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 of the following most accurately describes an institutional conflict of interest in the context of fraud and the fraud triangle?

A case where a manager pressures employees to meet unrealistic sales targets.

A scenario where an employee steals cash from the company’s petty cash fund.

A situation where an organization's own financial interests may improperly influence its decisions or actions.

A situation where an employee fails to segregate duties due to lack of training.

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Verified step by step guidance

Step 1: Understand the concept of institutional conflict of interest. It refers to situations where an organization's financial interests or goals may improperly influence its decisions or actions, potentially leading to unethical behavior or fraud.

Step 2: Review the fraud triangle, which consists of three elements: pressure, opportunity, and rationalization. Institutional conflict of interest typically aligns with the 'pressure' element, as financial interests can create undue pressure to act unethically.

Step 3: Analyze each option provided in the problem. For example, a manager pressuring employees to meet unrealistic sales targets aligns with the pressure element but is not directly an institutional conflict of interest. Similarly, an employee stealing cash or failing to segregate duties are examples of individual actions rather than institutional conflicts.

Step 4: Focus on the correct answer, which describes a situation where the organization's financial interests improperly influence its decisions or actions. This is a clear example of institutional conflict of interest as it involves the organization itself rather than individual employees.

Step 5: Conclude that understanding institutional conflict of interest requires recognizing how organizational goals or financial pressures can lead to unethical decision-making, which is distinct from individual employee actions or errors.