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Policy Authority
Category: Internal Audit

Consulting Services

Also known as: Advisory Services, Consultancy
Simply put

Consulting services involve providing expert advice or strategic recommendations to an organization so that its leaders can consider the input and make informed decisions. The advice may address people, processes, technology, or overall performance, but the decision to act on it typically rests with the organization receiving the service.

Formal definition

Consulting services refer to the provision of specialized expertise or strategic advice, delivered for a fee by consultants or consulting firms, that is presented for an organization's consideration and decision-making. In a management consulting context, such services are commonly engaged to improve organizational performance or assist in achieving objectives across dimensions such as people, process, and technology. Within a GRC context, consulting or advisory work is distinct from assurance activities: it aims to add value and support management decisions rather than to provide independent, objective assurance, and it does not transfer decision authority or ownership of resulting risks and controls to the advisor. This entry does not address engagement structuring, fee arrangements, or the specific independence and objectivity requirements that apply when internal audit functions undertake advisory work.

Why it matters

Consulting services matter to governance because they inject specialized expertise into an organization's decision-making without displacing accountability. When leaders engage advisors on people, process, technology, or performance questions, the advice is offered for consideration; the decision to act, and the ownership of the resulting risks and controls, typically remains with the organization. Preserving this distinction is central to sound governance, because it keeps decision rights and accountability with those charged with directing the organization rather than with an external or internal advisor.

In a GRC context, the boundary between consulting and assurance is particularly important. Assurance activities are designed to provide independent, objective evaluation, whereas consulting or advisory work aims to add value and support management decisions. Blurring the two can undermine the independence and objectivity that assurance functions rely on. Where an internal audit function performs advisory work, additional considerations apply to protect its independence; the specific requirements governing such situations are beyond the scope of this entry.

Because consultants do not assume the decision authority of the organization they advise, the value of a consulting engagement depends on how the receiving organization evaluates, adapts, and acts on the recommendations. Recommendations are inputs to governance processes, not substitutes for them.

Who it's relevant to

Governance professionals and organizational leaders
Those responsible for directing an organization engage consulting services to obtain expertise that informs their decisions. Because decision authority and accountability remain with them, they need to treat consultant recommendations as inputs to be evaluated rather than as decisions already made on their behalf.
Internal auditors and assurance functions
Assurance professionals must keep consulting or advisory work distinct from independent, objective assurance. Where an internal audit function undertakes advisory work, particular care is needed to preserve independence and objectivity; the detailed requirements that govern this fall outside this entry.
Risk and compliance managers
These practitioners may commission advisory input on people, process, technology, or performance matters. They should recognize that engaging a consultant does not transfer ownership of the resulting risks and controls, which continue to rest with the organization.
Consultants and consulting firms
Providers of expertise and specialized labour for a fee should present their work for the client's consideration and decision-making, understanding that their role is to add value and support decisions rather than to make or own them.

Inside Consulting Services

Advisory Engagement
An activity in which an assurance or advisory function provides advice, facilitation, or recommendations at the request of management, without the practitioner assuming management responsibility for the outcome. In the internal audit context, consulting services are commonly distinguished from assurance services by their advisory, client-requested nature.
Agreed Scope and Nature
The terms of a consulting engagement, including its objectives and scope, are typically agreed with the requesting party. Unlike many assurance engagements, the nature and scope of consulting work are generally negotiated with the client rather than set independently by the function.
Preservation of Objectivity
A component addressing how a consulting practitioner maintains objectivity when advising management. Where an internal audit function provides consulting, safeguards are commonly applied so that later assurance over the same area is not impaired by prior advisory involvement.
Management Responsibility Boundary
The distinction that consulting services offer advice and recommendations while decision-making and implementation remain the responsibility of management. The practitioner does not take on the accountability that belongs to the first line or to those charged with governance.
Value-Adding Purpose
Consulting services are commonly intended to improve governance, risk management, and control processes by contributing knowledge and insight, complementing rather than replacing assurance activities.

Common questions

Answers to the questions practitioners most commonly ask about Consulting Services.

