Skip to content

CS Professional · Internal and Forensic Audit · Basic Concepts of Forensic Audit

Gomti Retail Ltd has a strong control environment, yet its store manager, Mr. Verma, bypasses the dual-approval control by colluding with the cashier and diverts takings. A forensic auditor concludes that the opportunity element was created mainly by which factor?

Opportunity arose because collusion between the manager and cashier overrode a well-designed dual-approval control. Collusion is an inherent limitation of internal control, since controls relying on separate people fail when those people cooperate. The company did have controls, so absence of controls is not the explanation.

  1. AAbsence of any internal controls in the company
  2. BCollusion that overrides a control which is otherwise well designedCorrect
  3. CLack of financial pressure on the manager
  4. DExcessive segregation of duties

Explanation

Controls exist, but collusion between two people defeats dual approval, a known inherent limitation of internal control. So opportunity arose from collusion overriding a sound control, not from absence of controls. Segregation of duties was not excessive, and pressure is a separate element.

Did you get it right without looking?

One question tells you little. A timed set on Basic Concepts of Forensic Audit shows your real accuracy, how long you take and where you lose marks.

Practise Basic Concepts of Forensic AuditFree diagnostic mock

More Basic Concepts of Forensic Audit questions