Which of the following is a limitation of detective internal controls in fraud management?
A.
Implementation costs tend to be higher than the expected benefits.
B.
They tend to be easy for fraudsters to circumvent.
C.
They are not designed to improve efficiency of operations.
D.
They are not effective in preventing fraud.
The Answer Is:
D
This question includes an explanation.
Explanation:
Detective internal controls are a limitation in fraud management because they are not designed to prevent fraud but to identify fraud after it has occurred. Their primary purpose is to detect and provide feedback on incidents of fraud, thereby allowing corrective action to be taken. However, they do not stop the initial occurrence of fraudulent activities.
IIA guidance on types of controls and their effectiveness in fraud prevention.
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