What is the INCORRECT statement regarding the internal and external auditor relationship?

What is the INCORRECT statement regarding the internal and external auditor relationship?

• A. External auditors must understand internal audit to assess risks.
• B. Internal auditors can assist external auditors in testing controls.
• C. Internal auditors dictate audit procedures for external auditors.
• D. External auditors may alter procedures based on internal audit work.

Answer: (C)

The statement asserting that internal auditors dictate audit procedures for external auditors is not correct. This misrepresents the relationship between the two types of auditors. Internal auditors are responsible for evaluating and improving the effectiveness of risk management, control, and governance processes within an organization. They provide valuable insights and findings that can assist external auditors. However, external auditors maintain independence and have the ultimate authority in determining the approach and procedures for their audit. In practice, external auditors may consider the work of internal auditors when planning their audits, but they are not bound by or required to follow the procedures dictated by internal auditors. Instead, external auditors assess the quality and relevance of the internal audit’s findings to inform their risk assessments and can use it to determine the nature, timing, and extent of their own audit tests. Thus, internal auditors support the external audit but do not control it, underlining the separate roles and objectives of each auditor's function within the auditing process.

The statement asserting that internal auditors dictate audit procedures for external auditors is not correct. This misrepresents the relationship between the two types of auditors. Internal auditors are responsible for evaluating and improving the effectiveness of risk management, control, and governance processes within an organization. They provide valuable insights and findings that can assist external auditors. However, external auditors maintain independence and have the ultimate authority in determining the approach and procedures for their audit.

In practice, external auditors may consider the work of internal auditors when planning their audits, but they are not bound by or required to follow the procedures dictated by internal auditors. Instead, external auditors assess the quality and relevance of the internal audit’s findings to inform their risk assessments and can use it to determine the nature, timing, and extent of their own audit tests. Thus, internal auditors support the external audit but do not control it, underlining the separate roles and objectives of each auditor's function within the auditing process.