Internal Control—Whose Responsibility?
BY VIRGIL F. BLANK Partner, San Francisco Office
Presented before the San Francisco Chapter of the Systems and Procedures Association — November 1957
Your program chairman has been very kind in asking for my comments
on a subject which he claims was requested by the largest segment of your membership. You have raised the question "Is the systems man responsible for internal control?"
Since four articles have been published this year in The Journal of Accountancy on the subject of the independent auditor's responsibility for internal control, we may assume that you are not the only group concerned with this question of responsibility. As a matter of fact I understand that some concern on this topic has also been expressed by internal auditors as well as by members of top-management groups.
From the manner in which this question has been treated it is difficult to ascertain whether each group is eager to assume this responsibility for internal control or is seeking ways to disclaim all responsibility for it.
FUNCTIONS OF GROUPS CONCERNED
Perhaps we should first define some of the areas of activity of these various groups which relate them to this subject of internal control.
The systems man performs a staff function for management. That is, he serves in a planning and advisory capacity. His function pertains principally
to analyzing activities within the organizational structure and design-ing adequate methods and procedures for accomplishing the purposes of those activities. This work sometimes encompasses the redesign of the organizational structure itself, but rarely includes activity in the area of plant layout or manufacturing methods and equipment. However, a major portion of his work is concerned with the design of records to control the cycle of the organization's assets as they change from raw materials to inventories to receivables to cash — and back again to raw materials. The methods and procedures provided for these purposes must afford adequate internal control; hence, the systems man does have a responsibility in this area.