Multiple Choice
Which of the following is an example of poor internal control in an organization?
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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 considered a component of the fraud triangle that presents risks and ethical concerns for businesses?
A
Incentive/Pressure
B
Rationalization
C
Internal Audit Review
D
Opportunity
Verified step by step guidance1
Understand the concept of the fraud triangle: The fraud triangle is a framework used to explain the factors that lead to fraudulent behavior in organizations. It consists of three components: Incentive/Pressure, Opportunity, and Rationalization.
Define each component of the fraud triangle: Incentive/Pressure refers to the motivation or need to commit fraud, such as financial pressure. Opportunity refers to the circumstances that allow fraud to occur, such as weak internal controls. Rationalization is the justification or reasoning the fraudster uses to make their actions seem acceptable.
Analyze the options provided in the question: The options include Incentive/Pressure, Rationalization, Opportunity, and Internal Audit Review. Compare each option to the components of the fraud triangle.
Identify the outlier: Internal Audit Review is not a component of the fraud triangle. Instead, it is a control mechanism used by organizations to detect and prevent fraud, which is unrelated to the three components of the fraud triangle.
Conclude that the correct answer is Internal Audit Review, as it does not align with the fraud triangle's components of Incentive/Pressure, Opportunity, and Rationalization.
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