Multiple Choice
Which of the following is the most common risk management technique used to prevent fraud 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 one of the three elements of the fraud triangle?
A
Incentive/Pressure
B
Opportunity
C
Rationalization
D
Product Differentiation
Verified step by step guidance1
Understand the concept of the fraud triangle, which is a model used to explain the factors that lead to fraudulent behavior in accounting and auditing.
The fraud triangle consists of three elements: Incentive/Pressure, Opportunity, and Rationalization. These elements describe the conditions under which fraud is likely to occur.
Incentive/Pressure refers to the motivation or financial pressure that drives an individual to commit fraud, such as debt or financial hardship.
Opportunity refers to the circumstances that allow fraud to occur, such as weak internal controls or lack of oversight.
Rationalization is the justification or reasoning an individual uses to convince themselves that committing fraud is acceptable. Product Differentiation is not part of the fraud triangle, as it is unrelated to the conditions that lead to fraudulent behavior.
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