Answer (C) is correct . Internal auditors should assess compliance in specific areas as part of their role in organizational governance. Compliance testing can be used to determine whether laws and regulations are being adhered to, as well as whether internal controls are functioning as designed.
Answer (A) is incorrect because Compliance testing involves assessing the everyday functioning of internal controls.
Answer (B) is incorrect because The proper statement of financial statement line items is the purview of a financial audit, not a compliance audit.
Answer (D) is incorrect because No type of testing can be sure of detecting instances of collusion.
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