Question

MNCs can improve their internal control process by all of the following, except:

a.establishing a centralized data base of information
b.ensuring that all data are reported consistently among subsidiaries
c.ensuring that the MNC always borrows from countries where interest rates are lowest
d. using a system that checks internal data for unusual discrepancies

Answer 1

To improve internal controls, MNCs should focus on establishing centralized databases, ensuring data consistency, and monitoring for discrepancies, not on borrowing strategies for lower interest rates.

Step-by-step explanation:

Multinational corporations (MNCs) can improve their internal control processes by establishing strong and consistent informational frameworks and systems for monitoring their operations. However, ensuring that the MNC always borrows from countries where interest rates are lowest is not directly related to internal control processes, but rather a financial strategy decision. Effective internal controls for MNCs include establishing a centralized database of information, ensuring consistent data reporting among subsidiaries, and using systems to check for unusual discrepancies in internal data. Regarding capital flows and financial stability, developing countries seeking foreign capital, management expertise, and technology must balance attracting investment with measures to protect against capital flight and banking system collapse. This entails a mix of encouraging long-term investment and managing risks through foreign exchange reserves and prudent regulation.