Research On Internal Audit Outsourcing Of Small-and-medium-sized Enterprises Based On Transaction Cost Theory

Along with economic globalization and the rapid development of information technology, organizational behavior of enterprise have increasingly been seriously affected. In developed countries, some enterprises gradually outsource some of their non-core business areas, in order to restructure organization and transform processes. On this background, the internal audit outsourcing was becoming popular in foreign countries, since the late 80s,20th century. In China, the banking sector was the earliest one starting internal audit outsourcing. It opened a prelude to internal audit outsourcing at home. At present, both domestic and foreign, outsourcing is an inevitable trend of history. At the same time, the assurance and advisory functions of modern internal audit, is more and more positioning and deepening. The functions are bringing a further integrational advantage of outsourcing, to promote a new round of internal audit outsourcing process.The small-and-medium enterprises (SMEs) have become an indispensable force, In our country's position, it is increasingly important. But in the fierce market competition and the rapid development of informational technology, SMEs are also facing many challenges. A continuous influx of enterprise, and the existing market gradually saturated, in order to survive, they are often at the expense of their own profits and innovation. Moreover, SMEs also face some development bottlenecks, such as difficulties in financing, management models applied mechanically, staffs, execution, etc. Compared to the Red Sea, internal audit, as a value-added services, will undoubtedly become a sea of blue for SMEs. But at present, set-up and operation mechanism of the internal audit agency of SMEs are not satisfactoried. Most of the enterprises only set up part-time internal audit staffs. And even if some set up full-time internal audit staffs, its internal audit function has not been due to play. Therefore, fully using external resources, that is outsourcing internal audit, to improve economy, efficiency, effectiveness of enterprise, might be a wise choice.The article, from the transaction cost theory perspective, combined with their own characteristics of SMEs, analyzes the transaction attributes, outsourcing's strategic choiceing, outsourcing's cost strategy, outsourcing's implementation steps, in the model of risk-oriented internal audit outsourcing. The article attempts to give SMEs advice on theoretical basis and practical framework of internal audit outsourcing.