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

Which element of the fraud triangle is most directly illustrated when an insurer neglects to pay a legitimate claim?

Incentive/Pressure

Ethical lapse (lack of integrity)

Rationalization

Opportunity

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Verified step by step guidance

Understand the fraud triangle, which consists of three elements: Incentive/Pressure, Opportunity, and Rationalization. These elements explain why individuals commit fraud.

Analyze the scenario where an insurer neglects to pay a legitimate claim. This action reflects a decision that involves ethical considerations and integrity.

Consider the element 'Ethical lapse (lack of integrity)' as it directly relates to the moral decision-making process of the insurer. This is not part of the fraud triangle but is mentioned in the problem as a correct answer.

Evaluate the fraud triangle elements: 'Incentive/Pressure' refers to external or internal pressures that motivate fraud, 'Opportunity' refers to the ability to commit fraud due to weak controls, and 'Rationalization' refers to the justification of fraudulent actions.

Conclude that the most relevant fraud triangle element in this scenario is 'Opportunity,' as neglecting to pay a legitimate claim could stem from the ability to exploit weak oversight or controls. However, the problem specifies 'Ethical lapse (lack of integrity)' as the correct answer, which is outside the fraud triangle framework.