Internal Auditing Over the Past Term Paper

Excerpt from Term Paper :

The amount and complexity of information created and overseen by the auditors in terms of expenses, earnings, and taxes will also increase. The ongoing growth of global organizations is also demanding greater auditing expertise concerning international laws and trade in addition to international mergers and acquisitions.

Following Enron and the other financial scandals, Congress passed laws to curtail organizational accounting fraud. This legislation requires public companies to maintain established internal controls to guarantee the accuracy and reliability of financial reporting and analysis. Although not part of this legislation, private companies have to be just as concerned about financial crimes such as embezzlement, theft, and securities fraud. Computer and Internet technology is making such crimes easier to commit, and the number of them are rising.


Over half of the 400 respondents of PricewaterhouseCoopers' second annual "State of the Internal Audit Profession" 2006 survey said Sarbanes-Oxley (SOX) lead to an increase in internal audit resources. Thirty five percent of those surveyed said they had expanded their personnel by 25% or more after the legislation was passed. However, simultaneously, 32% were actively trying to find candidates for auditor positions that have been vacant for over six months -- the same number as in 2005.

In today's operating environment, the demand for internal audit resources has increased much faster than internal audit capacity - a situation that raises serious concerns about the ability of internal audit groups to address higher level risks facing their organizations," said the Pricewaterhouse Cooper report.

The report noted the growing need for audit professionals who have the ability to "evaluate and test internal controls, audit complex areas, address enterprise-wide risk and governance issues, and provide insight into the adequacy of financial controls." The study also found that half of the organizations responding now use continuous auditing techniques, an increase from 35% in 2005. Another 31% plan to implement continuous auditing in the future. "This may be the beginning of a significant change in the way internal auditing has traditionally been done," said Dick Anderson, a partner in PricewaterhouseCoopers Advisory.



The United States Low Median High

Internal Auditor I $36,589 $42,166 $48,275

Requires bachelors degree

Little creativity required

0 -- 2 years of experience

Internal Auditor III $54,097 $63,007 $72,764

Requires bachelors degree

Wide degree of creativity and latitude years of experience


Although the Internal Auditor Certification (CIA) given by the Institute of Internal Auditors (IIA) is not mandatory for internal auditors, a number of companies are looking for CIA candidates only. Betty McPhilimy, the 2004/05 chairman of the board for the (IIA) says in a 2004 interview with the CPA Journal, "the CIA is the premier global certification for internal auditing -- a crown jewel that we strenuously protect to make sure that it continues to reflect the appropriate priorities for internal auditors."

The IIA made considerable changes to its CIA program and curricula in May 2004, after undertaking an international research study that centered on the expertise, skills, and abilities that underlined the common pool of knowledge for its CIA examination. A significant change consists of the test's three parts that make up the center international syllabus, which focuses on corporate governance and risk deliberations. A fourth section emphasizes general business management issues.

To become a CIA, candidates must possess knowledge of both the core global syllabus and either specialized audit-related subject matter or general business management.


Institute of Internal Auditors ( the main organization for internal auditors. Established in 1941, IIA is an international professional association of about 122,000 members with global headquarters in Altamonte Springs, Florida. Throughout the world, The IIA is recognized as the internal audit profession's leader in certification, education, research, and technological guidance.

INTERNAL AUDITOR.COM ( a source for information relating to internal auditing, including the free newsletter QMS Internal Auditor.

Resources Cited

Dalton, Dan and Dalton, Catherine. "

Sarbanes-Oxley legislation and the private company: if not a marriage, then certainly an engagement" The Journal of Business Strategy. 2005. 26.2 (2005), 7-9.

Harrington, Cynthia. "Internal Audit's New Role." Journal of Accountancy. 198.3 (2004), 65-71

Institute of Internal Auditors. Internal Auditors Certification. 8/9/06.

Pricewaterhouse. "2006 State of the internal audit profession study: Continuous auditing gains momentum." 8/10/06

Smith, Gene. "Communications skills are critical for internal auditors. Managerial Auditing Journal. 20. 5 (2005), 513-520.

Tidrick, Donald E. "Seize the Moment: Interview with IIA Chairman Betty McPhilimy." (April 2004). 8/10/06

U.S. Department of Labor. Occupational Outlook Handbook. 8/10/06

Wells, Joseph T. "Small Business, Big Losses." Journal of Accountancy, (Dec.2004), taped Norwick rather than take notes, because I felt this was less intrusive than typing on my notebook. He is a calm, easy going guy who was really pleased to see me and talk about his profession and his plans. He expects to stay with this company "as long as it's a challenge" and then head off to another company. He likes working for the smaller, privately owned companies rather than the larger public ones, because he likes being the big fish in the small pool. He feels he has better opportunities here and is more recognized for his work.

He said that he was glad that he went for the certification, since that may have been a big plus when he applied for this job. Off the record, he added that there are always plusses and minuses to every job. Because this is a smaller company, it does not have the resources nor support to do some of the things he wants to do. Also, although it is farsighted in some areas, in others it is behind the times. Communication between the hourly and salaried employees, for example, could be improved. Overall, however, he is glad he took this position. It is giving him a lot of experience and networking opportunities that he can use for his next…

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