The Research on the Risks and Countermeasures of Internal Audit Outsourcing in Small and Medium-sized Enterprises: Evidence from China

Abstract

As China’s market economy continues to develop and the specialization of the social division of labour deepens, competitive pressures force companies to invest their limited resources in the areas that generate the highest benefits. In recent years, the number and scale of SMEs in China have experienced unprecedented growth, but internal audit outsourcing has gradually become necessary due to financial and personnel limitations. However, internal audit outsourcing started late in China, with few process specifications in practice. This paper first analyses the feasibility of internal audit outsourcing for SMEs in China, followed by a comprehensive analysis of the benefits and potential risks that can be generated by the adoption of internal audit outsourcing by SMEs, and proposes corresponding measures and recommendations to address the risks.