A Company Should Study Risks Common to Its System Prior

question 11

Multiple Choice

A company should study risks common to its system prior to deciding the mix of controls needed.High-risk characteristics that might justify the need for extensive internal controls include all of the following, except:

• A)Goods received are especially difficult to differentiate, count, or inspect.
• B)High volumes of goods are often received, or the goods are of high value.
• C)Receiving and / or record keeping are performed at one centralized location.
• D)Changes in price or vendors is frequent.

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Definitions:

Exaggerated Claims

Statements that stretch the truth or make something seem more important or serious than it actually is.

Contract

A legal contract made between two or more parties, which can be upheld in a court of law.

Indemnity

A contractual agreement in which one party agrees to compensate for any losses or damages incurred by another.

Written Commitment

A documented pledge or promise to engage in or refrain from a specified action.