What is a critical function of internal auditors that external auditors must verify management has acted upon?

The identification and communication of internal control weaknesses is a critical function of internal auditors. Internal auditors are responsible for evaluating the effectiveness of an organization’s internal controls and suggesting improvements. When they detect weaknesses, it is essential that these findings are addressed by management to ensure the organization’s financial reporting and operational efficiency are not compromised.

External auditors, when conducting their audits, ascertain whether management has taken appropriate actions in response to the internal auditors' findings. This is important as it helps ensure that any identified weaknesses in controls are remediated, thereby minimizing risks related to errors, fraud, and inefficiencies that could affect the accuracy of financial statements.

In this capacity, external auditors serve as a check on management, ensuring they are responsive to the internal audit function. This link between the internal auditors and external auditors underscores the role of internal auditing as not just a function of compliance, but as a critical component of risk management and corporate governance.