Amold W. Johnson has defined Internal Audit. “Internal Auditing is the independent appraisal activity within an organization for the review of the accounting, financial and other operations as a basis for protective and constructive service to management.” Business or undertaking of a very bug size like banking and insurance companies engage a certain set of people who conduct a kind of continuous audit during the whole of the year. They check the accounts which have been maintained by book-keepers. As a matter of fact, the nature of work of such a set of people who are called Internal Auditors is more or less the same as that of professional auditors who are appointed by the shareholders. The Internal Auditors are appointed by the Directors. The Internal Auditor checks the entries after they have been passed by the accounts clerks. He checks the accounts before the Auditor of the Company conducts the annual or six-monthly audit as the case may be. Internal audit is a device which detects any error or fraud which might have been committed while the internal check prevents the commission of an error or fraud.