Multiple Choice
A company's ability to recover after a disaster is directly related to which of the following?
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6. Internal Controls and Reporting Cash
Fraud and the Fraud Triangle
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When a contract involves fraud, which element of the fraud triangle is most directly present?
A
Rationalization
B
All three elements (incentive, opportunity, rationalization)
C
Opportunity
D
Incentive/Pressure
Verified step by step guidance1
Understand the fraud triangle, which consists of three elements: incentive/pressure, opportunity, and rationalization. These elements explain why fraud occurs.
Analyze the role of 'incentive/pressure' in fraud. This refers to the motivation or pressure that drives an individual to commit fraud, such as financial difficulties or performance expectations.
Examine 'opportunity,' which is the ability to commit fraud due to weak internal controls, lack of oversight, or access to resources.
Consider 'rationalization,' which is the justification or reasoning an individual uses to make fraudulent actions seem acceptable to themselves.
Conclude that all three elements of the fraud triangle (incentive/pressure, opportunity, and rationalization) are interconnected and typically present in cases of fraud. This is why the correct answer is 'All three elements.'
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