Fraud is more prevalent in smaller businesses and not-for-organizations because it is more difficult for them to maintain:
A) adequate separation of duties.
B) adequate compensation.
C) adequate financial reporting standards.
D) adequate supervisory boards.

Question

Quizplus · Accepted Answer

Adequate separation of duties is a key internal control to prevent fraud, as different individuals should be responsible for different parts of financial transactions to provide a system of checks and balances. This control can be difficult to implement in smaller businesses and not-for-profit organizations due to limited resources and staffing. Therefore, these organizations are more susceptible to fraud. While compensation, financial reporting standards, and supervisory boards are also important, they are not as directly related to the prevention of fraud as proper separation of duties.

Fraud Is More Prevalent in Smaller Businesses and Not-For-Organizations Because