Brink's Modern Internal Auditing

CHAPTER 1 Significance of Internal Auditing in Enterprises Today: An Update

The profession of auditing has been with us for a long time. Mesopotamian scribes in around 3000 BC utilized elaborate systems of internal controls using stone documents that contained ticks, dots, and checkmarks. Auditing has evolved over the millennia, and today we generally think of two basic types of business enterprise auditors: external and internal. An external auditor is chartered by a regulatory authority, with authority to visit an enterprise or entity to independently review and report on the results of that review. Those reviews generally cover financial statements but may involve other compliance areas. In the United States, financial external auditors are Certified Public Accountants (CPAs), who are state-licensed and follow the standards of the American Institute of Certified Public Accountants (AICPA; www .aicpa.org). However, there are many other types of external auditors in fields such as medical equipment devices, television viewer ratings, and multiple governmental areas.

Internal auditing, as discussed throughout this book, is a broader and often more interesting field. As an employee or member of an enterprise, an internal auditor independently reviews and assesses operations in a wide variety of areas, such as accounting office procedures, information technology systems controls, or manufacturing quality processes. Most internal auditors follow high-level standards established ...