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Outsourcing The I.T. Function

The document discusses the benefits, risks, and audit implications of outsourcing IT functions. Some key benefits include improved core business and IT performance as well as reduced IT costs. However, risks include failure to perform by the vendor, security issues, and loss of strategic advantages. From an auditing perspective, SAS 70 reports allow an organization's auditors to review the controls at the outsourced IT vendor.

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Wilbert Carlo Racho
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68 views6 pages

Outsourcing The I.T. Function

The document discusses the benefits, risks, and audit implications of outsourcing IT functions. Some key benefits include improved core business and IT performance as well as reduced IT costs. However, risks include failure to perform by the vendor, security issues, and loss of strategic advantages. From an auditing perspective, SAS 70 reports allow an organization's auditors to review the controls at the outsourced IT vendor.

Uploaded by

Wilbert Carlo Racho
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Outsourcing the I.T.

Function
Benefits of I.T. Outsourcing

 Improved core business performance


 Improved I.T. performance
 Reduced I.T. cost
 Commodity IT Assets are not unique to a
particular organization and are thus easily
acquired in the marketplace.

 Transaction Cost Economics (TCE) theory is in


conflict with the core competency school by
suggesting that firms should retain certain
specific non core IT assets in- house.
Risks Inherent to IT Outsourcing
1. Failure to perform.
2. Vendor exploitation.
3. Outsourcing cost exceed benefits.
4. Reduced security.
5. Loss of strategic advantage.
Audit Implications of IT Outsourcing
 Statement on Auditing Standard No. 70 (SAS
70) is the definitive standard by which client
organizations’ auditors can gain knowledge
that controls at the third-party vendor are
adequate to prevent or detect material errors
that could impact the client’s financial
statements.
Figure 2.8
Client Client
SAS REPORT 70
SAS 70 1 Auditor A
Overview
70
RT
E PO Client
SR Client SAS REPORT 70
SA 2 Auditor B
70
R E PORT
Outsourcing SA S
Vendor
SAS REPO
R T 70 Client Client
SAS REPORT 70
SA
S
3 Auditor C
RE
PO
Review Controls

RT
SAS REPORT 70

70

Client Client
SAS REPORT 70
4 Auditor D

Vendor
Auditor

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