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:

Learning-Directed Behaviour

Refers to activities and actions that are specifically aimed at acquiring knowledge and skills.

Informal Learning

Learning that occurs in a natural, unstructured manner outside the confines of a formal education or training program.

Formal Learning

Formal learning is structured education that typically occurs in an institutional setting like schools or training centers, involving systematic instruction based on a curriculum.

Learning Needs

The gap between current knowledge or skills and the desired level of knowledge or skills.