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Difficulty: EasyConditional Logic and Formal Deductions

A corporate compliance officer established the following rule for international transactions: Any transaction exceeding $100,000 requires prior approval from the risk assessment committee. Furthermore, whenever a transaction requires prior approval from the risk assessment committee, it must undergo a secondary audit by an independent auditor.

If an international transaction exceeded $150,000, which of the following must be true based on the compliance officer's rule?

  1. The transaction must undergo a secondary audit by an independent auditor.Answer
  2. B
    If an international transaction underwent a secondary audit by an independent auditor, its value must have exceeded $100,000.
  3. C
    The transaction will automatically be rejected if the independent auditor identifies any minor reporting discrepancy.
  4. D
    Any international transaction valued at under $100,000 is entirely exempt from internal compliance reviews.
  5. E
    The risk assessment committee must complete its review after the independent secondary audit has concluded.

Answer

The transaction must undergo a secondary audit by an independent auditor.
The passage establishes a direct chain of conditional logic: a transaction exceeding 100,000requiresriskassessmentcommitteeapproval,andanytransactionrequiringsuchapprovalmustundergoasecondaryauditbyanindependentauditor.Because100,000 requires risk assessment committee approval, and any transaction requiring such approval must undergo a secondary audit by an independent auditor. Because 150,000 is greater than $100,000, both conditions in the chain are sequentially triggered, making it logically necessary that the transaction undergoes a secondary audit by an independent auditor.

Step-by-Step Solution

1
Identify the given condition for the specific transaction
The transaction value is 150,000,whichsatisfiesthethresholdconditionof′exceeding150,000, which satisfies the threshold condition of 'exceeding 100,000'.
Establishing that the initial condition (150,000>150,000 > 100,000) is met triggers the first conditional rule.
2
Apply the first conditional rule
Since 150,000>150,000 > 100,000, the transaction requires prior approval from the risk assessment committee.
Rule 1 states: Transaction > $100,000 → Requires risk assessment committee approval.
3
Apply the second conditional rule in the chain
Because the transaction requires prior approval from the committee, it must undergo a secondary audit by an independent auditor.
Rule 2 states: Requires committee approval → Must undergo secondary audit by an independent auditor.

Key Concept

Hypothetical Syllogism (Chained Conditional Deductions)
Estimated Time:1m 0s
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Topics

Conditional Logic and Formal Deductions

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