Question

Which of the following environments will be LEAST conducive to fraud? a. Perceived inequalities in the organization and inadequate pay b. Unreasonable budget expectations c. Proactive management d. High employee turnover

Answer 1

Answer:

The answer is C. Proactive management

Explanation:

Proactive management looks ahead. They are not reactive. They envisage problems before it occurs. They institute or set up internal controls which will not be conducive to fraud. Internal controls like segregation of duty, dual control, authorization etc.

But in an organization where perceived inequalities are rife, employees will tend to play fast because they are not satisfied.

Also, when unreasonable budget are set by the management, employees tend to do all things possible to achieve this budget so as to keep their job. This breeds the thought of fraud.

High employee turnover too can lead to fraud because staffs know they wont stay too long.