Jane Lee, a director of a nonpublic corporation with a number of stockholders and lines of credit with several banks, suggested that the corporation appoint as controller John Madison, a certified public accountant on the staff of the auditing firm that had made annual audits of the corporation for many years. Lee expressed the opinion that this move would effect a considerable savings in professional fees because annual audits would no longer be needed.
She proposed to give the controller, if appointed, an internal auditing staff to carry on such continuing investigations of accounting data as appeared necessary. Evaluate this proposal.