What is a general assessment the auditor must conduct regarding systems of internal controls?

The appropriate response highlights the importance of considering the competence of internal auditors as part of the overall assessment of a company's internal control systems. Evaluating the internal auditors' competence is crucial because effective internal auditing is integral to the reliability of financial reporting and the effectiveness of internal controls.

Internal auditors play a key role in assessing and improving the adequacy and effectiveness of risk management, control, and governance processes. Their skills, qualifications, and objectivity can directly influence how thoroughly and accurately they evaluate control systems. If the internal auditors are competent and appropriately trained, they are more likely to identify deficiencies in internal controls, thereby assisting the overall audit process.

In contrast, while evaluating financial statements, checking budgetary controls, and ensuring compliance with regulatory standards are important aspects of an auditor's responsibilities, they do not provide a direct assessment of the internal control systems themselves. Thus, considering the competence of internal auditors is a fundamental step in evaluating the integrity and efficacy of those systems.