The Mid-Market Internal Audit Opportunity for CPA Firms

There’s a gap in the internal audit market that CPA firms are uniquely positioned to fill.

Large enterprises have dedicated internal audit departments with specialized staff, technology budgets, and direct board reporting lines. Small companies often operate without formal internal audit, relying on external auditors and ad-hoc reviews.

But mid-market companies—those with $50M to $500M in revenue—face a different challenge. They need internal audit capability but can’t justify the cost of a full-time team.

This is your opportunity.

The Mid-Market Reality

Mid-market companies share common characteristics:

Growing compliance requirements: SOC 2, SOX (if public), industry regulations
Audit committee expectations: Boards expect internal audit coverage
Limited resources: Can’t staff a 3-5 person internal audit department
Competing priorities: Every dollar spent on audit is a dollar not spent on growth

These companies need professional internal audit services. They just need them delivered differently.

Outsourced vs. Co-Sourced Models

CPA firms serving this market typically offer two models:

Outsourced Internal Audit

You are the client’s internal audit function. Full responsibility for:

Developing the annual audit plan
Executing the testing program
Reporting to the audit committee
Following up on remediation

Best for: Companies with no internal audit presence, early-stage compliance programs.

Co-Sourced Internal Audit

You supplement the client’s internal resources. Shared responsibility:

Client handles routine monitoring and some testing
You provide specialized expertise (IT audit, complex testing)
You provide peak capacity during busy periods
You bring technology and methodology the client lacks

Best for: Companies with one or two internal audit staff who need depth.

Why This Market Is Growing

Several trends are expanding mid-market internal audit demand:

1. Regulatory Pressure

SOC 2 is no longer optional for B2B software companies. Even private mid-market companies face audit committee expectations for internal audit coverage.

2. Cyber and Operational Risk

High-profile breaches and operational failures have boards asking harder questions. Internal audit is the answer to “who’s testing our controls?”

3. Private Equity Involvement

PE-backed companies face rigorous due diligence expectations. A mature internal audit function adds exit value.

4. Talent Shortage

Mid-market companies can’t compete for internal audit talent against large enterprises. Outsourcing is often the only way to get experienced professionals.

The Technology Advantage

Here’s where CPA firms can differentiate: bring technology capabilities your mid-market clients can’t afford independently.

AI-powered control testing gives you:

Efficiency: More testing in less time means competitive pricing
Quality: Consistent methodology across all engagements
Scalability: Take on more clients without proportionally more staff

Your client gets enterprise-grade internal audit at mid-market prices. You get margins that make the practice sustainable.

Building the Practice

CPA firms entering or expanding mid-market internal audit typically start with:

Existing Clients

Your current attest clients are natural targets:

You already know their business and systems
Trust is established
Cross-sell opportunity is warm

Ask: “Have you considered internal audit support for your SOC program?”

Industry Focus

Specialization drives efficiency:

Develop templates and testing programs for specific industries
Build expertise auditors can leverage across clients
Market as an industry specialist, not a generalist

Technology, healthcare services, and manufacturing are common focus areas.

Pricing Model

Mid-market clients prefer predictable costs:

Fixed-fee engagements: Scope-based pricing, no surprise bills
Retainer arrangements: Monthly fee for ongoing support
Project-based: Specific assessments or gap analyses

AI-powered efficiency makes fixed-fee models profitable.

The Competitive Landscape

You’re competing with:

Big 4 risk advisory: Expensive, often over-engineered for mid-market
Regional CPA firms: Direct competitors—differentiate on technology and specialization
Boutique internal audit firms: Specialists who may lack CPA firm resources

Your advantage: the combination of CPA firm credibility, technology investment, and right-sized service for mid-market needs.