A company's internal control system:
A) Eliminates the company's risk of loss.
B) Monitors company and employee performance.
C) Eliminates human error.
D) Eliminates the need for audits.
E) Eliminates the need for managers' certification of controls.

Question

Quizplus · Accepted Answer

A company's internal control system is designed to monitor company and employee performance, reducing the risk of fraud, errors, and other financial losses by identifying potential issues before they become problems. While internal controls aim to minimize risk, they cannot completely eliminate it, making option A incorrect. Additionally, human error can never be entirely eliminated, making option C incorrect. Internal controls do not eliminate the need for audits, as audits are still necessary to verify the effectiveness of the control system, making option D incorrect. Finally, managers' certification of controls is still necessary and not eliminated by internal controls, making option E incorrect.

A Company's Internal Control System