The internal control in small business is highly dependent on the
A) Separation of functional responsibilities.
B) Complexity of the client's internal controls.
C) Owner-manager's competence as well as ethics and integrity.
D) Bonding of employees.

Question

Quizplus · Accepted Answer

The owner-manager's competence, ethics, and integrity are crucial in establishing and maintaining effective internal controls in a small business. Small businesses often have limited resources and personnel, making it challenging to implement robust controls. However, an owner-manager with a clear understanding of the business's risks and a commitment to ethical behavior can establish effective internal controls even with limited resources. Separation of functional responsibilities, bonding of employees, and complexity of internal controls are important aspects of internal controls, but they are not as critical as the owner-manager's role in ensuring the internal control system's effectiveness.

The Internal Control in Small Business Is Highly Dependent on the