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

Banks typically come under financial stress because of:

excessive customer deposits and low loan demand

high levels of employee satisfaction and ethical culture

a combination of opportunity, pressure, and rationalization, as described by the Fraud Triangle

strict regulatory compliance and frequent external audits

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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 why individuals or organizations may commit fraud.

Recognize that financial stress in banks can arise when these three elements are present. For example, 'opportunity' might occur due to weak internal controls, 'pressure' could stem from financial targets or economic conditions, and 'rationalization' involves justifying unethical actions.

Analyze the options provided in the problem. Excessive customer deposits and low loan demand, high levels of employee satisfaction and ethical culture, and strict regulatory compliance and frequent external audits do not align with the Fraud Triangle.

Identify that the correct answer is the combination of opportunity, pressure, and rationalization, as described by the Fraud Triangle. This is the framework that explains financial stress due to fraudulent activities.

Conclude that understanding the Fraud Triangle is essential for identifying and mitigating risks of financial stress in banks, as it highlights the root causes of fraudulent behavior.