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 organisation is more likely to achieve its strategic and operating objectives
D) the organisation is less likely to achieve its strategic and operating objectives

Question

Quizplus · Accepted Answer

Effective internal controls help to ensure that the organization is more likely to achieve its strategic and operating objectives. This is because effective internal controls promote efficiency, accuracy, and compliance, which are essential for achieving organizational goals. Additionally, effective internal controls also reduce the risk of fraud, error, and non-compliance, which can impede the achievement of organizational objectives. Therefore, option C is the best answer. Option A is incorrect because an increased reliance on substantive tests suggests that internal controls are not effective. Option B is incorrect because effective internal controls should decrease control risk. Option D is incorrect because effective internal controls increase the likelihood of achieving strategic and operating objectives.

When Internal Controls Are Effective