Internal controls are important because they:
A) deter fraud and prevent misleading financial statements.
B) eliminate fraud.
C) ensure that the company maintains a compensating balance.
D) guarantee accurate financial statements.

Question

Quizplus · Accepted Answer

Internal controls are put in place to deter fraud and prevent misleading financial statements. While they cannot eliminate fraud entirely, strong internal controls can greatly reduce the risk of fraudulent activity and ensure that financial statements are accurate and reliable. A compensating balance is a separate issue that is unrelated to internal controls.

Internal Controls Are Important Because They