Question : A control system that relies on external audits is an example of:
Option 1: Bureaucratic control.
Option 2: Market control.
Option 3: Clan control.
Option 4: Centralized control.
Correct Answer: Bureaucratic control.
Solution : The correct answer is (a) Bureaucratic control.
Bureaucratic control is a system of control that relies on rules, procedures, and hierarchy to ensure that employees are following the organization's policies and procedures. External audits are a form of bureaucratic control because they are conducted by independent auditors who are not affiliated with the organization. The auditors review the organization's financial records and procedures to ensure that they are in compliance with applicable laws and regulations.
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