Final answer:
The best example of an 'independent verification' control activity is conducting surprise audits, where an auditor reviews financial records and operational processes without prior notice to ensure accuracy and compliance.
Step-by-step explanation:
The independent verification process in control activities is best exemplified by option 1) Conducting surprise audits. Independent verification involves the review and verification of data, transactions, or processes by individuals who are not directly involved in their execution or are external to the process. Such verifications are done to ensure accuracy and compliance with policies and procedures.
Surprise audits are unexpected examinations of financial records and operational processes by an internal or external auditor. They serve as a deterrent to fraudulent activities and errors because employees are aware that an audit could happen at any time without prior notice, enhancing the overall control environment.
Options 2) Performing reconciliations and 4) Reviewing management reports are also control activities but are not necessarily independent as they could be performed by individuals within the process. Option 3) Implementing segregation of duties is a preventive control mechanism, but it does not directly involve verification by an independent party.