What is meant by the term 'control activity'?

The term 'control activity' refers to a procedure or policy that is implemented within an organization to mitigate risks and ensure that internal controls function as intended. Control activities are critical components of an organization's internal control system and are designed to provide reasonable assurance that the company's objectives are being met. These activities can include approvals, authorizations, verifications, reconciliations, and segregation of duties, among others.

The purpose of control activities is to prevent errors or irregularities in financial reporting and to safeguard assets. By having established procedures and policies in place, organizations can better manage their resources and achieve their operational goals while remaining compliant with relevant regulations and standards.

The other options do not accurately define control activities. For instance, employee benefits guidelines do not fall under internal control systems, financial audits are assessments of financial statements rather than control measures, and investment strategies pertain to financial planning or asset management rather than the internal control structure of an organization.