Which of the following statements is not true?

Solution (By Examveda Team)

Step 1: Understanding the Question

The question asks which of the given statements is NOT true. That means we need to carefully check each option one by one and identify the false statement.

Step 2: Option A
"Management fraud is difficult to detect than employee fraud"
This statement is true because management has the authority to override internal controls, manipulate records, and hide fraud. Hence, detecting management fraud is more difficult than employee fraud.

Step 3: Option B
"An internal control system reduces the possibility of occurrence of employee fraud and management fraud"
This is also true. A sound internal control system cannot completely eliminate fraud but it reduces the chances of fraud by setting proper checks, segregation of duties, and monitoring systems.

Step 4: Option C
"The auditor's responsibility for the detection and prevention of errors and fraud is similar"
This statement is false. An auditor’s primary responsibility is detection of material misstatements caused by errors or fraud. However, prevention of fraud is not the auditor’s duty; it is the responsibility of management through effective internal controls. Therefore, the auditor’s responsibility for detection and prevention is not the same.

Step 5: Option D
"None of the above"
This is not correct because we already found that Option C is false.

Final Conclusion:
Since Option C is the only incorrect statement, the correct answer is Option C.