US CMA Part 1 · Chapter 5 · Question 5 of 23
Why can an internal control system provide only reasonable, rather than absolute, assurance that objectives will be achieved?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Controls can be circumvented by collusion or management override, and their cost must be weighed against their benefits
Explanation
Inherent limitations include human error and faulty judgment, collusion among employees, management override and the need to balance the cost of a control against its expected benefit. These limitations mean no system can guarantee that objectives will be met.
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