NCJ Number
66360
Journal
Internal Auditor Volume: 37 Issue: 2 Dated: (APRIL 1980) Pages: 96-101
Date Published
1980
Length
6 pages
Annotation
A CORPORATE EXECUTIVE AND FORMER GOVERNMENT OFFICIAL CRITICIZES THE 1978 INSPECTOR GENERAL ACT WHILE EMPHASIZING THE IMPORTANCE OF INTERNAL AUDITING CONTROLS.
Abstract
ALTHOUGH THE LEGISLATION SEPARATING THE INSPECTOR GENERAL FROM THE AUTHORITY OF THE AGENCY HEAD WILL ENHANCE THE ROLE OF THE INTERNAL AUDITOR, IT ALSO CREATES SERIOUS PROBLEMS. THE LAW NOT ONLY MAKES IT ALMOST IMPOSSIBLE TO FIRE THE INSPECTOR GENERAL, IT ALSO GIVES THE OFFICE BROAD AUTHORITY WHICH GOES BEYOND INVESTIGATING CORRUPTION AND COULD INHIBIT AN AGENCY HEAD'S EFFECTIVENESS. IN RECENT YEARS, CORPORATIONS HAVE HAD TO ASSUME A MORE PUBLIC CHARACTER AND ALTER OPERATIONS TO COMPLY WITH REGULATORY LEGISLATION LIKE THE FOREIGN CORRUPT PRACTICES ACT. DIRECTING BOARDS HAVE RECRUITED MORE OUTSIDE MEMBERS AND CREATED OVERSIGHT COMMITTEES THAT INFLUENCE MANAGEMENT. MANAGEMENT MUST ALSO DEVELOP A DEFENSIVE TEAM CONSISTING OF AN INDEPENDENT AUDITOR, GENERAL COUNSEL, AND INTERNAL AUDITOR. FEDERAL AND PUBLIC PRESSURES DEMAND THAT INTERNAL AUDITORS REPORT TO THE BOARD'S AUDITING COMMITTEE AS WELL AS MANAGEMENT. AN AUDIT COMMITTEE MUST SPECIFY ITS REPORTING REQUIREMENTS, BE FAMILIAR WITH INTERNAL AND EXTERNAL AUDITING OPERATIONS, AND KNOW THE CAPABILITIES AND PROBLEMS OF THE AUDITING STAFF. INTERNAL AUDITORS SHOULD GIVE TOP PRIORITY TO DEVELOPING INTERNAL CONTROL SYSTEMS IN ORDER TO RESPOND EFFECTIVELY TO INCREASING SCRUTINY OF THE AMERICAN CORPORATION.