Question

Which of the following is not an element of a clear and well-defined organizational structure?

a. Policies and procedures that clearly delineate responsibility, accountability, and reporting lines for all business lines.
b. Minutes are maintained in sufficient detail to document discussion regarding actual and potential risk exposures.
c. The board of directors and its committees effectively discharge their responsibilities.
d. Several recordkeeping functions have been outsourced, thereby relieving management from accountability for these activities.

Answer 1

The correct answer is d. Several recordkeeping functions have been outsourced, thereby relieving management from accountability for these activities.

Step-by-step explanation:

The correct answer is d. Several recordkeeping functions have been outsourced, thereby relieving management from accountability for these activities.

A clear and well-defined organizational structure should include policies and procedures that clearly delineate responsibility, accountability, and reporting lines for all business lines (option a).

Minutes maintained in sufficient detail to document discussion regarding actual and potential risk exposures are also an important element of a clear and well-defined organizational structure (option b).

The effective discharge of responsibilities by the board of directors and its committees is another key element of a clear and well-defined organizational structure (option c).

However, outsourcing several recordkeeping functions can lead to a lack of accountability for these activities, which goes against the principles of a clear and well-defined organizational structure. Management should still retain responsibility for these functions to ensure proper oversight and control.