Internal Auditing (The International Library of Management)

Control by management is synonymous with internal control in counterdistinction from external control. Internal auditing is the independent appraisal of the effectiveness of internal control. It is "internal" not because it is necessarily performed by people who are internal to the business but because it is the review of "internal" control. Market testing of internal auditing provision leading, possibly, to contracting out of internal auditing is becoming more popular. The impetus for outsourcing internal audit provision has often been the introduction of a mandatory internal auditing requirement into institutions and businesses which are quite small and where management considers a full in-house provision cannot be justified: in the UK this has often been seen to apply to hospitals, universities and local government bodies. The methods and applications of internal auditing are examined in this text which includes various defining roles and qualities. The relationship between internal and external auditing is also examined which highlights the following trends: pressures on external audit fees; the developing role of the audit committee; an increasing professionalism of internal audit; a more frequent mandatory requirement for internal audit; the more common use of both internal audit consortia and external audit firms to perform contracted out internal auditing; and the involvement of both external and internal auditors with direcctor's published reports on internal control.