Which of the following statements about internal control is CORRECT?
A) Exceptional strong internal control is enough for the auditor to eliminate substantive tests on a significant account balance.
B) Properly maintained internal control reasonably ensures that collusion among employees cannot occur.
C) The cost-benefit relationship is a primary criterion that should be considered in designing internal control.
D) The establishment and maintenance of internal control is an important responsibility of the internal auditor.
E) All of these are correct statements about internal control. C

Question

Quizplus · Accepted Answer

The cost-benefit relationship should always be considered when designing internal control because the cost of implementing and maintaining internal controls should not outweigh the benefits. A and B are incorrect because strong internal controls may not eliminate the need for substantive testing, and collusion is always a risk even with proper internal controls in place. D is incorrect because while the internal auditor may play a role in establishing and maintaining internal control, it is primarily the responsibility of management.

Which of the Following Statements About Internal Control Is CORRECT