Which of the following statements about internal controls are correct?
A)It is not possible to have perfect (materially correct)financial statements and no internal controls.
B)It is not possible to have perfect internal controls and materially incorrect financial statements.
C)Testing internal controls answers the question,"Are the financial statements correct?"
D)Substantive tests answer the question,"Are the account balances and classes of transactions correct?"
E)What companies say they do is often quite different from what they actually do.
F)Both A and B
G)Both C and D
H)Both D and E

Question

Quizplus · Accepted Answer

D) Substantive tests are designed to verify the accuracy and completeness of the financial records and ensure that the financial statements are free from material misstatement. They directly test the financial transactions and balances.E) This statement reflects the reality that there can be a discrepancy between a company's documented policies and procedures (what they say they do) and their actual practices. This is a common challenge in auditing and internal control assessments, highlighting the importance of not only reviewing documented controls but also testing their implementation.

Which of the Following Statements About Internal Controls Are Correct