Choice "D" is correct. The human resources principle says that human resources policies and procedures should be fully compatible with effective financial reporting and internal control. Background checks are evidence of the organization's commitment to hire new employees only after they have been thoroughly vetted and shown to be compatible with organizational commitments to competence, ethics, etc.
Choice "a" is incorrect. The management philosophy and operating style principle says that management's philosophy and operating style should be congruent with effective financial reporting and internal control. Management's philosophy is demonstrated by internal practices that emphasize work ethic and documentation and are evidenced by background checks.
Choice "c" is incorrect. The integrity and ethical values principle says that high standards of integrity and ethical conduct should be adopted by top management and demonstrated throughout the entire organization. Background checks on new employees do not support this principle.
Choice "b" is incorrect. The financial reporting competencies principle says that companies should retain qualified personnel to handle financial reporting. Financial reporting competencies represent the establishment of standards rather than the verification of standards (e.g., a background check).