Which of the following is NOT an element of internal control over financial reporting?

• A. Maintaining accurate financial records.
• B. Providing reasonable assurance that receipts and expenditures are recorded based on proper authorization by management.
• C. Developing a code of conduct and whistle-blowing procedures.
• D. Providing reasonable assurance that the financial statements are prepared in accordance with generally accepted accounting principles

Answer: (C)

Internal control over financial reporting is about the processes that ensure reliable financial data, accurate recording of transactions, proper authorization of those transactions, and financial statements that conform to GAAP. Maintaining accurate financial records directly supports that reliability. Requiring that receipts and expenditures are recorded only with proper management authorization strengthens the legitimacy and traceability of each transaction. Ensuring the financial statements are prepared in accordance with GAAP targets the overall integrity and comparability of the reports.

A code of conduct and whistle-blowing procedures, while valuable for governance and ethics, do not constitute a direct element of internal control over financial reporting. They influence the control environment and can help detect misconduct, but they are not the specific controls that ensure financial data accuracy, proper authorization, and GAAP compliance.