Ineffective internal controls result in higher risk of material misstatement in the financial statements than effective internal controls.

Question

Quizplus · Accepted Answer

Ineffective internal controls do not adequately prevent or detect errors or fraud in financial reporting, which increases the risk of material misstatement in the financial statements. In contrast, effective internal controls provide reasonable assurance that material misstatements will be prevented or detected in a timely manner. Therefore, A is the correct answer.

Ineffective Internal Controls Result in Higher Risk of Material Misstatement