External Auditors Should Consider the Work of Internal Auditors in Their

question 56

Essay

External auditors should consider the work of internal auditors in their assessment of control risk.
a.Are internal auditors independent of management? Explain.
b.What is the difference between the primary objective of the external auditors and that of internal auditors? Explain.
c.Discuss the factors that should be considered by the external auditors in deciding how much,if any,reliance should be placed on the work of the internal auditors.

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Definitions:

Net Income

Profit remaining after all operational, interest, and tax expenses have been subtracted from total revenue, reflected differently to avoid repetition.

Free Cash Flow

The amount of cash generated by a company after accounting for operational expenses and capital expenditures, indicating the company's ability to generate surplus cash.

Capital Expenditures

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment, aimed at improving future operations.

Income Taxes

Taxes levied by governments on individuals or entities based on their income or profits.