Discussant's response to an auditing perspective of the historical development of internal control;

              Discussant's Response to
An Auditing Perspective of the
Historical Development of Internal Control
Rodney J. Anderson
Clarkson, Gordon & Co.
By way of explanation relative to my remarks as discussant, please consider that it was only yesterday that this paper reached my hands. The paper may be said to consist of three elements:
1. An overview of the historical development of auditing and internal control,
2. The development of North American thinking on internal control during the 20th century, and
3. Present thinking on internal control and internal auditing.
I will organize my comments with respect to each of these three elements and finally use the third as a jumping off point for a few other related thoughts about control.
Overview of Historical Development
The first eight pages, indeed half the paper, deal with an overview of the historical development of auditing and control. I found this interesting and readable. I think it gives a good summary of the early beginnings. Perhaps it could have gone a little more into the big jump from Charlemagne to the Industrial Revolution—a period where, I think, the roots of many of our present practices may be found. I will refer again to this presently. The authors state that control was the natural product of the profit motive. In the general sense of human acquisitiveness ("Let's protect what we've got."—and what we're getting), I agree. But in the narrower sense, profit motive suggests commercial transactions. In contrast, it was more commonly the wealth and the taxing power of the ruler or government which was being protected in those precursory days. As an over­simplification,
we might say that control in auditing began with public funds (if one may use that euphemism for the ruler's hoard). And perhaps if the gov­ernment
take of the GNP continues at its present rate, we will soon come full circle. And future historians may look wistfully back at the 19th and 20th cen­turies
as the age of private enterprise. However, that's not the subject for this conference.
In any case, whether the very beginnings were private-commercial or ruler-public is always a little difficult to tell from the literature. Certainly the examples of Egypt, Persia and Rome are all public funds examples. On the other hand, it
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