Final answer:
Management review of the bank reconciliations is not a limitation of internal control; it is a part of the control system itself, designed to maintain the accuracy and integrity of financial records.
Step-by-step explanation:
The question revolves around the concept of internal controls within an organization and what constitutes a limitation to these controls. When we are talking about the limitations of internal control, we are referring to the inherent weaknesses or constraints that prevent the internal control system from being fully effective. Options A, collusion between two employees, C, mistakes of judgment, and D, misunderstanding of instructions, are all examples of such limitations. They can undermine the effectiveness of the system either by deliberate manipulation, human error or poor communication.
However, option B, management review of the bank reconciliations, does not describe a limitation, but rather a control activity intended to detect and prevent irregularities. The management's review process is an integral part of a sound internal control system, aiming to ensure the accuracy and integrity of financial information.