To outsource or not to outsource? a study on the internal audit function sourcing decision of selected businesses in Metro Manila

• Main Authors: Asilo, Mon Reih, Manarin, Lew Earvin, Razon, Zean Kristian, Tieng, Michael Alfonso
• Format: text
• Language: English
• Published: Animo Repository 2014
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/11817
• Institution: De La Salle University

As a result of the heightened pressure brought by the continuous evolution and restructuring of the business world, enterprises are challenged to seek innovations and other strategic moves to maintain their integrity and reputation in their respective industries. It is of great significance to recognize the role of internal audit in keeping up with the fast-paced changing environment. From historically focusing on compliance, it has expanded to helping businesses create value through its involvement in top-level decision making. Because of increasing significance of the IA function as part of every firm’s management control structure, this study has decided to assess the internal audit sourcing decisions of companies in order to determine how well an in-house and an outsourced IA function achieve the IA objective of improving the effectiveness of companies’ risk management, control and governance process. One of the chief concerns in the carrying out of this study is the benefits that will be acquired by individuals, groups and sectors, specifically the managers and owners of the selected businesses, future researchers, academe, and the respective auditors that perform the IA function whether internalized or outsourced. Population of this research is limited to the selected businesses in Metro Manila that have an internal audit function. Convenience sampling was utilized in choosing the respondents who will participate in the study. A descriptive research design served as the schema in drawing out the methodology of this paper. T-test formula that assumes that two samples come from populations in which variances are essentially equal is used to test the difference between two means where samples and population variances are unknown. A level of significance of five percent will be used to test whether null hypotheses will be rejected or not. IA has become a prime candidate for strategic sourcing decisions because of the increasingly competitive economy and its expanding role in the management control structure of every organization. Because of this, it is important to recognize the need for evaluating whether to retain or externalize this function to ensure that it creates and preserves business value for companies who have it.