ExpertHard1 markMultiple Choice
CPA · Question 62 · Area II: Risk Assessment
Which of the following is an example of an 'inherent limitation' of internal control?
Which of the following is an example of an 'inherent limitation' of internal control?
Answer options:
A.
Lack of segregation of duties.
B.
Management override of controls.
C.
Incompetent staff.
D.
Missing documentation.
How to approach this question
Inherent Limitations: Collusion, Human Error, Management Override. These exist in ALL systems.
Full Answer
B.Management override of controls.✓ Correct
Management override of controls.
Inherent limitations are weaknesses that exist in any system of internal control, regardless of how well designed. They include: Human error, Collusion, and Management Override. Other options are specific deficiencies that can be fixed.
Common mistakes
Confusing specific flaws (lack of segregation) with universal limitations.
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