Which of the following is an inherent limitation of internal controls?
A)Lack of auditor independence.
B)Collusion.
C)Separation of duties.
D)Employee peer review.

Question

Quizplus · Accepted Answer

Collusion refers to the possibility that two or more people could work together to circumvent internal controls. This is an inherent limitation because no matter how well-designed the controls are, there is always a risk that employees could collude to commit fraud or other unethical behavior. Other options listed are not inherent limitations, but rather important aspects or benefits of internal controls.

Which of the Following Is an Inherent Limitation of Internal