Any system of compensation:
A) May encourage unethical behavior.
B) Must be approved by the appropriate regulatory authority.
C) Should be designed by top management.
D) Must be approved by the auditor.

Question

Quizplus · Accepted Answer

Any system of compensation may incentivize individuals to engage in unethical behavior in order to increase their compensation, particularly if the system is focused purely on financial incentives. Companies must be careful to design compensation systems that balance financial incentives with other factors, such as ethical behavior, to avoid encouraging misconduct. The other answer choices are not correct, as compensation systems do not necessarily need to be approved by a regulatory authority, designed by top management, or approved by the auditor.

Any System of Compensation