A good set of internal controls may not be as effective in reducing the chance of management fraud as it would be in reducing the chance of fraud committed by an employee.

Question

Quizplus · Accepted Answer

Management has more authority and decision-making power than employees, so they may be able to override or manipulate internal controls more easily. Additionally, management may have access to more sensitive information and be able to conceal fraudulent activities more effectively than employees. Therefore, a good set of internal controls may not be as effective in detecting and preventing management fraud as it would be in reducing the chance of fraud committed by an employee.

A Good Set of Internal Controls May Not Be as Effective