Which statement about bank accounts is supported by internal control guidance?

• A. More bank accounts always reduce risk
• B. Fewer bank accounts make reconciliation easier
• C. Bank accounts are irrelevant to controls
• D. Banks will not charge service fees if accounts exist

Answer: (B)

Keeping the number of bank accounts down helps cash controls by making bank reconciliations more straightforward and reliable. Bank reconciliation is a key control activity that compares the organization’s records with the bank’s records to catch errors, omissions, or signs of misappropriation. When there are many accounts, reconciling each one becomes more time-consuming and complex, increasing the chance that discrepancies slip through or controls become inconsistent. Fewer accounts mean fewer reconciliation tasks, better oversight, and the ability to apply consistent procedures across all cash activity, which strengthens overall cash control.

The other statements don’t fit internal control guidance. Having more accounts does not automatically reduce risk and can, in fact, broaden the opportunity for errors or fraud. Bank accounts are relevant to controls because how cash is held and reconciled directly affects detection and prevention of misstatements. Service fees are a banking matter, not a control principle, and their existence isn’t a justification for more or fewer accounts.