As the internal audit is concerned with an evaluation of both internal control as well as the quality of actual performance. The management of Young Ltd. was of the view that the internal auditor should : (i) see whether

Review of Organizational Structure: The internal auditor should conduct an appraisal of the organization structure to ascertain whether it is in harmony with the objectives of the enterprise and whether the assignment of responsibilities is in consonance therewith. For this purpose, he should review the manner in which the activities of the enterprise are grouped for managerial control. (i) Examining that Lines of Authority and Responsibility are clearly defined and communicated to all the organisation levels: The internal auditor should see whether the lines of authority and responsibility are clearly defined and communicated to all the organizational levels. He should examine the organization chart to find out whether the structure is simple and economical and that no function enjoys an undue dominance over the others. He should particularly see that the responsibilities of managerial staff at headquarters do not overlap with those of chief executives at operating units. This situation often results in organizational chaos. (ii) Examining whether there is a satisfactory balance between authority and responsibility of important executives: The internal auditor should examine whether there is a satisfactory balance between authority and responsibility of important executives i.e., the authority of each executive should be commensurate with the responsibility assigned to him. This can be evaluated by discussing the problems of operations and implementation with various executives. (iii) Examining the reasonableness of the span of control of each executive: The internal auditor should examine the reasonableness of the span of control of each executive (the number of sub-ordinates that an executive controls). There should be a proper balance between the span of control of different executives at different levels. (iv) Examining whether there is a unity of command: He should examine whether there is a unity of command i.e., whether each person reports only to one superior. Where dual responsibilities cannot be avoided, the primary one should be specified and the specific responsibility to each senior fixed. This must be made known to all concerned. (v) Examining whether there is a sufficient flexibility in the day to day working of the organization: He should examine whether there is a sufficient flexibility in the day to day working of the organization and that initiative is not being stifled by a strict adherence to rules. One way of reducing organizational rigidity without sacrificing control is to have a quick and free flow of information within the enterprise. (vi) Evaluating the process of managerial development in the enterprise: Finally, he should evaluate the process of managerial development in the enterprise. This is a vital aspect in a fast-growing enterprise. Unless executives are properly groomed to take over positions of responsibilities when senior people retire, there is bound to be organizational chaos.