What is the definition of internal control?
A) A process designed to guarantee that objectives related to organizational strategy, quality of reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations will be achieved.
B) A process designed to provide reasonable assurance that objectives related to organizational strategy, quality of reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations will be achieved.
C) A process designed to provide reasonable assurance that objectives related to ethical values and integrity, quality of reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations will be achieved.
D) A process designed to guarantee that objectives related to ethical values and integrity, quality of reporting, SOX compliance, and efficiency of operations will be achieved.

Question

Quizplus · Accepted Answer

Internal control refers to the processes, policies, procedures, and systems implemented by an organization to provide reasonable assurance that its objectives related to organizational strategy, quality of reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations will be achieved. The word "guarantee" in option A and D is too strong, and the word "ethical values and integrity" in option C narrows the scope of internal control too much. Therefore, option B is the best choice as it covers all the important objectives while using appropriate language.

What Is the Definition of Internal Control