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• <br />What is the relationship between <br />the internal auditor and the <br />independent auditor of the <br />financial statements? <br />The internal auditor may help the work of the in- <br />dependent auditor of the financial statements in <br />one of two ways. First, the independent auditor <br />may be able to rely upon the internal auditor's <br />work to limit the amount of study and testing <br />that would otherwise have been necessary to <br />form an opinion on the fair presentation of the fi- <br />nancial statements. Second, the internal auditor <br />may, under the independent auditor's supervi- <br />sion, help to perform portions of the financial <br />statement audit. For example, internal auditors <br />may assist in the annual physical inventory of <br />supplies, or in preparing and reconciling confir- <br />mation requests. <br />Several factors can help to maximize the benefits <br />to be drawn from collaboration between the in- <br />ternal auditor and the independent auditor of <br />the financial statements. First, independent au- <br />ditors may be in a better position to rely upon <br />the work of internal auditors if they are in- <br />formed of the internal auditor's annual work <br />plan and kept abreast of progress made to date <br />on that plan. Second, if the independent auditor <br />plans to use the services of internal auditors in <br />conducting portions of the financial statement <br />audit, there should be a clear prior understand- <br />ing concerning the amount of staff time and the <br />level of internal audit staff to be devoted to that <br />effort, as well as the types of tasks that would be <br />appropriate. <br />TO AUDITING 53 <br />