Principles of Accounting
12th Edition
ISBN: 9781285607047
Author: NEEDLES
Publisher: Cengage Learning
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Question
Chapter 8, Problem 1DQ
To determine
State the reason of a system of internal control not able to overcome collusion by employees.
Expert Solution & Answer
Explanation of Solution
Internal control: Internal control is a process which ensures continuous reliability of accomplishment of a company’s objectives, related to operations, financial reporting, and in conformity with laws and regulations.
Reason of a system of internal control not able to overcome collusion by employees:
- No system of internal control is without weaknesses. As long as people perform control procedures, an internal
control system will be vulnerable to human error. - Errors can arise from misunderstanding, mistakes, in judgment, carelessness, distractions, or fatigue.
- Separation of duties can be defeated through collusion by employee who secretly agrees to deceive a company.
- Established Procedure may be ineffective against employee's errors or dishonesty.
- With the change in conditions, Internal Control may become Ineffective.
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Students have asked these similar questions
Which of the following is not part of the definition of internal control?
Separation of duties
Safeguard assets
Encourage employees to follow company policies
Promote operational efficiency
Which of the following is not part of the definition of internal control?
a. Separation of duties
b. Safeguard assets
c. Encourage employees to follow company policies
d. Promote operational efficiency
Chapter 8 Solutions
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