Which of the following statements concerning internal controls is true?
A)Internal administrative controls are designed to limit the amount of funds spent on investments.
B)The control procedure, separation of duties, prohibits the employment of a husband and wife or other closely related parties within the same company.
C)Internal accounting controls are limited to the policies and procedures used to protect the company from embezzlement.
D)Strong internal controls provide reasonable assurance that the objectives of a company will be accomplisheD.Strong internal controls provide reasonable, but not absolute, assurance that the objectives of a company will be accomplished.

Question

Quizplus · Accepted Answer

Strong internal controls can provide reasonable assurance that the objectives of a company will be accomplished. However, they cannot provide absolute assurance since there is always a possibility of errors, fraud, or external factors that may impact the achievement of objectives. Option A is incorrect because internal administrative controls are not necessarily related to investments. Option B is incorrect because separation of duties does not prohibit the employment of closely related parties, rather it requires that certain responsibilities be delegated to different individuals to reduce the risk of errors or fraud. Option C is incorrect because internal accounting controls cover a broad range of policies and procedures that aim to ensure the accuracy and reliability of financial reporting, as well as prevent and detect fraud or misappropriation of assets.

Which of the Following Statements Concerning Internal Controls Is True