Reducing the Cost of Auditing
BY RICHARD H. GROSSE PARTNER, PITTSBURGH OFFICE
Presented before the Accounting Conference of the Penn-sylvania Electric Association, Pittsburgh — May, 1955
The title of our subject probably raises two questions - "How can we reduce the cost of internal auditing?" and "What can we do to reduce the audit bills of our public accountants?" Substantial savings can be made in both areas by giving serious study to the objectives and pro-cedures of both groups for the purpose of creating a closer coordination and correlation of the work of the internal auditor with that of the independent
It is interesting to note that the Institute of Internal Auditors was organized in 1941 and I understand that at their first regular meeting the subject of discussion was "Coordinating Internal and External Audits". Since then many papers have been written and much discussion has been held on the same subject under various titles. Even though this afternoon we are primarily interested in public utilities there are certain
fundamental principles which must be observed in all industries. It is my impression that the Controller's Department, the internal auditing
staff, and the independent public accountants do not always have a clear mutual understanding of these fundamental principles which I will discuss in more detail later.
Today many companies have large and well organized internal audit departments and elaborate procedures and systems have been adopted for such departments. Other companies have reached the point where they are thinking about creating such a department, and some companies may have only one person who has the title of internal auditor.
Regardless of the size of your internal auditing staff I plan to relate to you some observations which I hope will be helpful in most instances.
Rather than devote a lot of time to a discussion of the desirability of coordinating and correlating the work of the internal auditor with that of the independent public accountant I should like to relate about a dozen of my observations as a public accountant which may appear to be unrelated to each other but which I hope will help us all in reducing the cost of auditing - internal and external.