　Knowledge of systems
　　NAB & Co will allocate available staff members to work on the internal audit assignment, this may mean that each month the staff members are different and hence they may not understand the systems of Goofy Co. This will decrease the quality of the services provided and increase the time spent by Goofy Co employees explaining the system to the auditors.
　　Independence
　　If NAB & Co continues as external auditor as well as providing the internal audit service, there may be a self-review threat, where the internal audit work is relied upon by the external auditors. NAB & Co would need to take steps to ensure that separate teams were put in place as well as additional safeguards.
　　Existing internal audit department
　　Goofy Co has an existing internal audit department of five employees. If they cannot be redeployed elsewhere in the company then they may need to be made redundant and this could be costly for the company. Staff may oppose the outsourcing if it results in redundancies.
　　Cost
　　As well as the cost of potential redundancies, the internal audit fee charged by NAB & Co may, over a period of time, prove to be very expensive.
　　Loss of in-house skills
　　If the current internal audit team is not deployed elsewhere in the company valuable internal audit knowledge and experience may be lost; if Goofy Co then decided at a future date to bring the service back in-house this might prove to be too difficult.
　　Timing
　　NAB & Co may find that Goofy Co requires internal audit staff at the busy periods for the audit firm, and hence it might prove difficult to actually provide the required level of resource.
　　Confidentiality
　　Knowledge of company systems and confidential data will be available to NAB & Co. Although the engagement letter would provide confidentiality clauses, this may not stop breaches of confidentiality.
　　Control
　　Goofy Co will currently have more control over the activities of its internal audit department; however, once outsourced it will need to discuss areas of work and timings well in advance with NAB & Co.