An organization is planning to outsource its payroll function to an external service provider.

Internal auditors may advise management about outsourcing risks and typical controls without impairing independence, provided they do not assume management responsibility. However, controls provided by the service provider alone may be insufficient to protect the organization. Management must also establish internal oversight, contract monitoring, review of service organization reports, data protection requirements, access controls, issue escalation, and right-to-audit provisions. Option A is incorrect because recommending controls in an advisory capacity does not automatically compromise independence. Option B is also incorrect if internal audit remains advisory and management makes decisions. Option C would be inappropriate if internal audit takes responsibility for ensuring controls operate. Therefore, Option D is the most accurate statement.