ACCA Applied Knowledge · Business and Technology · Internal controls
The board of Delta plc is preparing its annual statement on internal control. Which statement is the most accurate about the board's responsibility?
The board holds ultimate responsibility for maintaining the internal control system and for reviewing its effectiveness, usually at least annually. It may be supported by the audit committee and internal audit, but it cannot hand over accountability, and an unmodified external audit report does not end its duty.
- AThe board is responsible for maintaining and reviewing the effectiveness of the system of internal control, and it may use internal audit and the audit committee to support its reviewCorrect
- BThe board may delegate full responsibility for internal control to the internal audit function once the function is established
- CThe board's responsibility ends once the external auditor has reported on the financial statements without modification
Explanation
Governance guidance places ultimate responsibility for the system of internal control with the board, which reviews its effectiveness at least annually. It can rely on the audit committee and internal audit for assistance but cannot delegate accountability. The external audit opinion does not discharge that responsibility.
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