Part 1Which of the following statements are true? Part 1
A. Issuing employees procurement cards is an example of the control procedure referred to as ''general authorization.'' B. Organizations can reduce the risk of fraudulent disbursements by sending their bank a list of all checks issued, a process referred to as ''Positive Pay.'' C. Both of the statments above are true. D. None of the statements above are true.

Question

Part 1Which of the following statements are​ true? Part 1
A. Issuing employees procurement cards is an example of the control procedure referred to as​ ''general authorization.'' B. Organizations can reduce the risk of fraudulent disbursements by sending their bank a list of all checks​ issued, a process referred to as​ ''Positive Pay.'' C. Both of the statments above are true. D. None of the statements above are true.

BlackTom AI · Accepted Answer

Let's break down the question by evaluating each statement in turn and linking them to common internal controls knowledge.
A. 'Issuing employees procurement cards is an example of the control procedure referred to as ''general authorization.''' This statement is not accurate. General authorization typically refers to broad, policy-level approvals that grant employees permission to perform certain activities without requiring further specific approvals for each transaction. Procurement cards (P-cards) are usually associated with specific purchasing controls, such as spending limits, merchant category restrictions, and receipt matching, rather than being classified as general authorization. Therefore, this option mischaracterizes the nature of general authorization.
B. 'Organizations can reduce the risk of fraudulent disbursements by sending their bank a list of all checks issued, a process referred to as ''Positive Pay.''' This description aligns with Positive Pay, a well-known bank reconciliation control where the company provides the bank with a list of checks issued. The bank then matches presented checks against this list and flags discrepancies, reducing the chance of fraudulent disbursements. This option accurately describes Positive Pay.
C. 'Both of the statements above are true.' Given that statement A is mischaracterized about general authorization, this option cannot be true because it relies on A being correct.
D. 'None of the statements above are true.' Since statement B is correct, this option is false; at least one statement (B) is true.

In summary, the evaluation shows that A is misconceived regarding general authorization, B correctly describes Positive Pay, C is invalid because A is incorrect, and D is invalid because B is correct. The reasoning demonstrates why the only accurate statement among the choices is B, by contrasting each option's claim with standard internal controls concepts and typical banking practices.

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