Which of the following is an example of an operation deficiency in internal control?

The following questions deal with deficiencies in internal control. Choose the best response.
a. An internal control deficiency may be defined as a condition in which material mis-
statements would ordinarily not be timely detected by
(1) auditors in assisting control risk.
(2) the controller reconciling the general ledger.
(3) employees in normal course of assigned functions.
(4) the chief financial officer reviewing interim financial statements.
b. Which of the following is an example of an operation deficiency in internal control?
(1) The company does not have a code of conduct for employees to consider.
(2) The cashier has online ability to post write-offs to accounts receivable accounts.
(3) Clerks who conduct monthly reconciliation of intercompany accounts do not
understand the nature of misstatements that could occur in those accounts.
(4) Management does not have a process to identify and assess risks on a recurring
basis.
c. A material weakness in internal control represents a control deficiency that
(1) more than remotely adversely affects a company’s ability to initiate, authorize,
record, process, or report external financial statements reliably.
(2) results in a reasonable possibility that internal control will not prevent or detect
material financial statement misstatements.
(3) exists because a necessary control is missing or not properly designed.
(4) reduces the efficiency and effectiveness of the entity’s operations.

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