A New Era in External/Internal Auditor Cooperation

Article Abstract:

Cooperation between the internal and external auditors is crucial due to the fast rate of technological advances. The external auditor, without the assistance of the internal auditor, would be too expensive as there are a vast variety of systems in use among his clients. The internal auditor could evaluate control systems and report to the external one who evaluates the quality of the report. The external auditor does not have the time or flexibility to be involved in the systems development life cycle and should depend on the internal auditor's findings and evaluations. Audit software is not a feasible option due to the complexity and variability of file systems. Changes are common. In some cases, the only feasible audit approach is the computer-assisted audit technique (CAATs). But these are technical and require research that the internal auditor would be skilled in and aware of. In order to evaluate controls used for micro-and mini- computers the auditor needs to be on-site which is not cost-effective for the external auditor. One factor to be considered is the degree of independence from management of the internal auditor. In the last decade, auditors hold a more professional position and are usually acting independently. Cooperation minimizes costs and duplication.

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The External/Internal Auditor Relationship - Part 1

Article Abstract:

Once the value of internal controls has been determined to be acceptable, the external auditor can benefit from relying on the internal auditor. The internal and external auditors have several common objectives. The benefits of a cooperative relationship between the two include reduction of fee, improved client-relationship, improved understanding by the external auditor of the organization operations, and information relevant in evaluating internal control. The internal audit department can benefit by knowledge of the external auditor concerning other similar businesses or organizations. Reliance by the external auditor can be placed on the internal auditor in two ways - on the work generated by the internal auditor through the system and work requested by the external auditor and performed by the internal auditor. Testing for reliance of the internal auditor is similar to testing in the external audit process. The auditor evaluates competence and objectivity on the basis of compliance and substantive procedures. The evergrowing complexity and increasing size of organizations makes reliance on internal auditors more necessary. The degree of reliance will be dependent on the external auditor's judgment. Legal guidelines are not available on the subject.

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Macro Gains for Micros

Article Abstract:

Chartered accountants have been traditionally resistant to the introduction of computers in their practices. Often, senior partners are intimidated by the new technology and the recent graduates comfort with it. Microcomputers now provide an inexpensive method of entry into data processing, as it is relativelt low-cost and the large, reputable hardware suppliers and software developers have now entered the market. Communication abilities will be enhanced in large firms and between firms and clients with microcomputer introduction. The software and supplier should be chosen first as it is the valuable portion, then the hardware to run it on. Stability of the vendor, user- friendliness, file accessibility in several parts of the program, ease of updating files, back-up and printing should all be points considered in choosing software. Integration of applications should also be considered, as well as portability of the machine. The computer, like the calculator, will follow the path from large to small and increasingly ease the accountants' work load, allowing them to increase their role as consultants.

Computers, Microcomputers, Laws, regulations and rules, Digital computers, Accounting and auditing, Technology application, Accountants

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