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The CISA® Prep Guide: Mastering the Certified Information Systems Auditor Exam by John Kramer

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2.4. Evaluating Third-Party Services Selection and Management

The evaluation of governance over third-party relationships is an important part of forming an opinion on management oversight and monitoring effectiveness. When management makes a decision to use outside parties to perform functions, there are several common reasons for doing so. The big reason is money. It is increasingly popular to involve other parties in the business process for a variety of good reasons. If the rationale for using an outside party is one of cost, you should review the cost justification and draw conclusions on the merit of the cost and benefit analysis supporting the third-party arrangement. Another primary reason for using third-party services is a classic buy versus build decision. Maybe the skill levels required for a new task are not available in-house and would require a significant recruiting effort. Perhaps the investment in the equipment required to perform a service requires a large up-front capital commitment. Many times, it makes more sense to rent a service rather than buy it and pay the ongoing costs of supporting that service. Valid rationales include the simple fact that it is not a core competency of the primary business and the service is best left to individuals who can focus on the excellence of that service as their primary offering. Many times when new ventures are embarked upon, strategic alliances and partnerships are formed with third parties. There are potential benefits ...

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