Which One of the Following BEST Describes the Inherent Limitations

question 109

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

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Definitions:

Generalized Anxiety Disorder

A mental health disorder characterized by persistent and excessive worry about various aspects of life, not tied to any specific threat.

Phobic Disorder

Irrational, exaggerated fear of an object or situation.

Cognitive Abilities

The mental skills and capacities for learning, thinking, reasoning, problem-solving, and memory that vary from person to person.

Untreated Depression

A condition characterized by persistent sadness and lack of interest or pleasure in previously rewarding or enjoyable activities that remains without medical or therapeutic intervention.