Department Index

Audit Office - Elms House. Picture 1950


Internal Audit Office

The work of the Internal Audit Office consisted in the main of inspecting the financial work carried out by other company offices, the purpose being to safeguard the company against the effects of inaccurate financial recording, deliberate or otherwise. The office was quite separate from the official audit of the company's Annual Accounts which, in accordance with company law, was carried out each year by an independent firm of auditors. The Internal Audit Office's work was a continuing process so that any inaccuracies could be identified and correct at an early stage than would otherwise be the case.

It was not possible to ensure 100 per cent accuracy in every clerical operation (before automation the task was awesome) but the inspections were designed to reveal any tendency to deviate from the high standard of accuracy that was expected of the clerical operations. However, there were some operations that did require 100 per cent correctness and to ensure this, the only way to prove it was to check every item/entry.

Despite the general impression that internal auditors were just there to find fault, criticise and report mistakes, their real purpose was rather to provide assurance that all was well, both with the methods in use and the way in which they were carried out. On the other hand the Internal Audit Office would have failed in their duty had they not acted on any deficiencies uncovered.

Until about 1950 the Internal Audit Office inspection service was restricted to those records having a direct bearing on the company's financial position, and which therefore formed an integral part of the Company Accounts. Some of the more important records which were later taken on were those records concerned with: payments for goods; service and wages; cash and credit sales; stock and work in progress; and equipment such as machinery and motor vehicles. Just after the Second World War it was decided to extend the inspection service to the costing, statistical and departmental accounting records maintained by various cost offices for the Management. Department Accounts were varied and complex having been developed over many years and it took some time for the Audit Office to fully comprehend all the differing processes. Their responsibilities also extended to inspections of the subsidiary company accounts some of whom were located outside of Cadby Hall in other parts of the country and periodic visits were made to these accounting centres. Apart from the routine examination of the clerical procedures the Audit Office also carried out special investigations which might have been requested by managers. One of their main tasks was the reconciling of the Company's Cash Book records of its transactions through the bank with the bank's own records as shown in the Pass Book. This did require 100 per cent comparison of the innumerable entries in both sets of records. Of course when computers began to take over many of the clerical procedures the inspection tasks became less onerous but nevertheless, computers brought in their own problems.

The Audit Office also collaborated with the Systems Research and Clerical Staff Offices in a special kind of inspection called a Group Review. The idea of this was to take a group in one or other of the offices and by careful study try to find out in what way, if at all, that group may be assisted to do its work more efficiently. These types of review were not always welcomed by the departments to which they were addressed but the overall intention was one of efficiency.

As the operating companies became more independent the Audit Office continued their inspections and were very much involved with the consolidation of the accounts. As computerisation of the company's financial and business activities became more widespread it became more difficult for auditors to follow through individual transactions and they had to develop new skills. John Simmons, however, who is the acknowledged pioneer of the Lyons clerical procedures and also the driving force behind computerisation in Lyons, ensured that the early computer programmes were designed to be self accounting. The tricks he had learned from the clerical operations were transferred to automation and Lyons' early computer programmes were well advanced on those of other companies. His vision was to bring together, by use of computers, all the company's accounts which he called the Master Plan. Sadly circumstances prevented this from coming to fruition.


© Peter Bird 2005