Multiple Choice
Which of the following is NOT considered a component of the fraud triangle that presents risks and ethical concerns for businesses?
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6. Internal Controls and Reporting Cash
Fraud and the Fraud Triangle
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According to the Fraud Triangle, which of the following best explains why individuals in a poorly designed financial system are more likely to commit fraud?
A
Because the system increases pressure, provides opportunity, and allows rationalization for fraudulent behavior.
B
Because the system eliminates all risks associated with fraud.
C
Because the system strictly enforces ethical behavior at all times.
D
Because the system guarantees high profits for everyone involved.
Verified step by step guidance1
Understand the Fraud Triangle: The Fraud Triangle is a model that explains the three factors that contribute to fraudulent behavior—pressure, opportunity, and rationalization.
Analyze the options provided in the question: Evaluate each option to determine which aligns with the principles of the Fraud Triangle.
Option 1: 'Because the system increases pressure, provides opportunity, and allows rationalization for fraudulent behavior'—this directly corresponds to the three elements of the Fraud Triangle.
Option 2: 'Because the system eliminates all risks associated with fraud'—this does not align with the Fraud Triangle, as it does not address the factors that lead to fraud.
Option 3 and Option 4: Similarly, these options do not address the three elements of the Fraud Triangle, making them less relevant to the question.
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