Question

Which of the following risk factors indicates an increased risk of misappropriation of assets?

a. high turnover of senior management
b. strained relationships between management and auditors
c. lack of mandatory vacations for employees performaing key functions
d. overly complex organizational structure

Answer 1

Answer: In the given case, the following indicates an increased risk of misappropriation of assets: lack of mandatory vacations for employees performing key functions.

Here, employees are a integral part of an organization. They are considered as one of the most vital asset of an organization. Therefore if there are lack of mandatory vacations for employees then there will be an increase in risk of misappropriation of assets.