In comparing management fraud with employee fraud,the auditor's risk of failing to discover the fraud is greater for
A)employee fraud because of the larger number of employees in the organization.
B)employee fraud because of the irregular hours worked by some employees.
C)management fraud because of management's ability to override existing internal controls.
D)management fraud because managers are inherently smarter than employees.

Question

Quizplus · Accepted Answer

Management fraud poses a greater risk of audit failure than employee fraud because management has greater access to and control over organizational resources and can override existing internal controls more easily. In contrast, employee fraud generally involves smaller amounts and is more likely to be detected through normal control procedures. The number of employees and their work hours is not a significant factor in determining the risk of failing to discover fraud. The idea of managers being inherently smarter than employees is also a stereotype and is not a valid reason for choosing option D.

In Comparing Management Fraud with Employee Fraud,the Auditor's Risk of Failing