objective of internal auditing

 
 
 
 
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


     
 
 
 
    

 

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900, the first auditing and reporting standards was established by the British Companies Acts. Before 1850, audits were a minor part of an accountant's practice. When they were performed, they were viewed as a means of giving stockholders control over management's and the director's stewardship of assets, and the auditor's primary purpose was the detection of fraud. The Companies Act of 1855-1856, removed the requirement that auditors had to be stockholders and thus gave companies the option of engaging an external auditor. The Act of 1862, included a detailed description of an audit examination, as well as the first standard form of the auditor's report (Sullivan, Gnospelius, Defliese, & Jaenicke, 1985, p. 12). It took until, 1900, however, for annual audits to become mandatory for all limited companies. Standards for qualification of auditors, however, along with accounting and disclosure requirements, were not incorporated into British regulations until the twentieth century. The first comprehensive text on auditing, Auditing: A Practical Manual for Auditors, by Lawrence R. Dicksee, was published in England in 1892. In the late 19th century, internal auditors were employed by U.S. railroad companies. Yet only a sm

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