A Critical Element of Control Is Monitoring

question 26

Multiple Choice

A critical element of control is monitoring. What is likely to happen if management fails to monitor an internal control?

• A) Necessary improvements will not be identified.
• B) Personnel are likely to stop observing the control.
• C) The inherent risk of an error will increase.
• D) The auditor is likely to assume the control is working when it might not be.

Comprehend the effects of demand forecast accuracy and aggregation on inventory management.

Identify the factors influencing the appropriate level of safety inventory and understand the trade-offs involved.

Understand the mechanisms of inventory review policies (e.g., continuous review, periodic review) and their impact on inventory levels and order patterns.

Appreciate the role of product fill rate and order fill rate in measuring supply chain performance.

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Definitions:

Circuit Switching

Where a dedicated connection is formed between two points (such as two people on telephones) and the connection remains active for the duration of the transmission.

Dedicated Connection

A communication link reserved exclusively for the use of a specific service, user, or application, often guaranteeing constant bandwidth.

Transmission

Transmission refers to the process of transferring data or power from one place to another, often used in contexts like data transmission over networks or mechanical power transmission in machinery.

Domain Name System

The decentralized naming system for computers, services, or any resource connected to the Internet or a private network, translating human-friendly domain names to IP addresses.