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    Question

    Which of the following statement is true?

    A Employee fraud and management fraud are one and the same. Correct Answer Incorrect Answer
    B Internal control system reduces the possibility of occurrence of employee fraud and management fraud Correct Answer Incorrect Answer
    C Statutory audit cannot be conducted by Chartered Accountants. Correct Answer Incorrect Answer
    D Interim audit is audit done on day-to-day basis. Correct Answer Incorrect Answer
    E All of the above. Correct Answer Incorrect Answer

    Solution

    An effective internal control system can help reduce the risk of both employee fraud and management fraud. For employee fraud, the system can establish clear policies and procedures for financial transactions and record-keeping, communicate these to all employees, and include monitoring and oversight mechanisms. For management fraud, the system can establish a culture of integrity and ethical behavior, ensure that management is held accountable for their actions, and implement checks and balances to prevent abuse of power.

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