Are consulting services the same as assurance services provided by internal audit?
No. Consulting and assurance are distinct activity types, and conflating them can compromise the independence and objectivity that assurance functions rely on. Assurance services typically involve an objective assessment of evidence to provide an independent opinion or conclusion on governance, risk management, or control processes. Consulting services are advisory in nature, generally undertaken at the request of the client, with the nature and scope agreed with that client, and intended to add value or improve processes without the practitioner assuming management responsibility. Where an internal audit function provides consulting, care is commonly taken to preserve objectivity for any later assurance work on the same area.
Does providing consulting services mean the practitioner takes on management's responsibilities?
No, and this is a common misconception. In advisory or consulting engagements, the practitioner typically offers advice, facilitation, or recommendations, but responsibility for decisions and for implementing them generally remains with management. Assuming management responsibility, such as making decisions, owning controls, or directing operations, can impair the objectivity needed for later assurance activities. The distinction between advising on a process and being accountable for that process is central to preserving independence.
How can an internal audit function offer consulting without impairing its objectivity for future assurance work?
Practices commonly include documenting the advisory nature of the engagement, ensuring management retains ownership of decisions and implementation, and disclosing any potential impairment to objectivity. Where a practitioner has provided consulting on an area, some functions rotate personnel or otherwise manage the timing of subsequent assurance work on that same area. The specific safeguards may vary by organization and by the professional standards the function applies.
How should the scope of a consulting engagement be established?
The nature and scope of consulting engagements are typically agreed with the client requesting the service. Clarifying at the outset the objectives, deliverables, the advisory (rather than decision-making) role of the practitioner, and the boundaries of the work helps set expectations and preserve the distinction from assurance activities. The level of formality often depends on the significance of the engagement and organizational practice.
Should the results of consulting engagements be communicated differently from assurance results?
Consulting communications are typically directed to and agreed with the requesting client, reflecting the advisory nature of the work, whereas assurance results generally support an independent conclusion communicated to relevant stakeholders. Because consulting does not usually provide an independent opinion, its reporting commonly reflects advice and recommendations rather than a formal assurance conclusion. Reporting formats and expectations may vary across organizations and applicable standards.
How can consulting engagements inform an organization's broader assurance planning?
Knowledge gained during consulting engagements may highlight risk or control matters relevant to future assurance planning, and can be considered when developing risk assessments or audit plans. At the same time, functions commonly manage the objectivity considerations that arise from having advised on an area before providing assurance on it. How this information is used depends on the organization's methodology and the professional standards it follows.

Common misconceptions

Consulting services and assurance services are interchangeable and can be treated the same way.
They are distinct. Assurance services typically involve an objective assessment for the benefit of a third party, with scope determined by the function, whereas consulting services are advisory and client-requested, with scope commonly agreed with the requesting party. Blurring the two can undermine the independence and objectivity that assurance functions rely on.
By providing consulting advice, the function takes on responsibility for the resulting decision or its outcome.
In consulting engagements the practitioner provides advice and recommendations, while decision-making and implementation generally remain management responsibilities. Assuming management responsibility would compromise the independence expected of assurance functions such as internal audit.
Prior consulting work has no effect on the ability to later provide assurance over the same area.
Prior advisory involvement may impair objectivity if the practitioner is later asked to assure the same area. Safeguards are commonly applied to manage this threat, and the potential impact on objectivity should be considered before accepting the work.

Best practices

Agree the objectives, scope, and nature of each consulting engagement with the requesting party before work begins, and document what is in and out of scope.
Preserve the boundary between advising and managing by providing recommendations while leaving decision-making and implementation with management.
Assess and document potential threats to objectivity and independence before accepting consulting work, particularly where the same area may later be subject to assurance.
Apply and record appropriate safeguards where consulting could impair later assurance over the same subject matter.
Keep clear records distinguishing consulting engagements from assurance engagements so that the different nature of each is transparent to stakeholders.
Frame consulting engagements around adding value to governance, risk management, and control processes, complementing rather than substituting for assurance activities.
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