Question

What are reasons internal controls can never completely prevent and detect errors and fraud?

a) Human error, management override, collusion

b) Technology advancement, strict regulations, employee training

c) Auditing, external oversight, thorough documentation

d) Automation, segregated duties, compliance procedures

Answer 1

Internal controls can never completely prevent and detect errors and fraud due to human error, management override, and collusion.

Step-by-step explanation:

Internal controls are put in place to prevent and detect errors and fraud within an organization. However, there are several reasons why they can never completely eliminate these problems.

Firstly, human error is inevitable as people make mistakes, misinterpret information, or become careless. Even with well-designed controls, individuals can still make errors that go undetected.

Secondly, there is the risk of management override. Managers have the authority to bypass or manipulate controls, allowing them to commit fraud or cover up misconduct.

Lastly, collusion can occur when two or more individuals work together to override controls and deceive the system. This can make it difficult for controls to detect fraudulent activities.