Question

Which of the following statements about internal control is correct?

a. A properly maintained internal control system reasonably ensures that collusion among employees cannot occur.
b. The establishment and maintenance of internal control is an important responsibility of the internal auditor.
c. An exceptionally strong internal control system is enough for the auditor to eliminate substantive procedures on a significant account balance.
d. The cost-benefit relationship is a primary criterion that should be considered in designing an internal control system.

Answer 1

The correct statement about internal control is option d: The cost-benefit relationship is a primary criterion that should be considered in designing an internal control system.

Step-by-step explanation:

The correct statement about internal control is Option d: The cost-benefit relationship is a primary criterion that should be considered in designing an internal control system.

Internal control is a system developed by an organization to safeguard its assets, ensure accurate financial reporting, and promote operational efficiency. When designing an internal control system, it is important to consider the cost-benefit relationship. This means that the cost of implementing and maintaining the control should not exceed the benefits gained from it.