Which One of the Following BEST Describes the Inherent Limitations

question 53

Multiple Choice

Which one of the following BEST describes the inherent limitations that should be recognised by an auditor when considering the potential effectiveness of a system of internal accounting control?

• A) Procedures whose effectiveness depends on segregation of duties can be circumvented by collusion.
• B) The competence and integrity of client personnel provides an environment conducive to accounting control and provides assurance that effective control will be achieved.
• C) The benefits expected to be derived from effective internal accounting control usually do not exceed the costs of such control.
• D) Procedures designed to assure the execution and recording of transactions in accordance with proper authorisations are effective against irregularities perpetrated by management.

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Definitions:

Ninety Days

A time period equivalent to approximately three months or 90 consecutive days.

Promise

A declaration or assurance that one will do something or that a particular thing will happen.

Consent Order

Under the Federal Trade Commission Act, an order under which a company agrees to stop a disputed practice without necessarily admitting that the practice violated the law.

Private Cause

A legal action initiated by an individual or entity for personal reasons or grievances.