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This academic article aims to review the past studies about the firm’s rationale and determinants of outsourced internal auditing function (IAF) and factors that indiscriminate the external auditor’s independence and objectivity which advocate the financial statements' creditability among in-house developed or outsourced IAF. Initially, IAF is non-value added activity which a firm tends to transfer to outsourced entity like external auditors for cost saving. Some argue that IAF performed by its external auditors is skeptical to auditor’s objectivity and independence but there are some studies to present that IAF either in-house or outsourced still promotes the external auditor independence and objectivity. Specifically, the firm’s financial statements with higher inherent risk will be more creditable if they hire experienced outsourced IAF.
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