Which of the following factors affects the control risk of a company?
Which of the following factors affects the control risk of a company?
Unusual pressures on management can affect the control risk of a company. Control risk is the risk that a company’s internal controls will not prevent or detect a material misstatement. If management is under unusual pressures, they may override internal controls or manipulate financial information, increasing the overall control risk. Other factors such as technological obsolescence, complex accounts, or segregation of duties are either unrelated to control risk or directly related to other types of risks such as operational or inherent risks.
this answer on SOD is quite difficult to choose as the management undue pressure is also a factor. If the question had phrased it as "control issues" instead, it would have been easier to dicpher
Which of the two (control or control risk) is affected by undue pressures on management ? I also note that there are natural and inherent limitations to control, such as management circumventing procedures or collusion. Furthermore, pressure ON management (or from management) affects the risk of fraud.