The top three sales representatives for a company consistently include non-allowable charges on their expense reports. Line management is reluctant to deny reimbursement of the charges for fear of losing the sales representatives. This situation has the greatest negative impact on which of the following internal control components?
A) Monitoring.
B) Control environment.
C) Information and communication.
D) Control activities.

Question

Quizplus · Accepted Answer

The control environment is negatively impacted because it sets the tone for the organization, influencing the control consciousness of its people. Allowing non-allowable charges undermines the integrity and ethical values of the company.

The Top Three Sales Representatives for a Company Consistently Include