ACCA Applied Knowledge · Business and Technology · Internal controls
Who has primary responsibility for the prevention and detection of fraud in a company?
Those charged with governance and management are primarily responsible for preventing and detecting fraud. They must design, implement and maintain effective internal controls and a culture of honesty. External and internal auditors assess or review controls but do not take over this responsibility.
- AThe external auditor
- BThe internal audit department
- CThose charged with governance and managementCorrect
- DThe tax authority
Explanation
Directors and management are responsible for designing and operating systems of internal control to prevent and detect fraud. Auditors have responsibilities to consider the risk of material misstatement due to fraud, but they do not carry primary responsibility. Internal audit may review controls but does not own them.
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