Question

When the auditing profession recognized that audits designed to discover fraud would be too costly, which of the following were recognized as better fraud protection techniques than audits? Select all that apply.

a. Bonds

b. Strong internal control

c. Financial statement audits

d. Frequent management changes

Answer 1

b. Strong internal control. d. Frequent management changes. Strong internal control and frequent management changes are recognized as better fraud protection techniques than audits in the auditing profession.

Step-by-step explanation:

When the auditing profession recognized that audits designed to discover fraud would be too costly, strong internal control and frequent management changes were recognized as better fraud protection techniques than audits. These techniques help prevent fraud by implementing robust systems of checks and balances within the organization and by periodically rotating management positions to minimize the risk of collusion.

On the other hand, bonds are a form of financial guarantee that provides compensation in the event of fraud, while financial statement audits are performed to verify the accuracy and reliability of financial statements but may not specifically focus on fraud detection.