Question

What are internal controls? Select one:

a. Processes to improve customer service
b. Controls to manage the risk of loss and fraud within a company
c. Controls to train accounting system users
d. Controls to ensure that a company does not spend more than it should

Answer 1

b. Controls to manage the risk of loss and fraud within a company

Step-by-step explanation:

Internal controls are the rules and procedures put in place by an organization to protect the integrity and accuracy of its financial records. Internal control promotes employee accountability and reduces the possibility of fraud in the company. They help the company achieve operational efficiency by improving the timeliness and accuracy of accounting information.

Internal controls safeguard company assets by putting in measures that regulate and prevent employees from stealing or committing fraud. The measures comprise of control activities like documentation, separations of duties, authorizations, and reconciliations.