Internal Audit Outsourcing Decision Theory

Internal audit develops along with the development of entrusted responsibility and it improves operations' economy, efficiency and effect through perfecting the whole enterprise's operation system. Internal audit plays more and more important role in the enterprise as a result of economy development and business complexity. As the fast development of economy globalization, enterprises' organization behaviors suffer severe blow. In order to reengineer organization and transform process, some enterprises in the developed countries outsource their non-core businesses. Under this background, outsourcing the internal audit becomes popular from the end of 1980s.Outsourcing internal audit is the result of society economic development, increasingly division of specialization and aims to better the impact of internal audit and organization's rational choice. However, there are disputes in many aspects of outsourcing internal audit concerning extent, form, developing situation and influences, especially independent problems about auditors. From the enterprise's angle, the paper researches the decision procedure of internal audit outsourcing, tries to solving the research lack both in theoretic and practice fields and inspires development of our country's internal audit outsourcing.The paper includes five parts:First part: Introduction. It introduces the selected motive, research significance, domestic and foreign research situation about outsourcing internal audit, the research technique as well as insufficient innovation.Second part: Outline of outsourcing internal audit and outsourcing models. First, it introduces the implication of outsourcing internal audit and analyses outsourcing motives and advantages it brings. Then, it outlines several outsourcing models for ordinary businesses and extends to flow chart for outsourcing internal audit from the ordinary outsourcing flow chart which is the framework of the whole paper.Third part: First step of outsourcing internal audit decision—environmental analysis. This part begins with goal analysis of organization strategy and internal audit outsourcing and analyses the core values of internal audit functions. This builds the foundation for analysis of core work content. It also illustrates the outer environment for internal audit.Fourth part: Second step of outsourcing internal audit decision—outsourcing content and form analysis. This is the core part of the decision process. On the basis of content and SWOT analysis, it makes a further research of how to choose outsourcing content and form.Fifth part: Third step of outsourcing internal audit decision—evaluation and choice decision of outsourcing contactor. Considering the characters of internal audit, it explains how to select information, establish a scientific evaluation targets system and make a choice of selected contractor.