THE NATURE OF INTERNAL AUDITING AND MANAGEMENT IS EXPLORED. THE DEVELOPMENT OF INTERNAL AUDITING IS TRACED FROM ITS EARLY BEGINNINGS WHEN INTERNAL AUDITORS WERE USED CHIEFLY TO DETECT ERRORS AND FRAUD UP TO THE PRESENT MANAGEMENT-ORIENTED APPROACH. THE GROWTH OF MODERN MANAGEMENT AND SOME OF THE PEOPLE WHO DEVELOPED MANAGEMENT SCIENCE ARE CONSIDERED. MANAGEMENT THEORIES, ARE ALSO EXPLORED, ALONG WITH INTERNAL AUDITORS' HANDLING OF VARIOUS MANAGEMENT MODELS. MANAGEMENT SKILLS ARE DISCUSSED, WITH SPECIFIC REFERENCE TO THE INTERACTION OF MANAGERS AND INTERNAL AUDITORS WITH PEOPLE AT ALL LEVELS OF AN ENTERPRISE. INFORMATION IS PROVIDED ON MANAGERS' DECISIONMAKING PROCESSES AND ASSISTANCE GIVEN BY INTERNAL AUDITORS. COMMUNICATION, THE MEASUREMENT AND EVALUATION OF PERFORMANCE, AND THE SCIENTIFIC METHODS AVAILABLE TO MANAGERS AND INTERNAL AUDITORS TO IMPROVE JOB PERFORMANCE ARE ALSO CONSIDERED. FINALLY, THE PROCESS OF MANAGEMENT--PLANNING, ORGANIZING, DIRECTING, AND CONTROLLING--IS TREATED, WITH COMMENTS ON THE INTERNAL AUDITOR'S INVOLVEMENT WITH THE PROCESS. A STATEMENT OF RESPONSIBILITIES OF INTERNAL AUDITORS AND STANDARDS FOR THE PROFESSIONAL PRACTICE OF INTERNAL AUDITING ARE APPENDED. AN INDEX AND DIAGRAMS ARE INCLUDED, AND EACH CHAPTER CONTAINS REFERENCES. (AUTHOR ABSTRACT MODIFIED--RCB)