ExpertEasy1 markMultiple Choice
CPA · Question 28 · Area 2: Risk Assessment
Which of the following is a 'Control Activity' component of internal control?
Which of the following is a 'Control Activity' component of internal control?
Answer options:
A.
Management's philosophy and operating style.
B.
The entity's process for identifying business risks.
C.
Bank reconciliations are prepared monthly by an employee who does not handle cash.
D.
Regular reporting to the board of directors on internal control performance.
How to approach this question
Identify the specific action/procedure. Environment/Risk/Monitoring are high-level processes. Activities are the actual checks (recs, approvals).
Full Answer
C.Bank reconciliations are prepared monthly by an employee who does not handle cash.✓ Correct
Bank reconciliations are prepared monthly by an employee who does not handle cash.
Control activities are the policies and procedures that help ensure management directives are carried out. Examples include authorizations, verifications, reconciliations, and segregation of duties.
Common mistakes
Confusing Control Activities with Monitoring.
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