Question

Auditors are often concerned with three aspects of internal controls related to the sales and collections cycle. Which of the following is not one of those controls?

1) Segregation of duties
2) Authorization and approval
3) Physical safeguards
4) None of the above

Answer 1

4) None of the above

(Ai generated)

Answer 2

The correct answer is 'None of the above.' Auditors consider segregation of duties, authorization, approval, and physical safeguards as essential aspects of internal controls in the sales and collections cycle. The correct option is 4.

Step-by-step explanation:

The answer to the question is 4) None of the above. Auditors are indeed concerned with the segregation of duties, authorization, and approval, and physical safeguards as part of internal controls related to the sales and collections cycle.

The main answer to this question is that in the field of accounting and auditing, internal controls are mechanisms put in place to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Regarding the sales and collections cycle, auditors are particularly concerned with three main aspects of internal controls to reduce the risk of errors and irregularities: segregation of duties, which ensures that no single individual has control over all aspects of a financial transaction to prevent potential conflicts of interest and fraud; authorization and approval, which ensures that transactions are reviewed and sanctioned by appropriate personnel within the organization; and physical safeguards, which protect the company's assets through physical measures, such as locked facilities and password-protected systems. These control mechanisms are crucial for maintaining the accuracy and reliability of financial records.