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How does the role of the internal auditor differ from that of the independent auditor of the financial statements? The role of the internal auditor differs from that of the independent auditor of the financial state- ments in a number of ways. The internal auditor works for and reports to management. Accord- ingly, the internal auditor's primary concern is to help management perform more efficiently and effectively. The independent auditors of the financial statements, on the other hand, are not employees of the entities they audit. While the independent auditors undoubtedly can help man- agement to perform better, their primary pur- pose is to provide assurance to parties outside the government (e.g., rating agencies). 52 AN ELECTED OFFICIAL'S GUIDE The annual financial statement audit has always been something of a mystery for many elected of- ficials and citizens. Nonetheless, if governments are to be sure of obtaining the quality audits they need, government officials must first obtain a basic understanding of the audit process. The purpose of this publication is to provide elected officials, management, and other nonaudit professionals with practical informa- tion concerning the audit process for state and local governments. Throughout, a simple ques- tion-and-answer format has been followed. This format is designed both to highlight the critical points discussed in the text and to furnish busy elected officials easy access to needed informa- tion. The first edition of this publication was released in 1992. Since that time, there have been several important developments affecting public-sector auditing, including the 1996 Amendments to the Single Audit Act, the release of Office of Manage- ment and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Orga- nizations, and the publication by the American Institute of Certified Public Accountants of Statement of Position 98-3, Audits of States, Lo- cal Governments, and Not-for-Profit Organiza- tions Receiving Federal Awards. Likewise, the General Accounting Office's Government Au- diting Standards ("Yellow Book") has been re- vised. Furthermore, public-sector auditing will now take place in the context of the new govern- mental financial reporting model established by the Governmental Accounting Standards Board's Statement No. 34, Basic Financial State- ments~nd Management's Discussion and Anal- ysis for State and Local Governments. This new ix