The Daphne Corporation *uates employees with responsibilities for financial reporting for fulfillment of those responsibilities for compensation and promotion purposes. The company's policies support the idea that:
a.Management's philosophy and operating style support achieving effective internal control over financial reporting.
b.Management and employees are assigned appropriate levels of authority and responsibility to facilitate effective internal control over financial reporting.
c.The company's organizational structure supports effective internal control over financial reporting.
d.Human resources practices should be designed to facilitate effective internal control over financial reporting.
Answer:D
Choice "D" is correct. The regular *uation of employees for their competence in financial reporting is an important link between human resources policies and the achievement of financial reporting objectives.
Choice "a" is incorrect. Management's operating style relates more to work ethic and commitment to effective financial reporting than the recruitment, retention, and *uation of employees.
Choice "b" is incorrect. Appropriate delegation relates to the organization's assignment of duties rather than to the recruitment, retention, and *uation of employees.
Choice "c" is incorrect. The organizational structure principle typically involves the appropriate alignment of reporting relationships to ensure that controls are not undermined (e.g., internal auditors should not report to the CFO) rather than to the recruitment, retention and *uation of employees.
