Which of the Following Is a Correct Statement About Internal

question 57

Multiple Choice

Which of the following is a correct statement about internal controls?

• A)The internal control function in a company is a process designed by management and others charged with governance to provide reasonable assurance that the financial statements are prepared in accordance with the applicable financial reporting framework.
• B)Management develops internal controls to prevent misstatements in the financial statements.
• C)The auditor reviews the internal controls developed by management to assess whether the internal controls are effective in detecting misstatements.
• D)The auditing standards define internal controls over financial statements as processes designed by management and others charged with governance to provide assurance that company responsibilities are met.

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Definitions:

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that is used globally to prepare public company financial statements.

Held to Maturity

A designation for financial assets which a company has the intention and ability to hold until a specified maturity date.

Available-For-Sale Securities

Financial assets that are purchased with the intent of selling before they reach maturity or when favorable market conditions exist.

Short-Term Investments

Assets that are expected to be converted into cash, sold, or consumed within one year or within the operating cycle, whichever is longer.