Which factor will likely mitigate the risk of fraud within a business?

The correct choice emphasizes the importance of having clear roles and responsibilities among employees in mitigating the risk of fraud within a business. By defining specific roles, each employee understands their responsibilities and the extent of their authority, which creates a structured environment where accountability is enhanced.

When roles are clear, it is difficult for any one person to undertake fraudulent activities without being noticed, as their actions can be more easily scrutinized by others. It facilitates oversight and enables checks and balances, making it harder for individuals to manipulate situations without detection. Furthermore, when employees know what is expected of them and what they are accountable for, it fosters a culture of integrity and ethical behavior.

In contrast, a lack of policies on documentation would create confusion and could lead to opportunities for dishonest practices. Extensive managerial authority may lead to a concentration of power that lacks accountability, increasing the risk of fraud. Ambiguous reporting lines can create uncertainty regarding who is responsible for oversight, which can shield fraudulent activities from scrutiny. Therefore, establishing clear roles and responsibilities is a foundational factor that helps to safeguard against the risk of fraud in an organization.