CAF-8 · Chapter 6 · Question 10 of 10
In smaller entities, a strict segregation of duties is often difficult to achieve due to limited staff. What is the most common mitigating control the auditor will look for in such environments?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) High levels of direct involvement and oversight by the business owners or senior management.
Explanation
In small entities where formal segregation of duties is impractical, the active, hands-on involvement of the owner/manager acts as a powerful compensating control, though it does raise the risk of management override.
More Tests of Controls MCQs
- Q2During a walkthrough of the purchases system, you note that goods are recorded in the accounting system purely based on the supplier's…
- Q3To ensure that wages and salaries are not paid to 'ghost' or fictitious employees, which of the following internal controls is most…
- Q4To prevent the misappropriation of petty cash at a client's regional office, which of the following controls should management implement?
- Q5The auditor of a wholesale company is testing the completeness of dispatched goods. Which of the following tests of controls specifically…
- Q6While evaluating a client's computerized payroll system, the auditor notes that the software automatically rejects any employee age…