Fraud Examination
6th Edition
ISBN: 9781337619677
Author: Albrecht, W. Steve, Chad O., Conan C., Zimbelman, Mark F.
Publisher: Cengage,
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Question
Chapter 1, Problem 16MCQ
To determine
The person least likely to be involved in fraud amongst the persons mentioned
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Categorize the situation as primarily indicating
1 - an incentive to commit fraud
2 - an opportunity to commit fraud
3- a rationalization for committing fraud
state the reasoning behind the category you choose
Scenario:
A group of top-level management was compensated (mostly in form of stock-options) well in excess of what would be considered normal for their positions in this industry
The fraud triangle asserts that the following three factors must exist for a person to commit fraud. A. Opportunity B. Pressure C. Rationalization. Identify the fraud risk factor (A, B, or C) in each of the following situations.
The fraud triangle asserts that the following three factors must exist for a person to commit fraud.A. Opportunity B. Pressure C. RationalizationIdentify the fraud risk factor (A, B, or C) in each of the following situations. A worker feels that fellow employees are not honest.
Chapter 1 Solutions
Fraud Examination
Ch. 1 - Prob. 1DQCh. 1 - Prob. 2DQCh. 1 - Prob. 3DQCh. 1 - Prob. 4DQCh. 1 - Prob. 5DQCh. 1 - Prob. 6DQCh. 1 - Prob. 7DQCh. 1 - Prob. 8DQCh. 1 - Prob. 9DQCh. 1 - Prob. 10DQ
Ch. 1 - Prob. 11DQCh. 1 - Prob. 12DQCh. 1 - Prob. 13DQCh. 1 - Prob. 14DQCh. 1 - Prob. 15DQCh. 1 - Prob. 1TFCh. 1 - Prob. 2TFCh. 1 - Prob. 3TFCh. 1 - 4. Manufacturing companies with a profit margin of...Ch. 1 - Prob. 5TFCh. 1 - Prob. 6TFCh. 1 - 7. When perpetrators are criminally convicted of...Ch. 1 - Prob. 8TFCh. 1 - 9. A Ponzi scheme is considered to be a type of...Ch. 1 - Prob. 10TFCh. 1 - Prob. 11TFCh. 1 - Prob. 12TFCh. 1 - Prob. 14TFCh. 1 - Prob. 15TFCh. 1 - Prob. 16TFCh. 1 - Prob. 17TFCh. 1 - Prob. 18TFCh. 1 - Prob. 19TFCh. 1 - Prob. 20TFCh. 1 - Prob. 21TFCh. 1 - 22. In vendor fraud, customers don’t pay for goods...Ch. 1 - Prob. 23TFCh. 1 - Prob. 24TFCh. 1 - Prob. 25TFCh. 1 - Prob. 26TFCh. 1 - Prob. 27TFCh. 1 - Prob. 28TFCh. 1 - Prob. 29TFCh. 1 - Prob. 30TFCh. 1 - Prob. 1MCQCh. 1 - Prob. 2MCQCh. 1 - Prob. 3MCQCh. 1 - Prob. 4MCQCh. 1 - Prob. 5MCQCh. 1 - Prob. 6MCQCh. 1 - Prob. 7MCQCh. 1 - Prob. 8MCQCh. 1 - Prob. 9MCQCh. 1 - Prob. 10MCQCh. 1 - Prob. 11MCQCh. 1 - Prob. 13MCQCh. 1 - Prob. 14MCQCh. 1 - Prob. 15MCQCh. 1 - Prob. 16MCQCh. 1 - Prob. 17MCQCh. 1 - Prob. 18MCQCh. 1 - Prob. 19MCQCh. 1 - Prob. 20MCQCh. 1 - Which of the following is not an example of...Ch. 1 - Prob. 22MCQCh. 1 - Prob. 23MCQCh. 1 - Prob. 24MCQCh. 1 - Prob. 25MCQCh. 1 - Prob. 1SCCh. 1 - Prob. 2SCCh. 1 - Prob. 3SCCh. 1 - Prob. 4SCCh. 1 - Prob. 5SCCh. 1 - Prob. 6SCCh. 1 - Prob. 7SCCh. 1 - Prob. 8SCCh. 1 - Prob. 9SCCh. 1 - Prob. 10SCCh. 1 - Prob. 11SCCh. 1 - Prob. 13SCCh. 1 - Prob. 14SCCh. 1 - Prob. 15SCCh. 1 - Prob. 16SCCh. 1 - Prob. 1.1CSCh. 1 - Prob. 1.2CSCh. 1 - Prob. 1.3CSCh. 1 - Prob. 2.1CSCh. 1 - Prob. 2.2CSCh. 1 - Prob. 3.1CSCh. 1 - Prob. 3.2CSCh. 1 - Prob. 4.1CSCh. 1 - Prob. 4.2CS
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- The fraud triangle asserts that the following three factors must exist for a person to commit fraud.A. Opportunity B. Pressure C. RationalizationIdentify the fraud risk factor (A, B, or C) in each of the following situations. Officers are told to show rising income or risk layoffs.arrow_forwardBriefly describe some of the common themes or pressures faced by executives who commitcorporate fraud.arrow_forwardWhy would a financial institution’s PEP customers be required to provide documentation to evidence their source of wealth and/or income? In other words, what type of fraud would PEP clients more likely be associated with than the non-PEP customers? Why would they need to launder their money?arrow_forward
