A Deficiency in Internal Control Design Exists When

question 12

Multiple Choice

A deficiency in internal control design exists when

• A)the person performing the control does not have the knowledge to perform the control effectively
• B)a control is missing
• C)the person performing the control does not have the authority to perform the control
• D)a control does not operate as designed
• E)a control does not operate as it should
• F)both A and C
• G)both B and D
• H)both C and E

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Definitions:

Market Interest Rate

The prevailing rate of interest available in the market for securities of comparable risk and maturity, influencing how much interest is paid on bonds and loans.

Loan Origination Fees

Charges paid to a lender or broker for processing a new loan application, used as compensation for putting the loan in place.

Periodic Interest Revenue

The interest income earned on investments during a specific period, reflecting the return on interest-bearing financial assets.

Note Proceeds

The amount of money received by a borrower from the lender when a note is issued; essentially the principal amount of the loan.