Multiple Choice
When contracting services from a third party, what type of fraud risk is the organization primarily exposed to according to the Fraud Triangle?
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6. Internal Controls and Reporting Cash
Fraud and the Fraud Triangle
Multiple Choice
Which of the following is NOT a motive for the embezzlement of cash by employees, according to the fraud triangle?
A
Financial pressure
B
Rationalization
C
Effective internal controls
D
Opportunity
Verified step by step guidance1
Understand the fraud triangle, which consists of three elements: financial pressure, rationalization, and opportunity. These are the primary factors that drive individuals to commit fraud.
Recognize that financial pressure refers to personal or financial stress that motivates an individual to seek illegal means to resolve their issues.
Learn that rationalization involves the individual justifying their fraudulent actions, often convincing themselves that their behavior is acceptable or necessary.
Understand that opportunity refers to the circumstances or weaknesses in the system that allow the fraud to occur, such as lack of oversight or ineffective controls.
Identify that effective internal controls are not a motive for embezzlement but rather a preventive measure designed to reduce the opportunity for fraud. Therefore, it is NOT part of the fraud triangle.
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