In this question, candidates were required to discuss the advantages and disadvantages of outsourcing an internal audit department. This was a knowledge based question; there was no scenario, so candidates were expected to using their knowledge of internal audit and outsourcing to write their answer.

The requirement verb “discuss” indicated that points had to be identified and then explained in the context of outsourcing. Many candidates recognised this requirement and provide eight well explained points. However, many other candidates did not link their comments to outsourcing, which limited the number of marks which could be awarded.

Marks were not “capped” between advantages and disadvantages, so in theory a candidate could obtain eight marks from simply discussing the advantages of outsourcing. In practice, most candidates mentioned at least two disadvantages, although disadvantages were sometimes more difficult to identify and discuss.

Example comments provided and reasons why those comments did not obtain a pass standard are noted below:

Answer comment
“Potential reduction in cost.”

Examiners assessment of comment
Worth 0.5 at best because there is no explanation of why cost will decrease. “Potential reduction in cost because recruitment fees and training costs will be avoided” would be worth the full mark

Answer comment
“The internal audit department will be able to provide detailed reviews of the control systems in the company and recommendations for improvements in those controls.”

Examiners assessment of comment
While correct, this comment is true for any internal audit department. Answers needed to focus more on the outsourcing element of internal audit, not simply generic benefits of internal audit.

Answer comment
“An outsourced internal audit department will be more independent”

Examiners assessment of comment
Agreed – but why is this? Asking this question could elicit the answer “because they don’t work full time at the company and have fewer self-interest or association risks”. Ensuring all comments are explained again helps to pick up easily the full mark per point made.

Other common errors included:

• Not linking the points made to outsourcing internal audit. Many comments made were generic; that is they could apply to any internal audit department. To gain full credit, comments had to relate to outsourcing.
• As noted above, not fully explaining the points made.

Overall, the standard of answers for this question was high indicating that candidates did understand the theory behind the question.