Internal Controls The external auditor relies heavily on the internal controls maintained by those companies that it audits and may also rely on some of the work of the internal audit staffs of the companies.

a. What is meant by internal controls?

b. Why is heavy reliance placed on internal controls in determining audit procedures?

c. How might the existence of an internal audit staff in the company enter into the evaluation process used by the external auditor?

d. Is the external auditor likely to accept as accurate something the internal auditor indicates is properly stated? Why?