Financial Services Internal Audit
Kroll’s Financial Services Internal Audit practice has specialist teams with subject matter experts who help our clients properly manage their major risks. We provide value-adding ideas and solutions to help achieve your business objectives.Contact Us
We can create and manage a variety of internal audit services for organizations of all sizes, from one-time assurance assessments over major risk areas to the creation and delivery of strategic internal audit programs. We collaborate with your management to identify problems, offer realistic ideas and assist our clients in implementing the most appropriate controls.
Our team of over 300 financial services professionals services more than 1,200 clients based in key financial markets around the world, including the UK, Europe, the Americas and Asia Pacific. They can offer industry-leading insights and pragmatic solutions to the management of your key risks.
Internal Audit Challenges
Increased regulatory and stakeholder demands have increased the need for organizations to ensure they have adequate independent and objective assurance over the effectiveness of their internal controls.
These pressures are increased through difficulties in attracting and retaining specialist skills covering all areas of risk and ensuring audit plans are aligned to changing business risk profiles.
Kroll’s Internal Audit Services
Our internal audit solution delivers a tailored approach to meet our clients’ needs. We recognize that the solutions to our clients’ challenges vary by organization type, size, culture and regulatory environment.
- Outsourcing: For many organizations, fully outsourcing their internal audit requirements is a cost effective way to achieve effective internal audit coverage that can draw on the wide range of capabilities needed to assess different areas and risks. We can offer access to the full range of Kroll’s capabilities and deep financial services sector experience through our Outsourced Internal Audit Service.
- Co-sourcing: We can provide Co-Sourced Internal Audit support, supplementing your own resources with subject matter expertise in all areas of regulatory, technology and business risks.
- External Quality Assessment (EQA) & Advisory: Kroll’s Internal Audit Quality Assurance professionals help organizations evaluate conformance with The International Standards for the Professional Practice of Internal Auditing and can provide advice to improve internal audit performance and services.
Frequently Asked Questions
Is it a requirement for financial services firms to have internal audit?
A firm should, where appropriate and proportionate in view of the nature, scale and complexity of its business and the nature and range of its financial services and activities, establish and maintain an internal audit function, which is separate and independent from the other functions and activities of the firm.
Can internal audit be outsourced?
Internal audit work was traditionally done mostly by in-house staff. This has altered over time, and many firms now outsource their internal audit function entirely or in part. For modern internal audit functions to be effective and complete, a wide range of talents are required. A company may only have a few internal auditors, but their duties may call for knowledge of a wide range of specialized skills, including IT audit, data mining, data analytics, and—depending on the industry and the size of the company—in-depth familiarity with various regulatory frameworks. Finding, keeping and investing in people with specialized skills may be challenging and expensive.
Many companies outsource the internal audit function to some extent to get around this problem.
What is the Internal Audit Financial Services Code of Practice?
The Internal Audit Financial Services Code of Practice was first issued by the Chartered Institute of Internal Audit in 2013. It aims to enhance the overall effectiveness of internal audit and its impact within organizations operating in the financial services sector in the UK and Ireland. Its recommendations can be regarded as a benchmark of good practice against which organizations can assess their internal audit function.
Who should the internal audit function report to?
Best practice suggests that the internal audit activity should have a dual reporting connection in order to maintain openness and prevent collusion and conflicts of interest. For strategic direction, reinforcement and accountability, the Chief Audit Executive (CAE) should have their direct reporting to the organization's most senior oversight group, generally the audit committee. For aid in setting up direction, support, and administrative interface, the CAE should have a secondary reporting line to the Chief Executive.
What is internal audit co-sourcing?
Co-sourcing is where a company's internal audit department engages with an externally contracted internal audit service provider and work together to complete elements of the internal audit plan. Through co-sourcing, the internal audit division can collaborate with a reputable internal auditing company, giving access to specialist skillsets not found within the in-house team or to meet resource shortages.
What is the key difference between an internal auditor and external auditor?
Internal auditors are typically part of the organization, though this role can be outsourced. Their objectives are determined by professional standards, the board and the management. Their primary clients are the management and the board. External auditors are not part of the organization but are engaged by it. Their objectives are set primarily by statute and their primary client—the board of directors.
The internal auditor's scope of work is comprehensive. It serves the organization by helping it accomplish its objectives and improve its operations, risk management, internal controls and governance processes. Concerned with all aspects of the organization—both financial and non-financial—the internal auditors focus on future events as a result of their continuous review and evaluation of controls and processes. They are also concerned with the prevention of fraud in any form.
The primary mission of external auditors is to provide an independent opinion on the organization's financial statements. Their approach is historical in nature, as they assess whether:
- The statements conform with generally accepted accounting principles
- Fairly present the financial position of the organization
- The results of operations for a given period of time are accurately represented
- Whether the financial statements have been materially misstated