Which of the following is essential to determine whether effective internal control policies and procedures have been prescribed and are being followed?
A) Developing questionnaires and checklists.
B) Understanding control policies directed towards operating efficiency.
C) Understanding the internal control and performing tests of controls.
D) Observing employee functions and making inquiries.

Question

Quizplus · Accepted Answer

To determine whether effective internal control policies and procedures have been prescribed and are being followed, one must understand the internal control and perform tests of controls. This involves assessing the design of the internal controls and testing them to ensure that they are operating effectively. The other options listed may be useful in developing an understanding of the internal control system but are not sufficient on their own to determine whether effective internal controls exist and are being followed.

Which of the Following Is Essential to Determine Whether Effective