The quality of entity level controls is important to _______.
A)the ineffective functioning of transaction level controls
B)the effective functioning of transaction level controls
C)the differences between book and taxable income
D)the quantity of transaction level controls

Question

Quizplus · Accepted Answer

Entity level controls provide the overall control environment for a company, which includes setting the tone at the top, establishing policies and procedures, and ensuring the competency and ethical behavior of employees. Effective entity level controls are necessary for the effective functioning of transaction level controls, which are the specific controls in place to prevent errors or fraud in individual transactions. Therefore, the quality of entity level controls is crucial in ensuring the overall effectiveness of a company's internal control system.

The Quality of Entity Level Controls Is Important to _______