Final answer:
False. Internal control procedures are necessary even if a company hires honest employees to prevent errors and fraud.
Step-by-step explanation:
False. Even if a company hires honest employees, internal control procedures are still necessary to prevent errors and fraud. Internal control procedures help ensure that financial records are accurate, assets are safeguarded, and operations are efficient.
For example, segregation of duties is an important internal control procedure that ensures no single employee has too much control over a process. This helps prevent fraud by requiring multiple individuals to be involved in critical activities, such as authorizing transactions and recording them in the books.
Additionally, internal control procedures include regularly reconciling bank statements, conducting physical inventories, and implementing IT controls to protect sensitive information.