Which of the following best describes the inherent limitations that should be recognized by an auditor when considering the potential effectiveness of an accounting system?
A)Procedures whose effectiveness depends on segregation of duties can be circumvented by collusion.
B)The competence and integrity of client personnel provides an environment conducive to accounting control and provides assurance that effective control will be achieved.
C)Procedures designed to assure the execution and recording of transactions in accordance with proper authorizations are effective against irregularities perpetrated by management.
D)The benefits expected to be derived from an effective accounting system usually do not exceed the costs of such control.

Question

Quizplus · Accepted Answer

It is important for the auditor to recognize that even the most well-designed accounting system can still be susceptible to fraud and manipulation. Collusion among employees can undermine safeguards such as segregation of duties. Therefore, the auditor must always exercise professional skepticism and be alert to the potential for fraud. Choices B, C, and D are incorrect because they do not address inherent limitations of accounting systems, but rather general principles related to control environments, transaction processing, and cost-benefit analysis.

Which of the Following Best Describes the Inherent Limitations That