4.4 Define internal control and describe the objectives of an internal control system
1) One objective of an internal control system is to safeguard the assets of a company.
2) An organization's employees are responsible for the design and implementation of the internal control system.
3) Safeguarding assets and ensuring proper reporting of financial information are two of the objectives of having an internal control system.
4) Internal control systems are the same in all companies.
5) Just like anything in accounting, internal control systems are not perfect, although they do reduce the risk of undetected errors and irregularities.
6) Small companies' internal control is always inferior.
7) Internal control is a comprehensive system that helps an organization do all of the following EXCEPT:
A) safeguard assets.
B) safeguard liabilities.
C) operate efficiently and effectively.
D) ensure compliance with applicable laws and regulations.
E) ensure happy employees.
8) Internal control systems:
A) are the same from company to company.
B) are regulated by the Securities and Exchange Commission.
C) vary from company to company.
D) guarantee the safeguard of assets.
E) are regulated by Canadian law.
9) A good internal control system does which of the following?
A) Guarantees the efficiency and effectiveness of operations
B) Reduces the risk of undetected errors
C) Provides absolute assurance that no errors will occur
D) Guarantees that fraud will be prevented
E) Reduces the risk of breaking the law
10) A company may be limited in its internal control procedures because the cost of hiring enough people to implement the procedures:
A) outweighs the benefits of the system.
B) has nothing to do with the effectiveness of the internal control system.
C) can prevent collusion.
D) can limit employee distractions.
E) can make employees scared.
11) List the four parts of a well-defined internal control system.