Multiple Choice
What is the primary reason that many new businesses fail early on, according to the Fraud Triangle framework?
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6. Internal Controls and Reporting Cash
Fraud and the Fraud Triangle
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Which of the following is NOT an element of the fraud triangle?
A
Rationalization
B
Opportunity
C
Internal control
D
Pressure
Verified step by step guidance1
Understand the fraud triangle: The fraud triangle is a model used to explain the factors that lead to fraudulent behavior. It consists of three elements: Pressure, Opportunity, and Rationalization.
Define each element: Pressure refers to the motivation or need to commit fraud, such as financial difficulties. Opportunity is the ability to commit fraud due to weak internal controls or oversight. Rationalization is the justification or reasoning that makes the fraudulent act acceptable in the perpetrator's mind.
Identify the element that does not belong: Internal control is not part of the fraud triangle. Instead, internal controls are mechanisms designed to prevent fraud by reducing opportunities for fraudulent behavior.
Compare the options provided: Rationalization, Opportunity, and Pressure are all elements of the fraud triangle, while Internal control is not.
Conclude that the correct answer is Internal control, as it is not an element of the fraud triangle but rather a preventive measure against fraud.
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