Answer (D) is correct . According to the definition of internal auditing, “Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.”? Thus, it helps the organization to maintain effective controls by evaluating their effectiveness and efficiency and by promoting continuous improvement (Standard 2120).
Answer (A) is incorrect because Published financial statements are only required to be fairly presented. Internal audit activities cannot ensure correctness.
Answer (B) is incorrect because Internal auditing’s responsibility with respect to fraud detection is to examine and evaluate the adequacy and effectiveness of internal control.
Answer (C) is incorrect because Internal auditing evaluates and contributes to the improvement of risk management, control, and governance processes, but it cannot ensure compliance with legal requirements.
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