Question

Which of the following is true regarding management's documentation of internal controls?

A) Some documentation should focus on controls management has placed in operation to adequately address identified financial reporting risks.

B) Documentation should focus on controls over the interim financial reporting process.

C) Documentation must be done on paper.

D) Inadequate documentation is usually considered an insignificant deficiency in internal control.

Answer 1

Management's documentation of internal controls should focus on controls that address identified financial reporting risks.

Step-by-step explanation:

The correct answer is A) Some documentation should focus on controls management has placed in operation to adequately address identified financial reporting risks.

Management's documentation of internal controls is an important aspect of ensuring the accuracy and reliability of financial reporting. It involves documenting the controls that management has implemented to address the risks related to financial reporting.

For example, management may document controls such as segregation of duties, authorization processes, and regular review and monitoring of financial transactions to mitigate the risks associated with financial reporting.