Final answer:
Internal controls have several purposes, including prevention of error, theft, and fraud; promotion of operational efficiency; and ensuring compliance with laws and regulations.
Step-by-step explanation:
Internal controls play a crucial role in organizations for various purposes, including but not limited to:
- Prevention of error, theft, and fraud: Internal controls are designed to detect and deter fraudulent activities and minimize errors in financial reporting and operations.
- Promotion of operational efficiency: Internal controls ensure that processes and procedures are in place to streamline operations, improve productivity, and utilize resources optimally.
- Ensuring compliance with laws and regulations: Internal controls help organizations adhere to legal and regulatory requirements, reducing the risk of non-compliance and potential penalties.
- Providing more favorable financial information: This option is incorrect as the purpose of internal controls is not to manipulate or present misleading financial information, but rather to ensure accuracy and reliability in financial reporting.
The main purposes of internal controls include: A. prevention of error, theft, and fraud; B. promotion of operational efficiency; and C. ensuring compliance with laws and regulations.
The option that is not a main purpose of internal controls is D. providing more favorable financial information. Internal controls are designed to safeguard company assets, improve the accuracy and reliability of accounting records, and increase efficiency within the organization.
They also ensure that the company is in compliance with applicable laws and regulations. However, the intention of internal controls is not to skew financial information favorably, but rather to ensure it reflects a true and fair view of the company's financial position.