Hanlon Corp. maintains a large internal audit staff that reports directly to the chief financial officer. Audit reports prepared by the internal auditors indicate that the system is functioning as it should and that the accounting records are reliable. An independent auditor will probably:
A) eliminate tests of controls.
B) increase the depth of the study and evaluation of administrative controls.
C) avoid duplicating the work performed by the internal audit staff.
D) place limited reliance on the work performed by the internal audit staff.

Question

Quizplus · Accepted Answer

Despite the positive reports from the internal auditors, the independent auditor should maintain an objective mindset and not automatically assume the system is functioning perfectly. Therefore, the independent auditor should place limited reliance on the work performed by the internal audit staff and perform their own tests and evaluations to ensure the accuracy and reliability of the financial statements.