A system of internal control can only provide reasonable assurance, which is based on the belief that
A)the system is infallible.
B)the system can always detect errors and irregularities.
C)the costs of establishing control activities should not be greater than their expected benefit.
D)the human element is not important.

Question

Quizplus · Accepted Answer

A system of internal control can never completely guarantee the prevention or detection of errors or irregularities. However, an effective system of internal control can provide reasonable assurance, which means that the benefits of implementing the control activities outweigh the costs. Therefore, choice C is the correct answer. Choices A, B, and D are all incorrect because they incorrectly assume that the system of internal control can be perfect or that certain elements are unimportant.

A System of Internal Control Can Only Provide Reasonable Assurance