Why Is Internal Control So Important

question 58

Multiple Choice

Why is internal control so important?

• A) Internal control is encouraged by several regulatory organizations, and it is required by law for publicly traded companies in an enactment in 1978 by the Cohen Commission.
• B) Internal control is essential in lowering costs due to errors and irregularities in an organization by using risk assessment and risk management techniques.
• C) Internal control enables management to maintain control over all its activities and it provides a measure of protection against erroneous or fraudulent financial reporting.
• D) The U.S. Congress has enacted legislation requiring management of publicly-traded companies to report on the effectiveness of their internal control.

---

Definitions:

Total Taxes

refer to the comprehensive amount of taxes (federal, state, local) levied on individuals, corporations, and other entities within a fiscal period.

Taxable Income

The portion of income subject to taxation after all deductions and exemptions have been applied according to tax laws.

Entry Fees

Charges that must be paid to gain access to a particular service, event, or location.

National Parks

Protected areas established by national governments aimed at conserving natural beauty, biodiversity, and cultural heritage while providing recreational opportunities.