The nature of accountability means the governing body (agent) must make an accounting back to the public and/or service recipient (principal) regarding the achievement of objectives and the stewardship of resources. All of the following are certain elements of risk that exist in the principal-agent relationship EXCEPT:
A) Consequence of error - the cost/impact to the principal is greater than that to the agent if errors occur undetected.
B) Moral hazards - potential for the agent to develop a conflict of interest between the agent's own interests and those of the principal.
C) Physical hazards
D) Complexity - the possibility that operations to achieve established objectives are too complex for the principal to readily understand.
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