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 the expected benefit.
D)the human element is not important.

Question

Quizplus · Accepted Answer

A system of internal control is designed to provide reasonable assurance regarding the achievement of objectives in effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations. It cannot guarantee absolute assurance because it must balance the cost of controls with the benefits they provide. Options A, B, and D are incorrect because no system is infallible, no system can always detect every error or irregularity, and the human element is a critical factor in the effectiveness of any control system.

A System of Internal Control Can Only Provide Reasonable Assurance