Question

Which of the following statements is correct regarding internal control?

1) Internal control is not necessary for organizations
2) Internal control helps in preventing fraud and errors
3) Internal control is only applicable to large organizations
4) Internal control is a one-time process

Answer 1

Internal control helps in preventing fraud and errors.

Step-by-step explanation:

The correct statement regarding internal control is option 2: Internal control helps in preventing fraud and errors.

Internal control refers to the processes and measures implemented by an organization to safeguard its assets, ensure accuracy and reliability of financial reporting, and promote operational efficiency.

Internal control is applicable to all organizations, regardless of their size, as it helps in preventing fraud and errors and provides a system of checks and balances to minimize risks.