(b) The requirement is to identify the most effective
external monitoring device. Answer (b) is correct because external
auditors audit the financial statements and internal controls
of a publicly held corporation. Answer (a) is incorrect
because internal auditors are an internal monitoring device.
Answer (c) is incorrect because the SEC relies upon external
auditors to audit the corporation’s financial statements and
internal controls. Answer (d) is incorrect because attorneys
only advise management on legal issues. They cannot take
action if management does not take their advice.