IIA History & Milestones
"The Institute clearly evolved as an answer to the growth of internal auditing and as a response to new management needs resulting from the increasing size and complexity of corporate and government organizations." 

— Foundations for Unlimited Horizons: The Institute of Internal Auditors 1941-1976 

In the years preceding the incorporation of The Institute in 1941, growth and expansion made it increasingly difficult for organizations to maintain control and operational efficiency. The shift to a war economy further expanded organizations' responsibilities for scheduling, availability of materials and laborers, compliance with government regulations, and an increased emphasis on cost finding. 

Management found it impossible to visually observe all of the operating areas in their respective areas of responsibility or to have sufficient personal contact with individuals who directly or indirectly reported to them. In seeking ways to deal with these new problems, management appointed special staff people to review and report on what was happening and to probe for the why. These people came to be known as "internal auditors."

The internal audit function varied greatly as to the number of people assigned to perform it and in the scope and nature of the work being done. In some organizations, internal auditors were used to check on routine financial and operational activities with a heavy emphasis on compliance, security, and detection of fraud. In others, internal auditors were given higher levels of status and were asked to analyze and appraise more substantive financial and operational activities. 

As the profession evolved, a number of internal auditors began pushing vigorously for greater understanding and recognition of their function, and began to develop contacts and relationships with professionals in other organizations in an attempt to share problems and to advance their common interests. 

John B. Thurston, head of the internal auditing function at the North American Company utility company, was among the first to push vigorously for greater understanding and recognition of the internal audit function. He is credited with being the person most responsible for the creation of The Institute.

Thurston was joined in his thinking by Robert B. Milne, general auditor of the Columbia Engineering Corporation, and Victor Z. Brink, a former auditor and Columbia University educator who authored the first major book on internal auditing. 

Thurston, Milne, and Brink, acting as an organizing committee, contacted 40 friends and associates from the utilities industries, public accounting firms, and other industries, 25 of whom agreed to participate in forming a new organization for internal auditors. Seventeen individuals attended an organizational meeting on Sept. 23, 1941, at the Williams Club in New York City and agreed to start a new professional organization for internal auditors. 

Thurston was appointed interim organizing director and Arthur E. Hald of Consolidated Edison Co. was asked to oversee creation of a charter and bylaws. 

On Nov. 17, 1941, The IIA's Certificate of Incorporation was filed that officially established The Institute of Internal Auditors' name; recognized The Institute as a membership corporation; and identified corporation's specific purposes, which were: 

To cultivate, promote, and disseminate knowledge and information concerning internal auditing and subjects related thereto; to establish and maintain high standards of integrity, honor, and character among internal auditors; to furnish information regarding internal auditing and the practice and methods thereof to its members, and of other persons interested therein, and to the general public; to cause the publication of articles relating to internal auditing and practices and methods thereof; to establish and maintain a library and reading rooms, meeting rooms, and social rooms for the use of its members; to promote social intercourse among its members; and to do any and all things which shall be lawful and appropriate in furtherance of any of the purpose herein before expressed.

On Dec. 9, 1941, 24 charter members attended The IIA's first annual meeting, and the following officers (and nine directors) were elected: President: John B. Thurston; Vice President: Carl F. Saxon; and Treasurer: Arthur E. Hald.

The IIA was a national organization at the outset with several of its 24 original members hailing from both the East Coast and the Midwest. IIA membership grew to 104 members by the end of the first year, and increased to 1,018 at the end of five years and to 3,700 by 1957, with 20 percent of the latter located outside the United States. 

On November 27, The IIA's corporate seal was approved.