Comparative pro and cons of Internal Audit outsource versus in-house department.

1. INTERNAL AUDIT COST COMPARISON PROFILE
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Your operating systems get more complex as your organisation grows. That
means you require an internal audit function to assist you in the effective
discharge of your responsibilities by monitoring and promoting effective control at
reasonable cost.
We at FiveWH Corporate Services (Pvt) Limited (“5wh”)i
offer customized internal
audit services – a convenient outsource solution that costs you a fraction of what
it costs you to run an in-house Audit Department.
Here are some of the benefits you derive from outsourcing the Internal Audit
function:-
 Top flight skills: Not only do you get an effective skills-set, you also have
knowledge and research backup from the 5wh “back office” at no extra
cost to you.
 Cost: You get these skills at a fraction of the cost of running an in-house
audit department. That’s because of not only the savings arising out of
staff benefits and administration, but also because as 5wh our costs are
spread across a portfolio of many clients – economies of scale.
 HR: Staff administration is a necessary hassle that many an employer love
to pretend does not exist. When you outsource, you get the HR benefit
while avoiding the administration costs and risks.
 Staffing flexibility: As independent contractors, your relationship with us is
not governed by any labour laws, regulations or pronouncements. It is
simply contractual. We are in, out, in again - as you wish - depending on
your financial and other circumstances.
 Related services: Forensic audit and systems tune-up are skills that many
audit professionals pretend to have. We do have these and other business
skills. We love it when our client CEOs and CFOs resonate their ideas
with us!
 Experience: Because we have clients across many sectors of the
Zimbabwe economy, we have “war stories” to share. We have worked,
and are currently working, with various profit and not-for-profit
organisations.
Compare the cost comparatives in Exhibits A and B belowii
:

2. INTERNAL AUDIT COST COMPARISON PROFILE
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EXHIBIT A : Annual Cost of an In-house Internal Audit Department
Annual Cost
Internal
Audit
Manager
Internal
Auditor
A
Internal
Auditor
B
Internal
Auditor
C
Total
Gross Annual Salary 15,000 12,000 9,000 9,000 45,000
Annual Bonus [thirteenth cheque] 1,250 1,000 750 750 3,750
Allowances:
Transport 480 300 300 300 1,380
Housing 600 450 450 450 1,950
Education 300 240 240 240 1,020
Implied Rent:
Office space 300 300 600
M/V Running Cost 3,600 3,600
Employer Contributions:
Pension 120 75 75 75 345
NASSA 80 50 50 50 230
Medical Aid 150 90 90 90 420
Fuel [$40 per week] 2,000 2,000
Annual Leave 1,250 1,000 750 750 3,750
Telephone/Internet 900 600 600 600 2,700
Other/Overhead: HR, Admin, etc. 120 120 120 120 480
Total 26,150 16,225 12,425 12,425 67,225
Total [1 Auditor - Manager only] 26,150
Total [2 Auditors - Manager + Auditor A] 42,375
Total [3 Auditors - Manager + Auditor A&B] 54,800
Total [4 Auditors - Manager + Auditor A&B&C] 67,225

3. INTERNAL AUDIT COST COMPARISON PROFILE
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EXHIBIT B : Annual Cost of Internal Audit Services Outsourced To 5wh
Annual Cost
Internal
Audit
Manager
Internal
Auditor
A
Internal
Auditor
B
Internal
Auditor
C
Total
Gross Annual Fee 8,000 6,000 6,000 6,000 26,000
Annual Bonus [thirteenth cheque] 0
Allowances:
Transport 0
Housing 0
Education 0
Implied Rent:
Office space 200 200
M/V Running Cost 0
Employer Contributions:
Pension 0
NASSA 0
Medical Aid 0
Fuel [$40 per week] 0
Annual Leave 0
Telephone/Internet 200 200
Other/Overhead: HR, Admin, etc. 120 120 120 120 480
Total 8,520 6,120 6,120 6,120 26,880
Total [1 Auditor - Manager only] 8,520
Total [2 Auditors - Manager + Auditor A] 14,640
Total [3 Auditors - Manager + Auditor A&B] 20,760
Total [4 Auditors - Manager + Auditor A&B&C] 26,880
Cost Profile B as a Percentage of Cost Profile A 40%
Contact us
i
http://www.5wh.co.zw caleb@5wh.co.zw
ii
Source: 5wh Corporate Services Marketing. Data for illustration only.