Well-designed internal control that is functioning effectively is most likely to detect a fraud arising from:
A)The fraudulent action of several employees.
B)The fraudulent action of an individual employee.
C)Informal deviations from the official organization chart.
D)Management fraud.

Question

Quizplus · Accepted Answer

Well-designed and effectively functioning internal controls are more likely to detect fraud committed by an individual employee rather than fraud committed by several employees or management fraud. This is because individual fraud schemes are easier to spot with internal controls that are designed to prevent and detect activities that are not in line with established policies and procedures. However, internal controls may not be as effective in detecting informal deviations from the official organization chart as these deviations may not be obvious or easily noticeable.

Well-Designed Internal Control That Is Functioning Effectively Is Most Likely