Final answer:
The correct answer is option c. Having a good system of internal controls is generally the most effective tool for preventing and detecting fraud within an organization. These controls are proactive measures that are part of the everyday operational processes and include technological systems, standardized procedures, and oversight mechanisms that mitigate the risk of fraud.
Step-by-step explanation:
The question concerns identifying the most effective tool in preventing and detecting fraud within an organization or operative environment. Among the options provided, having a good system of internal controls is typically considered the most effective measure. Internal controls are various processes and procedures put in place to prevent, detect, and respond to potential misconduct or fraud. These controls are fundamental to a comprehensive risk management strategy and include separation of duties, access controls, audits, and regular reviews of operations.
While discouraging collusion and creating an expectation of punishment can play roles in a broader anti-fraud framework, they are more reactive and focused on the human elements of fraud prevention. The effectiveness of investigations of fraud symptoms is also important, but primarily in a reactive capacity once potential fraud is detected. In contrast, internal controls are proactive and embedded into the everyday workflows, thus serving as a primary line of defense.
Further, internal controls are reinforced by setting a tone at the top that emphasizes ethical behavior and compliance, thereby contributing to a culture that deters fraudulent activities. Robust internal controls often include the implementation of technological systems, like security and fire sprinkler systems mentioned for risk mitigation in insurance scenarios, as well as standardized procedures and oversight mechanisms that make it difficult for fraudulent activities to go undetected.