Question

What are some of the challenges faced by internal auditors in assisting organizations in responding to risks resulting from managing and the oversight of third party vendors?

Answer 1

Traditionally internal auditors primarily focussed on accounting, financial and compliance risk.Today they are expected to assist thir client identify, assess and properly respond to a far wider variety of risk.Vendor risk assessments continue to confound many companies, even while they say that getting a handle on supply-chain risk is at the top of their priority list.

1.The top difficulties faced by internal auditors is lack of good data on  vendors, poor visibility into the use of subcontractors, and limitations in comparing vendors risk.

2.Third parties will make delay in making payments. So it is difficult to auditors to check the payment details of vendors.

3.A company will have many number of vendors, maintaing their information correcly is very difficult to the auditors.

4.Each vendors need to be informed timely regarding their payments.

5.Total amount of vendors recorded by accountant may not be accurate, internal auditords will get false information for auditing.