Question

Evaluating management integrity is critical in assessing business risk. Please comment.

Answer 1

Ans. Yes, management integrity is definitely critical in assessing business risk. First and foremost reason is that management is managing the affairs of the business. So they know how each & every thing about working in the company, they are the one who set procedures for conducting the business. Secondly they are responsible in designing, implementing and monitoring internal control procedures in the business. So they are aware of business risk. Besides if we look back and see major scandals, we will find that someway or the other that scandals occurred due to involvement of management. Like enron scandal, which is the biggest scandal of it's time. Based on above discussion we can conclude that evaluating management integrity is critical part of assessing business risk.