Which of the Following Statements About Internal Control Is Correct

question 6

Multiple Choice

Which of the following statements about internal control is correct?

• A)The establishment and maintenance of internal control is an important responsibility of the internal auditor.
• B)Properly maintained internal control reasonably ensures that collusion among employees cannot occur.
• C)The cost-benefit relationship is a primary criterion that should be considered in designing internal control.
• D)Exceptionally strong internal control is enough for the auditor to eliminate substantive tests on a significant account balance.

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Definitions:

Privity of Contract

A principle in contract law stating that only parties involved in the contract have the right to sue to enforce their rights or claim damages.

Commission

A fee paid for services, typically a percentage of the transaction value, to an agent or salesperson for facilitating or completing a sale.

Agreement of Purchase and Sale

A legally binding contract between a buyer and seller detailing the terms and conditions of the sale of property.

Key Account Management

A strategic business approach focused on building and maintaining long-term relationships with a company’s most valuable customers.