Internal Auditing

History of Internal Auditingsubsidiaries is known to the executive officers. 
Internal auditing is a very respectable professionIn addition, section 404 of the Sarbanes-Oxley
with many responsibilites.  Internal auditing can beAct requres that management submit a report on
documented and traced as far back as to aboutthe internal controls.  The internal auditor is
5000 B.C.  A few civilized communites such asresponsible for making sure that the company
the Chaldaean Empire and the Babylonian Empirefollows the guidelines established under the
were the among the first to advanceSarbanes-Oxley Act (Sarbanes).
economically and politically and organize 
themselves into sovereign states.  The twoExample
empires imposed many taxes on both individualsCases such as the Enron scandal was a reason
and businesses, and therefore they established anwhy the Sarbanes-Oxley Act was put into
intricate system of checks and counterchecks. effect.  In as little as fifteen years, Enron grew
They designed internal control systems to helpfrom a little company to the seventh largest
minimize errors and safeguard state propertycompany in the country.  At its financial peak,
from taxpayers who were dishonest (Gupta). Enron employed more than 21,000 in staff and
In the United States, internal auditing has steadilyexpanded into more than forty countries. 
grown and evolved ever since the end of WorldEventually, the company’s scam became
War II.  Internal auditing today can be comparedknown to the world.  Enron had been lying about
to financial auditing because of the manyprofits and was accused of many “shady”
similarities associated with each, and “much ofdealings including concealing debts, so they didn't
the theory underlying internal auditing is derivedshow up in the company's accounts (Enron).  If
from management consulting and public accountingthe Sarbanes-Oxley Act was being enforced at
professions” (Internal Audit).that time, the scam would never have come to
 be.
Internal Auditing 
            The profession of internalSalary
auditing helps companies by advising them on howInternal auditing can be as rewarding as one
to better achieve there short-term and long-termmakes it, depending on education and
objectives.  Internal auditors utilizingexperience.  According to swz.salary.com, the
“systematic methodology for analyzingmedian expected starting salary for an Internal
business processes or organizational problems andAuditor I in the United states is $46,041 as of
recommending solutions” (Internal Audit). February 2008.  One’s salary can be greatly
Internal auditors are generally employed byaffected by factors such as employer size,
companies to perform their internal auditingindustry, employee credentials, and years of
activities which may include internal controls suchexperience though (Salary). 
as efficacy of operactions, reliability of financialOther Opportunities
reporting, deterration and investigation of fraud,            Everyone knows that
safeguarding assets, and compliance with laws andaccounting is a great subject to be knowledgable
regulations (Internal Audit)in.  Charlie Munger, vice-chairman of the
.diversified investment corporation, Berkshire
 Hathaway Corporation, once said, “You have
Internal Controlsto know accounting.  It’s the language of
            Improving internal controls ispractical business life” (Accounting).  Knowing
one of the main responsibilities of internalaccounting, especially internal auditing, can be very
auditors.  The management of a company is inbeneficial in the advancement of one’s career.
charge of internal controls within the organization,Internal auditing encompasses many different
but internal auditors test the controls to makeareas of internal controls and risk management of
sure they are working effectively.  Internalcompanies.  Internal auditors evaluate the
controls can be defined as a process that isadequacy and effectiveness of companies’
affected by the employees of the company asinternal control systems and its overall
well as the information technology systems thatperformance and report back to top
are used to assist the company in achieving itsmanagement.  Internal auditors are required to
objectives.  Internal controls direct, monitor, andsolve problems within the company and are
measure a company’s resources and helpconstantly perfecting their skills to make sure the
detect and prevent fraud from occuring within ancompany runs appropriately.  Some would
organization (Internal Control).consider the internal auditors to be the key to the
           success of a company.  Because of the broad
Risk Managementspectrum of activities internal auditing involves, it
Another responsibility of internal auditors is thegives one the opportunity to gain knowledge in
monitoring and evaluation of the effectiveness ofmany areas of the company, and therefore gives
the risk management process of a company.  Inone enough experience to expand and advance
addition to management’s reponsibility oftheir career.  There are not only opportunities for
internal controls, they are also responsible forinternal auditors, but with the type of experience
performing risk management activities as part ofand knowledge gained from internal auditing, one
their ordinary course of business.  How ancan expand their experience to other careers as
organization sets their objectives and responds towell.  Some related careers in which internal
the risks associated with their objective is part ofauditing experience is extremely valuable include
the risk management process.  Riskbudget analysts, cost estimators, loan officers,
management is a way for companies to managefinancial analysts, personal financial adviors, tax
uncertainty through risk assessment.  Developingexaminers, and even computer programmers and
strategies to manage risk and mitigating risk bysuch to name a few (Accountants).
using managerial resources is also involved in risk 
management.  For companies, risks can usually 
be categorized into four groups:  strategic risks, 
operational risks, financial reporting risk, and legal 
and regulatory risks (Risk). 
  
Sarbanes Oxley Act 
            The Sarbanes-Oxley Act, also 
known as the Public Company Accounting Reform 
and Investor Protection Act, was implemented on 
July 30, 2002 by the United States Federal 
Government to help prevent corporate fraud 
scandals.  All companies, both large and small, 
must comply with the rules and regulations of the 
Sarbanes-Oxley Act.  Some cases that 
prompted the passing of this act were withWorks Cited
companies such as Enron, Tyco International, and 
Adelphia that involved corporate and accounting"Accountants and Auditors." U.S. Department of
fraud (Sarbanes).  The Sarbanes-Oxley ActLabor. 18 Dec. 2007. 24 Feb. 2008
accelerated the growth of internal auditors            .
profession because they possessed “the skills"Accounting Quotes." Woopidoo Quotations. 24
required to help companies meet theFeb. 2008    .
requirements of the law” (Internal Audit)."Enron Scandal At-a-Glance." BBC News. 22 Aug.
            The Sarbanes-Oxley Act is2002. 24 Feb. 2008 .
comprised of eleven different sections forGupta, Parveen P. "Spiraling Upward - History of
companies to reduce and eliminate fraud.  SectionInternal Auditing and the Institute of Internal
302 of the act establishes internal procedures that            Auditors.” Bnet. June 1991.
are designed to ensure accurate financial24 Feb. 2008 .
disclosure within organizations.  The officers of"Internal Audit." Wikipedia. 24 Feb. 2008 .
companies must sign off on documents stating“Internal Control.” Wikipedia. 24 Feb. 2008 .
that they are “responsible for establishing and“Risk Management.” Wikipedia. 24 Feb.
maintaining internal controls” (Sarbanes).  The2008 .
officers certifying this also says that the internal"Salary Wizard." Feb. 2008. 24 Feb. 2008 .
controls designed ensure that the material“Sarbanes-Oxley Act.” Wikipedia. 24 Feb.
information significant to the company and its2008 .