Maximum benefit from independent checks of performance is obtained when
A)it is made on a pre-announced basis.
B)it is done by the employee possessing custody of the asset.
C)discrepancies are reported to management.
D)it is done at the time of the external audit.

Question

Quizplus · Accepted Answer

Independent checks of performance provide the maximum benefit when discrepancies are reported to management. This allows management to take corrective actions and improve the control system. Pre-announcing the independent check may cause employees to falsify records to avoid detection. It is not necessary that the employee possessing custody of the asset conducts the check, as it may lead to conflict of interest. External audit timing may not coincide with the independent check, so it may not be the best option.

Maximum Benefit from Independent Checks of Performance Is Obtained When