Which aspect is NOT typically covered by internal audits?

Creating annual financial statements is not typically covered by internal audits because the primary function of internal auditors focuses on evaluating and improving the effectiveness of risk management, control, and governance processes within an organization. Internal audits assess how well these components are functioning to support the organization’s objectives, including compliance with regulations and operational efficiency.

In contrast, the preparation of annual financial statements is generally the responsibility of the finance or accounting department of the company, not the internal audit team. While auditors may review financial statements for accuracy and adherence to accounting standards as part of their work, they do not create these documents. Their role is more about examining the results to provide assurance regarding the quality and reliability of the information presented.

This distinction clarifies the primary activities associated with internal audits, thereby affirming why the creation of annual financial statements falls outside their typical scope of responsibility.