Which of the Following Statements Is True Regarding Internal Controls

question 89

Multiple Choice

Which of the following statements is true regarding internal controls of capital and investment processes?

• A)Internal controls aimed at preventing and detecting employee fraud in capital and investment processes are not as effective.
• B)Top management fraud, rather than employee fraud, is more likely to occur.
• C)Any fraud is likely to involve manipulating capital and investment processes.
• D)Because of top management oversight, the auditor need not review these processes.

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Definitions:

Formal Operational

The stage of cognitive development, described by Piaget, occurring from around age 12 and beyond, characterized by the ability to think abstractly, logically, and systematically.

Cognitive Development

The construction of thought processes, including remembering, problem-solving, and decision-making, from childhood through adolescence to adulthood.

Concrete Operational

A stage in Piaget's theory of cognitive development during which children gain the abilities of logical thought about concrete events, understanding conservation, and performing mathematical operations.

Abstract Thought

The ability to think about objects, principles, and ideas that are not physically present.