The primary objective of internal auditing is to furnish accounting management with a continuous review and appraisal of authorized company procedures and controls. To accomplish this objective, the internal auditor must determine whether the system of checks and controls for the protection of company property is adequate; appraise the effectiveness of the accounting procedures, records, and personnel; determine whether company policies are being followed; and report results and recommendations regarding his findings to accounting management (Bennett, 1969, p. 39).
So that the company may receive the greatest possible audit coverage from the efforts of both the internal auditors and the company's independent public accountants, the work of the two staffs should be correlated so that the overlapping of effort may be reduced to a minimum. Prior to commencing the audit, the auditor should review the audit report and the supporting working papers for the previous audit; also review the auditing department's file of company policies, departmental procedures, accounting instructions, and internal checks for information that will apply to the examination. The internal auditor's report should include suggestions for improvement of weaknesses revealed in the accounting systems and procedures. Included in this report should be a review of the current status of items noted in the report for the previous audit. The final internal audit report should include only major points, with an indication of corrective action to be taken, or an adequate explanation of any unresolved questions. Minor questions and problems that arise during an audit should be discussed and settled at the lowest supervisory level (Bennett, 1969, p. 40).
Historians believe that record keeping originated about 4000 B.C., when ancient civilizations in the Near East began to establish organized governments and businesses. The governmental accounting system of the Zhao...