Choice "D" is correct. Since management generally has the authority to implement and assign responsibilities under the internal controls, they will generally also have the ability to circumvent those internal controls. This is an inherent limitation of internal control.
Choice "a" is incorrect. Although the design of an internal control system is important, it needs to be paired with the proper implementation and monitoring, and even then cannot ensure that the entity's internal control objectives will be met.
Choice "c" is incorrect. Internal control structures generally rely in some manner on segregation of duties. Because of this, collusion by two or more people can generally destroy this segregation of duties and thus potentially cause circumvention of the internal controls that may not be immediately detected.
Choice "b" is incorrect. No internal control system can guarantee the detection of all errors and fraud. The purpose of an internal control system is to significantly reduce the likelihood that errors or fraud will be committed and go undetected.