Around the globe the Netherlands - Brief Article - Statistical Data Included

Internal Auditor, Feb, 2002 by Nanning Van Der Hoop

FROM A MODEST beginning to part of a worldwide network, internal auditing has come a long way in The Netherlands. Today's auditors are promoting the profession at home and monitoring audit developments abroad.

A NEED FOR CONTROL

After economic disasters and depression struck The Netherlands in the 1930s, control became an important issue for Dutch companies. It was this emphasis that inevitably led to development of the external audit profession.

Before long, audit pioneers began to develop the view that the board of directors should be responsible for an organization's financial management and should provide reliable information necessary for financial justification. Many also supported external auditors' use of internal measures and systems established by the organization. Thus, the need for control management and efficiency led to the emergence of internal auditing. Internal control subsequently became increasingly important, especially in larger companies, and external accountants began trusting and using internal control systems.

ESTABLISHED PROFESSION

During the 1980s, operational auditing came into being and developed gradually. With increasing industrialization and company growth, more and more organizational leaders began to view improved control as a necessity. The new internal audit profession may have been first recognized when the national Accountants' Register Organization started an internal accountants chapter in the mid 1980s.

In 1997, the growing realization that internal auditing had become a separate profession with its own competencies and needs led to the formation of IIA-The Netherlands. The Institute was founded out of a combined initiative of three organizations: the Dutch Association of Registered Accountants, the Association of Registered Operational Auditors, and the Benelux Chapter of The IIA.

CURRENT PRACTICE

There are between 5,000 and 6,000 internal auditors working in The Netherlands today. Practitioners are most prevalent in central and local government, banks, insurance companies, service organizations, and industries such as manufacturing, transportation, communications, and mining.

Apart from the legally prescribed accountability for national and local government and the increasing rules for banks and insurance companies, there is no legislation requiring or promoting internal auditing in The Netherlands. However, for paying agencies -- agencies that ensure subsidies are duly paid to entitled recipients -- an internal audit department that abides by The IIA's standards is compulsory.

INCREASING AWARENESS

The greatest challenge facing The Netherlands' internal auditors is the need to increase awareness of the profession, especially at higher organizational levels. The young IIA-Netherlands is looking to heighten awareness by uniting internal auditors from divergent core areas such as government, banking, and multinational industries. To achieve this goal, The Institute aims to extend its network to upper management echelon outside its core membership.

Because the country houses an exceptionally large percentage of internationally oriented businesses, as well as many multinational corporations, international developments in internal auditing are also becoming increasingly important With their eye on the future, IIA-Netherlands auditors are advancing the profession by actively seeking greater international links, both inside and outside Europe, to strengthen and promote internal auditing.

AT A GLANCE

GDP

$383.4 billion

GDP PER CAPITA

$24,400

CURRENCY

Euro (previously Dutch guilder)

ANNUAL INFLATION

2.6%

LAND AREA

33,883 sq km

POPULATION

15,981,472

LABOR FORCE

7.2 million

INDUSTRIES

Agro-industries, metal and engineering products, electrical machinery and equipment, chemicals, petroleum, construction, microelectronics, fishing, and service industries.

INDUSTRIAL PRODUCTION

GROWTH RATE

3.2%

LANGUAGE

Dutch

SOURCES:

THE WORLD FACTBOOK 2001

THE STATISTICAL YEARBOOK 2001