Question

Paperclips has just acquired Office Space, so Ned wanted to inform the employees that they were no longer Office Space employees but Paperclips employees. As new Paperclips employees, Ned also wanted to make sure that everyone was familiar with the internal controls he employs. Each employee was given an employee handbook, which included Paperclips' Mission Statement, in order to educate the new employees about the merged company's policies and procedures. Which of the following internal control systems is being used in this scenario?A) Monitoring processes.B) Risk assessment.C) Control activities.D) Control environment.

Answer 1

Answer:

Paperclips

The internal control system that is being used in this scenario is:

D) Control environment.

Explanation:

The control environment of Paperclips is always set at the top, just as Ned is attempting to do with the new employees from Office Space.  An employee handbook is an excellent way to convey the management's tone for an effective control environment.  It will help the employees to understand their responsibilities and authority in their different roles and to be committed to ethical behavior.