Audit Regulatory: Reliability and Independence in Entity

B

The statement suggests that the reliability of audit regulatory is higher when it is obtained from knowledgeable independent sources within the entity. Let's break down the statement and examine each part in detail.

First, let's consider what audit regulatory means. An audit is an examination of an organization's financial records to ensure their accuracy and compliance with applicable laws and regulations. Regulatory refers to the various rules and regulations that govern the financial sector.

Next, the statement suggests that the reliability of audit regulatory is higher when it is obtained from knowledgeable independent sources within the entity. In other words, the statement is saying that when an organization relies on its own knowledgeable and independent sources to conduct audits, the results are more reliable.

There are a few reasons why this might be the case. First, internal auditors are likely to be more familiar with the organization's operations, processes, and systems than external auditors. This familiarity can allow them to identify potential issues more easily and to conduct audits more efficiently.

Second, internal auditors are likely to have a deeper understanding of the organization's culture and values. This understanding can help them to identify areas of risk or non-compliance that external auditors might overlook.

Finally, using internal auditors can also help to reduce the cost of audits. External auditors are typically more expensive than internal auditors, so relying on internal auditors can save organizations money.

In conclusion, based on the above reasoning, the statement is true. The reliability of audit regulatory is higher when it is obtained from knowledgeable independent sources inside the entity.