DEVELOPMENT OF INTERNAL AUDITING

PROFESSION
INTERNAL VS. EXTERNAL AUDITING
HOW DID INTERNAL AUDITING BEGUN?
 WHAT
WHAT IS ACCOUNTING?
IS INTERNAL AUDITING?

Objective Assurance
To add value and
INTERNAL AUDITING INDEPENDENT improve organization's
operations
CONSULTING
ACTIVITY
 HISTORY OF INTERNAL AUDITING

The auditing profession has evolved

throughout the years to meet the needs
of the changing business environment.
 Sumerians developed the first known elaborate
systems of law and government.
 Babylon City - Code of Hammurabi laws that
were imprinted on a stone pillar.
 Zhao dynasty in China (1122 – 256 B.C) they
have created an official record keeping systems as
Auditing existed since the beginning
their worries about correctly accounting for receipts of human civilization.
are documented.

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 HISTORY OF INTERNAL AUDITING

 During reign of calif Omer bin Al Khattab, he implemented the internal and external audit
concept among cities that were under his rule at that time. This rose from the idea that high
profile officials may use their position for unfair benefits.
 In the beginning of 20 century when business activities started to grow in size and scope.
A formal internal audit function was established, which enable management to keep track of
significant business developments, activities, and results from diverse and voluminous
transactions (helpful in decision making).

Victor Z. Brink and Lawrence B. Sawyer were the most two influential individuals in the
IIA’s history. They have created the auditing standards which are now used by the auditors
during their audit inspections.
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 Development of Internal Audit Services

1. Internal check procedures

2. Transaction-based approach
3. Statistical sampling
Pattern4.of Probity-based
relationships work
among positions
5.organization
in the Spotchecks
and among
6. Risk members
analysi
of the organization.
7. Systems-based approach
8. Operational audit
9. Management audit
10. Risk-based auditing
internal audit vs. extenal audit
 Prepared by:
Alvarez, Ma. Xristela Alliah P.
Aquino, Danica Q.