Who are principally responsible for communicating to the Audit Committee the scope of their annual audit of the financial statements, the extent of their involvement with interim reports?

Question

Options

• Aexternal auditors
• BInternal auditors
• Cteam workers
• Dstakeholders

• A
  82% (45)
• B
  2% (1)
• C
  13% (7)
• D
  4% (2)

Explanation

External auditors (Option A) are the professionals hired independently to audit a company's financial statements. They are required to communicate directly with the Audit Committee about the scope and nature of their planned audit, any significant findings, and the extent of their involvement with interim financial reports - this is a core governance requirement under auditing standards (e.g., ISA 260).

Internal auditors (B) report on internal controls and operational risks, not the external financial statement audit scope - that's a different function with a different reporting relationship. Team workers (C) is not a recognized audit or governance role in this context. Stakeholders (D) are a broad category (shareholders, creditors, regulators) who receive financial reports but have no responsibility for communicating audit scope to the Audit Committee.

Memory tip: Think "E for External = E for External communication to the Audit Committee." The key word in the question is annual audit of the financial statements - that's always the external auditor's domain, not internal audit.

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