Which of the following could increase risks to the organization’s control environment?

Which of the following could increase risks to the organization’s control environment?
A . Strong board of directors oversight.
B . Incentive-based compensation structures
C . Lower than average employee turnover.
D . Implementation of a fraud hotline

View Answer

Answer: B

Explanation:

Incentive-based compensation can increase the risk of unethical behavior or fraudulent activities as employees might be tempted to manipulate results to achieve their performance targets.

This could undermine the control environment and lead to significant risks if not managed properly