A good system of internal control
A) Encourages adherence to prescribed managerial policies
B) Promotes operational efficiencies
C) Eliminates the need for an audit
D) Both encourages adherence to prescribed managerial policies and promotes operational efficiencies
E) All of the above

Question

Quizplus · Accepted Answer

A good system of internal control should encourage adherence to prescribed managerial policies, as well as promote operational efficiencies. It does not eliminate the need for an audit, but it can make the audit process smoother and more effective. Therefore, option D, "Both encourages adherence to prescribed managerial policies and promotes operational efficiencies," is the best choice. Option E, "All of the above," is not a good choice because it implies that internal controls also eliminate the need for an audit, which is not true.

A Good System of Internal Control