As part of an activity-based management (ABM) project, one activity that has been identified by the analyst for elimination is reconciliation. This is a costly accounting control. The analyst is unsure what value reconciliation provides to stakeholders. The chief financial officer (CFO), who has been carrying out reconciliations of the accounts for three years, estimates the activity takes around 15 per cent of her time, and she has never discovered any material problems.

Should this activity be eliminated?

a.

Yes, because its elimination will decrease costs

b.

Yes, because it provides no value to stakeholders

c.

No, because it is an essential accounting control

d.

No, because accounting controls are required by regulation