In this podcast episode, we talk about how the internal auditing function can be used to increase the amount of profit generated by a business, by looking for excessive expenditures. Key points made are:
Internal auditing was usually held back from profit recovery work by the focus on control improvements that was initiated by the Sarbanes-Oxley Act.
Profit recovery is a great way to pay for the internal auditing department.
Profit recovery could be a separate function within the internal auditing department.
The work could be done by the procurement department, but internal auditing is the better option.
Can use control work to find departments that are in trouble, and then use profit recovery analyses to help them fund control fixes.
Could outsource profit recovery work to a third party and still generate a net profit by doing so.
Can pair the internal auditing staff with the third party recovery firm, to learn best practices.
Profit recovery work could be delayed if these tasks are mixed in with other priorities in the internal auditing department.