Which of the following best describes the goal of internal controls?

• A. To maximize profits by reducing all expenses to zero.
• B. To provide reasonable assurance regarding the achievement of an organization's objectives in operations, reporting, and compliance.
• C. To eliminate all risks and errors within an organization.
• D. To ensure that only top management is responsible for financial reporting.

Answer: (B)

Verified step by step guidance

1. Understand the concept of internal controls: Internal controls are processes and procedures implemented by an organization to ensure the reliability of financial reporting, compliance with laws and regulations, and efficient operations.
2. Clarify the goal of internal controls: The goal is not to eliminate all risks or errors, as this is impractical, but rather to provide reasonable assurance that the organization's objectives in operations, reporting, and compliance are achieved.
3. Evaluate the options provided: Analyze each option to determine which aligns with the definition and purpose of internal controls. For example, maximizing profits or eliminating all risks are not realistic goals of internal controls.
4. Focus on the correct answer: The correct answer should emphasize reasonable assurance and the achievement of objectives in operations, reporting, and compliance, as this is the widely accepted purpose of internal controls.
5. Conclude by reinforcing the importance of internal controls: Highlight that internal controls are essential for safeguarding assets, ensuring accurate financial reporting, and promoting adherence to laws and regulations.