Coordinating the Audit Program with Work of Internal Auditors
BY LESTER G. TAYLOR Principal, Cincinnati Office
Presented before the Principals' Meeting, Haskins & Sells, Westchester Country Club, Rye, New York — June 1957
In this inflationary economy characterized by increased cost of our services on the one hand and the understandable resistance of clients to increased fees on the other, we must consider every area in our examinations
where economies can be excercised without decreasing the effectiveness
or quality of our work. One of these areas is the utilization of the work done by internal auditing departments where such departments are an effective part of our clients' organizations.
REQUIREMENTS OF COORDINATION
Coordination of the internal auditing programs with our own programs
is not always an easy task: it requires a great deal of advance planning
and understanding between ourselves and the internal auditors. Programs for coordination must be individually developed according to the particular requirements and the form of business organization. It is apparent
in considering the degree of coordination we have achieved with many clients that it is impracticable to set forth a uniform program. Our experience
has varied even between companies of approximately equal size and engaged in similar businesses. We have engagements in which the internal auditors actively participate in many phases of our work. Our experience varies from a high degree of coordination down to the point where the only real contact we have with the internal auditors is a review of their audit programs and reports. A successful program of coordination requires active imagination on the part of both auditing groups.
Coordination of our programs with those of the internal auditors does not mean, for example, that we will audit the assets and they are to audit the liabilities, or that we will assume the responsibility for cash while they are to assume the responsibility for receivables. Such a program is obviously impossible in view of our responsibility to stockholders and other interested
outside parties to maintain independence. In order to render an opinion we must examine and test in some manner all phases of the accounting
for the year under review. While it is true that we may be able to