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    Question

    Which of the following statements is not true?

    A Management fraud is more difficult to detect than employee fraud Correct Answer Incorrect Answer
    B Internal control system eliminates the possibility of occurrence of employee fraud and management fraud Correct Answer Incorrect Answer
    C The auditor’s responsibility for detection and prevention of errors and frauds is similar. Correct Answer Incorrect Answer
    D All statements are correct. Correct Answer Incorrect Answer

    Solution

    Statement (b) is not true. While a robust internal control system can help reduce the likelihood of fraud, it cannot entirely eliminate the possibility of management fraud. Management fraud typically involves individuals in higher positions who may override or manipulate internal controls, making it more challenging to prevent or detect. Internal controls are important for prevention and detection, especially for employee fraud, but they may not completely eliminate the risk of management fraud.

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