Final answer:
Well-designed internal control systems are most likely to detect fraud related to mismanagement and criminal behavior. Internal employees may face a moral dilemma when deciding to report such fraud due to personal risks.
Step-by-step explanation:
Well-designed internal control that is functioning effectively is most likely to detect a fraud arising from mismanagement and even criminal behavior within the bureaucracy. Those within the bureaucracy are often best positioned to recognize such misconduct due to their access to and understanding of internal processes. However, the desire to protect one's own position can sometimes inhibit the reporting of such fraud, and as a result, an individual may face a moral dilemma when deciding whether to report the corruption. Bureaucracies tend to guard their reputations and resist criticism, creating a problem for insiders who want to report misconduct. The personal cost of reporting corruption can be prohibitive for bureaucrats.