- Each of the following scenarios is based on facts in actual fraud. Categorize each scenario as primarily indicating (1) an incentive to commit fraud (2) an opportunity to commit fraud or (3) a rationalization for committing fraud. Also state your reasoning for each scenario. a. There was intense pressure to keep the corporation's stock from declining further. This pressure came from investors, analysts and the CEO, whose financial well-being was significantly dependent on the corporation's stock price. b. Agroup of top-level management was compensated (mostly in the form of stock options) well in excess of what would be considered normal for their positions in the industry. c. Top management of the company closely guards internal financial information, to the extent that even some employees on a "need to know basis" are denied full access. d. Managing specific financial ratios is very important to the company, and both management and analysts are keenly observant of variability in key…arrow_forwardEach of the following scenarios is based on facts in anactual fraud. Categorize each scenario as primarily indicating (1)an incentive to commit fraud, (2) an opportunity to commitfraud, or (3) a rationalization to commit fraud. State your reasoningfor each categorization.a. There was intense pressure to keep the corporation’s stockfrom declining further. This pressure came from investors,analysts, and the CEO, whose financial well-being was significantlydependent on the corporation’s stock price.b. A group of top-level management was compensated (mostlyin the form of stock options) well in excess of what would beconsidered normal for their positions in this industry.c. Top management of the company closely guards internalfinancial information, to the extent that even some employeeson a need-to-know basis are denied full access.d. Managing specific financial ratios is very important to thecompany, and both management and analysts are keenlyobservant of variability in key ratios. Key…arrow_forward1. How do you understand Fraud in your own words? Please provide explanation. 2. How do you understand the Fraud Triangle? Please provide explanation. 3. Favorite topic in Forensic Accounting? 4. What recommendations will you give to prevent fraud? 5. Will you consider becoming a Fraud investigator in the Future? Why or why not.arrow_forward
- Fraud refers to any intentional act to achieve gain, usually monetary. Committing a fraud isunethical and resulting in bad consequences, not just to the perpetrator, but also others (e.g.shareholders, workers etc.). Several example of fraud scenario are listed as follows:i). Store manager misused company’s car for personal purpose because he is the onlyperson that monitor the movement and usage of the car.ii). The accountant and the store keeper of AAA Enterprise co-operate in stealing thecompany’s inventory and they gain a lot of money from it.iii). The Chief Financial officer (CFO) of ABC Sdn Bhd had reported over $700,000 fakeearnings because he wants to achieve sales target.iv). XYZ Sdn Bhd booked revenues earlier than it should have because it was at risk ofmissing analyst estimates.Required;a. Identify the type of fraud committed in the scenario i). to iv). b. Based on the fraud triangle (i.e. pressure, opportunity and rationalization), identify thecause of fraud happen in the…arrow_forwardRationalization (which is part of the Fraud Triangle and the Fraud Diamond) means making excuses for your sinful choices instead of admitting that you are evil. In Genesis 3, two people blamed someone else for their sin—Adam blamed Eve, and Eve blamed the serpent. Name a factor you think might be used as an excuse by a corporate executive to commit a financial statement fraud, and explain why he or she might think this way.arrow_forwardAll companies are vulnerable to fraud, but small businesses are particularly vulnerable. Why do you think this may be the case? What signs of possible fraud may be more pronounced in small businesses when compared to larger ones?arrow_forward
- The following scenarios are taken from actual fraud cases. For each scenario, categorize as primarily indicating (A) An incentive to commit fraud (B) An opportunity to commit fraud or (C) a rationalization for committing fraud. State your reason for your answer in each scenario. 1. