The correct answer is: C. The auditor’s responsibility for the detection and prevention of errors and fraud is similar
An auditor’s responsibility is to detect material misstatements in the financial statements, whether caused by errors or fraud. However, the auditor is not responsible for preventing fraud. This is because fraud is often concealed by management and employees, and it can be difficult to detect even with an effective internal control system.
Here is a brief explanation of each option:
- A. Management fraud is difficult to detect than employee fraud
This is true. Management fraud is often concealed by management, who have access to information and resources that employees do not have. Additionally, management may have the ability to override internal controls.
- B. An internal control system reduces the possibility of occurrence of employee fraud and management fraud
This is also true. An internal control system is designed to prevent, detect, and correct errors and fraud. However, no internal control system is perfect, and fraud can still occur even with an effective system in place.
- D. None of the above
This is not the correct answer. Option C is the only option that is not true.