Which of the Following Statements Regarding a System of Internal

question 135

Multiple Choice

Which of the following statements regarding a system of internal control is false?

• A) Effective internal control systems provide complete assurance against the occurrence of material frauds and embezzlements.
• B) Internal control systems depend largely on the competency and honesty of people.
• C) Because internal control systems have a cost, management should evaluate the cost/benefit of each control plan.
• D) The development of an internal control system is the responsibility of management.

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Definitions:

Criminal Sanctions

Punishments or penalties imposed for violations of criminal laws, intended to deter illegal activities and punish offenders.

Punitive Fines

Financial penalties imposed by a court, not to compensate the plaintiff, but to punish the defendant and deter future misconduct.

Ultramares Doctrine

A legal principle that limits the liability of auditors to third parties, based on the notion that auditors should only be held liable for fraud or gross negligence.

Recent Years

Refers to the period encompassing the last few years leading up to the current date, typically indicating a focus on contemporary or near-past events or trends.