Final answer:
Effective internal control systems cannot provide complete assurance against fraud and embezzlement, as they can be overridden and reporting misconduct may lead to personal dilemmas for employees.
Step-by-step explanation:
The statement that effective internal control systems provide complete assurance against the occurrence of material frauds and embezzlements is false. While internal controls are designed to reduce the risk of fraud and embezzlement, they cannot provide complete assurance against such incidents. This is partly because internal controls can be overridden or bypassed, and also because those within a bureaucracy, who are in the best position to monitor and report misconduct, may face significant personal dilemmas when deciding to report. The fear of retaliation or loss of livelihood can deter individuals from reporting, thus weakening the effectiveness of internal controls. Therefore, although an effective internal control system is crucial for a strong organizational structure, it is not foolproof.