What is the optimal point of reasonable assurance for internal control?
A) When all possible controls are implemented
B) When the cost of controls equals the savings on losses from risks
C) When standard costing is used in inventory accounts
D) When no discrepancies exist between the inventory physical count and the inventory account balance

Question

Quizplus · Accepted Answer

The optimal point of reasonable assurance for internal control occurs when the cost of implementing controls is balanced with the savings obtained from mitigating risks. It is not feasible or practical to implement all possible controls, and the use of standard costing in inventory accounts and the absence of discrepancies in inventory physical counts are only examples of specific controls rather than measures of overall assurance level.

What Is the Optimal Point of Reasonable Assurance for Internal