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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
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