Increasing Significance of Internal Control
By JACOB H. IMIG Partner, Omaha Office
Presented at the Nebraska University Accounting
Conference, Omaha — November 1957
"Mutation" mink furs were advertised in the paper a few days ago. "Mutation" means "change," and I believe a "mutation" mink fur is one which was not actually produced by minks. In other words, the article was "mink" after the mutation, not before.
Minks — or rather, furs — are not the only things which are changing.
There have been many changes in the accounting profession since its inception in this country around the turn of the century.
One of the great changes has been the improvement in communication — both within the profession and between the profession and other profes-sions and industries. We have a wealth of written material by outstanding authorities on accounting matters, and the leaders of the profession are giving very liberally of their time. We are having local, state, regional, and national meetings. The high regard we have for the ideas of members of other professions was shown very effectively by your approval, evidenced by your applause, of the remarks made by the preceding speaker — a representative
from the insurance industry.
Other great changes within the lifetime of nearly everyone here have been the increasing significance of INTERNAL CONTROL to business and auditors,
and clarification of the public's conception of the reliance business and auditors place on internal control. This is my subject this afternoon.
DEFINITION OF INTERNAL CONTROL
The Committee on Auditing Procedure of the American Institute of Accountants in 1949 issued a statement with which I know all of you are familiar, on Internal Control. The definition appearing in that statement is as follows:
"Internal control comprises the plan of organization and all of the coordinate methods and measures adopted within a business to safe-guard its assets, check the accuracy and reliability of its accounting data, promote operational efficiency, and encourage adherence to prescribed managerial policies. This definition possibly is broader than the meaning sometimes attributed to the term. It recognizes