Multiple Choice
Employers often purchase life insurance on a key employee in order to:
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6. Internal Controls and Reporting Cash
Fraud and the Fraud Triangle
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If you make an illegal sale and did not meet the level of care that an ordinary person would exercise in similar circumstances, which element of the fraud triangle does this most directly relate to?
A
Opportunity
B
Collusion
C
Rationalization
D
Pressure
Verified step by step guidance1
Understand the fraud triangle, which consists of three elements: Opportunity, Pressure, and Rationalization. These elements explain the conditions under which fraud is likely to occur.
Analyze the scenario described in the problem. The illegal sale and lack of care suggest a situation where the individual had the ability or chance to commit fraud without immediate detection.
Relate the concept of 'Opportunity' to the situation. Opportunity refers to the circumstances that allow fraud to occur, such as weak internal controls or lack of oversight.
Consider why 'Opportunity' is the most relevant element here. The lack of care and the ability to make an illegal sale indicate that the individual exploited a situation where controls or safeguards were insufficient.
Review the other elements of the fraud triangle (Pressure and Rationalization) to confirm they are less directly related to this scenario. Pressure involves external or internal forces driving someone to commit fraud, while Rationalization involves justifying the fraudulent act to oneself.
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