Multiple Choice
Which of the following is NOT one of the three elements of the fraud triangle?
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6. Internal Controls and Reporting Cash
Fraud and the Fraud Triangle
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To avoid evaluation errors and increase accuracy, a company should use which type of preparation when handling financial information?
A
Unsupervised preparation
B
Verbal preparation
C
Independent preparation
D
Randomized preparation
Verified step by step guidance1
Understand the concept of 'Independent preparation' in financial accounting. It refers to the process where financial information is prepared without external influence, ensuring objectivity and accuracy.
Recognize that independent preparation minimizes biases and errors, as it relies on established accounting principles and standards rather than subjective or external factors.
Compare the given options: 'Unsupervised preparation' lacks oversight and may lead to errors; 'Verbal preparation' is informal and prone to miscommunication; 'Randomized preparation' is inconsistent and unreliable.
Identify that 'Independent preparation' aligns with best practices in financial accounting, as it ensures the integrity and reliability of financial information.
Conclude that the company should adopt independent preparation to avoid evaluation errors and increase accuracy in handling financial information.
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