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

question 66

Multiple Choice

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 higher crime rate among blue collar workers.
• C) management fraud because of management's ability to override existing internal controls.
• D) management fraud because managers are inherently smarter than employees.

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Definitions:

Natural Consequences

Outcomes that happen as a result of behavior that are not planned or controlled by anyone.

Negligence Claim

A legal action taken when a person suffers harm due to another's failure to take reasonable care to prevent such harm.

Duty of Care

A legal obligation imposed on an individual requiring adherence to a standard of reasonable care while performing acts that could harm others.

Monetary Damages

Financial compensation awarded in court to indemnify harm or loss suffered by an individual or entity.