Accounting Multiple Choice Question – 5 November 2025

In each of the following three examples, select whether control risk is higher or lower than normal.

Example 1 – The company has an established and well-resourced internal audit function.

Example 2 – The company has a history of reviewing financial performance on a regular basis at the board level.

Example 3 – Purchase invoices are not authorised before payment.

Select ONE answer:

1. Example 1. Higher and Example 2. Higher and Example 3. Lower
2. Example 1. Lower and Example 2. Higher and Example 3. Lower
3. Example 1. Lower and Example 2. Lower and Example 3. Higher
4. Example 1. Lower and Example 2. Higher and Example 3. Higher

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct =>   Control risk is lower than normal (ie, internal controls are stronger) where the company has an established internal audit function (which strengthens the control environment by monitoring the adequacy and effectiveness of the controls in place) and where the board has a track record of performance review, monitoring and investigating deviations from expected performance. Control risk is higher than normal where purchase invoices are not authorised (control deficiency).
3. Not correct
4. Not correct

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