This research examines the role of the internal auditor. The history of internal auditing, the evolution of the profession to its contemporary status, the contemporary role of the internal auditor, and the employment potential of the profession are addressed in this research.
The earliest audits known concerned the manorial households of early Europe. In the manorial household, the auditor was a person of some importance; however, his importance was not recognized outside of the manor.
The relative obscurity of the early auditor and the relatively high profile of the contemporary auditor is a study in evolving contrast. As society demanded ever greater accountability of its institutions, the auditor was moved out of the manor house and into public view.
The methodology of auditing changes with the requirements placed on the auditor. When the objective of the audit was to account for the activities taking place within the household, the auditor's method required penny accountability. When the objective of the audit changed to the determination of the fairness of the financial position reflected by financial statements, the auditor's methods required the development of tests and relationships.
The auditing profession began to experience major change subsequent to 1850. Between 1850 and 1905, the auditing objective was expanded to include the detection of clerical error, in addition to the detection of fraud. During this period also some experimenting with tests occurred, although verification relied primarily on 100 percent examination. The user groups experienced a significant expansion during this period with stockholders and creditors being added to the owners of the enterprises being audited.
More change was introduced into the practice of auditing between 1905 and 1933. The determination of the fairness of the reported financial condition of an enterprise was added to the auditing objectives of detecti...