Internal auditors’ favorite books

Internal auditors’ favorite books

Dennis L. Kimmell

BOOKS ON INTERNAL AUDITING began appearing as early as 1941, when Victor Z. Brink’s Internal Auditing: Its Nature , and Function and Methods of Procedure was published. Many other books and nonperiodical publications have appeared subsequently have enjoyed enduring popularity. Although certain books may have special meaning for certain individuals, the ten publications cited in this article have all had a significant impact on the practice of internal auditing.

To develop this list of all-time best sellers, the publications department at the institute of Internal Auditors and the Accountants Index were consulted, and a pilot telephone survey was conducted. A mail survey listing potential publications was subsequently prepared and circulated to 70 practicing internal auditors, 42 of whom responded. Participants were asked to denote ten or fewer internal auditing publications they thought had been most important to the profession. Respondents could also list publications which did not appear on the prepared list.

Publications related to specific industries were excluded. The exhibit summarizes the results of our survey. The tie between the tenth and eleventh books was resolved by reviewing the Professional Internal Auditing Standards Volume and the Codification of Standards for the Professional Practice of Internal Auditing as one unit. The first edition of The Practice of Modern Internal Auditing, by Lawrence B. Sawyer, was published in 1973. The second edition (1981) recognized the expanded authority and increased responsibility of internal auditors and the profound effect of the technological, professional, and legal developments of the 1970s. The latest edition (1988), coauthored by Glenn E. Sumners and retitled Sawyer’s Internal Auditing, incorporates additional, new ideas and practices. The Standards for the Professional Practice of Internal Auditing have profoundly affected the profession. They are widely circulated and are regarded as a primary source of reference by internal auditing departments throughout the world. The Standards are the criteria by which the operations of an internal auditing department should be measured and evaluated.

The Standards are divided into (1) general standards, (2) specific standards, and (3) guidelines. They deal with five major topics. The first, independence, views the auditor in the context of the total organization. The second topic, professional proficiency, discusses what the organization has a right to expect of the internal audit department and the individual internal auditor. The third section, scope of work, concentrates on the internal audit department in actual operation and considers the type of work it may be expected to perform. Internal auditors are viewed as working in a cooperative partnership with management. Section four, performance of audit work, concentrates closely on the internal workings of the internal audit department and how an individual assignment should be pursued. The final section focuses on the management of internal audit departments.

Since adopting the Standards, the Professional Standards Committee issued seven Statements on Internal Auditing Standards (SIASs) during the period 1983 through 1989. Because it became difficult to ascertain what combination of Standards plus SIASs were still in effect, the first Codification of Standards for the Professional Practice of Internal Auditing was issued in 1989. This codification presents currently effective pronouncements with superseded portions deleted and amendments included.

The RA issued a Statement of Responsibilities of Internal Auditing in 1947. The current Statement, revised in 1990, embodies the concepts previously established and includes such changes as were deemed advisable in light of the present status of the profession. it reveals the nature and character of the internal auditing function and how it has changed over the last four decades.

Prior to the issuance of the Standards in 1978, there was a Code of Ethics for IIA Members and a Code of Ethics for Certified Internal Auditors. hi july, 1988, the IIA Board of Directors issued a single, new IIA Code of Ethics to apply to both groups.

