Which of the following statements is true regarding internal controls?

The statement regarding internal controls being flexible and adaptable is accurate because effective internal controls must be responsive to the changing conditions of the organization and its external environment. This flexibility allows organizations to adjust controls in response to new risks, regulatory changes, or shifts in operational processes. A rigid internal control system can become outdated quickly and may not adequately address potential fraud risks or operational inefficiencies, ultimately undermining the effectiveness of the controls in place.

Internal controls should be designed not just to protect assets and ensure compliance but also to promote an environment where employees can innovate within a framework of accountability and efficiency. This adaptability is crucial in dynamic business environments where new challenges and opportunities continuously arise.