Which of the following is an example of an inherent limitation on the effectiveness of internal control?

The effectiveness of internal controls is inherently limited by various factors, and recognizing these limitations is crucial for understanding how internal controls function within an organization. Each of the factors mentioned contributes to these inherent limitations.

Cost/benefit considerations refer to the idea that the costs associated with implementing and maintaining internal controls must be weighed against the benefits they provide. If the cost of a control outweighs its potential benefit, it may not be implemented, leading to gaps in internal control effectiveness.

Management override of controls is a significant concern, as it highlights the potential for individuals in positions of power to bypass established controls, undermining the very purpose of these controls. When management can override controls, it creates an environment where fraud or errors can occur without detection.

The risk of collusion among employees poses another inherent limitation. When two or more individuals work together to circumvent internal controls, the effectiveness of those controls is compromised. Collusion can be particularly challenging to detect and prevent, as it often involves deceptive practices that go unnoticed.

Recognizing that all these factors contribute to the inherent limitations of internal controls explains why 'all of the above' is the correct choice. Understanding these limitations helps organizations to design more effective internal control systems and develop strategies to mitigate the risks associated with these limitations.