During a Review of a Small Business Entity's Internal Control

question 69

Multiple Choice

During a review of a small business entity's internal control system, the auditor discovered that the accounts receivable clerk approves credit memos and has access to cash. Which of the following controls would be most effective in offsetting this weakness?

• A)The owner reviews errors in billings to customers and postings to the subsidiary ledger.
• B)A controller receives the monthly bank statement directly and reconciles the checking accounts.
• C)The owner reviews credit memos before they are recorded.
• D)The controller reconciles the total of the detailed accounts receivable accounts to the amount shown in the ledger.

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Definitions:

Non-material Culture

The intangible elements of culture, such as beliefs, practices, norms, and values that influence the way members of a society live and interact.

Mores

Deeply held cultural norms and values that embody the moral views of a group or society.

Folkways

Are norms that specify social preferences. Because they are the least important norms, violating them evokes the least severe punishment.

Sociobiologists

Scientists who study the biological underpinnings of social behavior across different species, including humans, aiming to understand how evolution has shaped social interactions and structures.