An Effective Internal Control Requires Organisational Independence of Departments

question 63

Multiple Choice

An effective internal control requires organisational independence of departments. Organisational independence would be impaired in which of the following situations?

• A) The internal auditors report to the audit committee of the board of directors.
• B) The financial controller reports to the marketing director.
• C) The payroll accounting department reports to the chief accountant.
• D) The cashier reports to the treasurer.

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Definitions:

Properly Drawn

Pertains to documents or legal instruments that are prepared and executed correctly and according to all requisite legal standards.

Sufficient Funds

The availability of enough money in an account to cover checks or withdrawals.

Honor

The act of fulfilling or adhering to an agreement, contract, or request, demonstrating integrity and respect.

Postdated Check

A check written with a date in the future, which cannot be cashed or deposited until that date.