Internal Controls and Cash Handling Practices Quiz

To ensure adherence to legal requirements and regulations.

To set clear rules and procedures for the proper handling of cash transactions.

To outline expected standards of behavior and ethics for individuals within the organization.

Regular reconciliations help uncover discrepancies and ensure accurate records.

Internal controls over cash handling safeguard against errors and fraud to maintain accurate financial records.

To minimize the risk of fraud and errors by dividing responsibilities.

To deter problems before they occur by implementing measures like numbered invoices.

To assess how well internal controls are functioning and identify areas for improvement.

To reduce the likelihood of hiring individuals who may pose risks to the organization.

Detective controls identify problems after they occur, such as surveillance cameras capturing incidents.

Employee motivation is not a formal component but can influence the effectiveness of controls.

An effective system involves ongoing scrutiny and assessment of controls.

Compensating controls mitigate risks when primary controls are insufficient, such as increased oversight.

Flexibility is not a principle but can be a desirable attribute in adapting controls to changing circumstances.

Strong internal controls decrease the likelihood of errors and enhance operational efficiency.