When Internal Controls Are Effective

question 1

Multiple Choice

When internal controls are effective,

• A) there will be an increased reliance on substantive tests of transactions and account balances.
• B) control risk will also be high.
• C) the organization is more likely to achieve its strategic and operating objectives.
• D) the organization is less likely to achieve its strategic and operating objectives.

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Definitions:

Firm's Purpose

A firm's purpose is its core reason for existence, encompassing its mission, values, and goals, which guides its strategies and operations.

Stakeholders

Individuals or groups that have an interest in the performance and activities of a company, including employees, customers, suppliers, and investors.

Strategic Goal

Refers to a long-term aim that guides decision-making and strategy formulation in an organization.

Planning Gap

The difference between targeted performance results and actual outcomes, highlighting areas that require corrective action or revised strategies.