REASONABLE ASSURANCE Definition

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REASONABLE ASSURANCE, in internal control, is the fact that internal controls, no matter how well designed and operated, cannot guarantee that an entity’s objectives will be met because of inherent limitations in all internal control systems.

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DISCRETIONARY COST can be increased or decreased at the discretion of the decision maker (e.g., advertising and business travel).

SAFETY STOCK (SS) or security stock ensures that the item is available up to the pre-defined required service level, even when the re-ordered material arrives later then expected, or the fluctuations in demand during the lead-time cause the demand to be larger then expected. See also STOCK RESERVE.

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