The auditing standards define internal controls over financial statements as processes designed by management and others charged with governance to provide reasonable assurance that company responsibilities are met.Which of the following is not one of those areas?
A)The reliability of financial reporting.
B)The earning of net income.
C)The effectiveness and efficiency of operations.
D)The compliance with laws and regulations.

Question

Quizplus · Accepted Answer

Internal controls over financial statements are designed to provide reasonable assurance that financial reporting is reliable, operations are effective and efficient, and the company complies with laws and regulations. However, they are not designed to ensure the earning of net income. Net income is affected by many factors, including external market conditions and company strategy, which are not necessarily within the scope of internal controls over financial statements.

The Auditing Standards Define Internal Controls Over Financial Statements as Processes