Any Lack of Independence Between Management, Internal Auditors, and External

question 21

Multiple Choice

Any lack of independence between management, internal auditors, and external auditors undermines the basic structure that prevents financial statement fraud. What type of red flag does this represent?

• A) Internal control process.
• B) Management style.
• C) Personnel practices and environment.
• D) The government structure.

---

Definitions:

Managing Assets

The practice of efficiently and effectively overseeing and allocating a company's tangible and intangible assets to maximize value.

Financial Manager

A professional responsible for managing an organization's financial health, developing strategies, and plans for long-term financial goals.

Leverage

The use of borrowed capital or financial instruments to increase the potential return of an investment.