Which of the following statements is correct regarding corporate compensation systems and related bonuses? 1. A bonus system should be considered part of the control environment of an organization and should be considered in formulating a report on internal control. 2. Compensation systems are not part of an organization's control system and should not be reported as such. 3. An audit of an organization's compensation system should be performed independently of an audit of the control system over other functions that impact corporate bonuses.
A) 1 only
B) 2 only
C) 3 only
D) 2 and 3 only

Question

Quizplus · Accepted Answer

A bonus system is part of the control environment as it can influence employee behavior and should be considered when evaluating internal controls.

Which of the Following Statements Is Correct Regarding Corporate Compensation