Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

6. Internal Controls and Reporting Cash

Fraud and the Fraud Triangle

Financial Accounting

6. Internal Controls and Reporting Cash

Fraud and the Fraud Triangle

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Multiple Choice

In the context of fraud and the fraud triangle, the measure of risk is best described as:

The frequency of external audits performed each year.

The total amount of losses a company has experienced in the past.

The likelihood that fraud will occur due to the presence of opportunity, pressure, and rationalization.

The number of internal controls implemented by an organization.

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Verified step by step guidance

Understand the concept of the fraud triangle, which consists of three elements: opportunity, pressure, and rationalization. These elements explain the conditions under which fraud is likely to occur.

Recognize that the measure of risk in the fraud triangle is not directly tied to external audits, past losses, or the number of internal controls, but rather to the likelihood of fraud occurring due to the presence of the three elements.

Analyze how opportunity, pressure, and rationalization contribute to the risk of fraud. Opportunity arises when there are weaknesses in internal controls, pressure stems from financial or personal stress, and rationalization occurs when individuals justify unethical behavior.

Evaluate the importance of assessing the likelihood of fraud by identifying and mitigating these three elements within an organization. This helps reduce the overall risk of fraud.

Conclude that the correct description of the measure of risk in the fraud triangle is the likelihood that fraud will occur due to the presence of opportunity, pressure, and rationalization.