Authors William C. Mair, Donald R. Wood, and Keagle W. Davis provide some very compelling reasons why businesses should be concerned about computer controls and why auditors should give them special attention. Although now somewhat obsolete (c.g., distributed processing and microcomputers are discussed very briefly and relational data bases and electronic data interchange are not mentioned at all), many of this book’s basic premises are still relevant. The Manual is the latest of several steps taken over the past decade by The Institute of Internal Auditors to recognize the importance of quality as an element of the practice of internal auditing. The objective of the Manual is to provide guidance for the completion of external and internal reviews, which will then provide some level of assurance about the quality of an internal audit function. Quality is judged by the degree to which an internal audit organization complies with the Standards for the Practice of Internal Auditing as wen as other organizational and departmental policies and procedures relevant to the specific unit being evaluated. The 4th edition of the CIA Examination Review, by Irvin Gleim, was published in 1991. The purpose of the CIA Examination Review is to assist candidates pass the Certified Internal Auditor (CIA) examination. Volume I contains outlines and study guides and volume II presents problems and solutions. Published first in 1980, and again in 1984 and 1989, there have been five updating editions bridging the intervening years. Victor Z. Brink’s books on internal auditing have provided guidance and assistance to internal auditors for five decades. The initial work, Internal Auditing: Its Nature and Function and Methods of Procedure (1941) was revised and rewritten in 1958, again in 1973, and most recently in 1982. The second edition was translated into German and the fourth edition was adapted for Continuing Professional Education in 1986.

The latest edition fully integrates financial and operational auditing. The authors address the issues of internal accounting control, consider compliance with laws, and discuss the economical and efficient manner of carrying out operational activities and the organization’s need for operational effectiveness. Concerned that internal control practices and internal audit expertise in the data processing environment lagged technological advances, The Institute of Internal Auditors conceived and organized this definitive evaluation of the subject of data processing systems audit and control in 1977. International in scope, the research was funded by International Business Machines Corporation and was performed by Stanford Research Institute.

The study had three objectives: (1) to obtain a comprehensive survey of the present status of EDP system audit and control, including the identification of current trends and the documentation of what: specific audit and control techniques have proven to be of practical value; (2) to increase management’s awareness of changes in the data processing environment@ as they affect internal audit and the controls governing data processing; and (3) to place the auditability and control of computer-based information systems in a proper perspective within the total system environment.

A 1991 version of the Systems Auditability and Control Study has just been published and is expected also to become a standard for internal audit practice. Evaluating the Effectiveness of Internal Audit Departments This book, by David Kowalczyk (1987), and its foreranner, Operational Auditing Handbook (1964), by Bradford Cadmus, are based on seven individual research reports issued by the Research Committee of The Institute of Internal Auditors.

These reports address the objectives, problems, controls, and techniques of internal audit related to operations in purchasing, receiving, scrap, salvage & surplus materials, traffic facilities, advertising and sales promotion, and insurance programs. The updated and revised handbook includes three additional topics: manufacturing resource planning (MRP II), personnel, and information systems.

The authors’ goals were to assist internal auditors to perform competently in areas of business operations that they may not have previously audited and to alert management that internal audit could help them control operations more effectively and efficiently. A basic premise is that an auditor must be thoroughly familiar with the operations about to be audited. Internal Auditor’s Handbook This book, by W. Steve Albrecht, Keith R. Howe, Kevin D. Stocks, and Dennis R. Schueler, reports the results of a research project initiated by the IIA Research Foundation. The study was designed to identify how the internal audit activity is evaluated by executive management, audit committees, operating management, and others. With a knowledge of the qualitative and quantitative criteria used by evaluating parties, auditors should be able to improve their perceived effectiveness.

Thirteen companies with well-known, highly respected internal audit departments participated in the study. Interviews were conducted with and questionnaires were completed by audit directors, chief executive officers, chief financial officers, audit committee members, operating management, external auditors, and members of the internal audit staff . Legislative requirements (e.g., the Foreign Corrupt Practices Act), court decisions, demands by legislators and the public for greater accountability by public officials, and increased responsibilities of audit committees led to the growth in internal audit. This growth and its concomitant increased responsibilities provided the impetus for The RA to produce the Handbook, written by Paul Heeschen and Lawrence B. Sawyer. Its purpose is to assist internal audit units and individual auditors by providing a compendium of forms and counsel extracted from [practicing, experienced auditors of the time on how to start and manage an internal audit unit.

COPYRIGHT 1991 Institute of Internal Auditors, Inc.

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