Certified Internal Auditor (CIA) Part 3: Business Knowledge for Internal Auditing — Question 15

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

Answer options

• A. Outsourced business processes should not be considered in the internal audit universe because the controls are owned by the external service provider.
• B. Generally, independence is improved when the internal audit activity reviews outsourced business processes.
• C. The key controls of outsourced business processes typically are more difficult to audit because they are designed and managed externally.
• D. The system of internal controls may be better and more efficient when the business process is outsourced compared to internally sourced.

Correct answer: B

Explanation

Option B is correct because reviewing outsourced processes allows internal auditors to maintain objectivity and assess the effectiveness of controls implemented by external providers. Option A is incorrect as outsourced processes can still impact the internal audit universe. Option C is misleading; while auditing may be challenging, it doesn't negate the need for oversight. Option D is not universally true, as efficiency can vary based on the specific circumstances of the outsourcing arrangement.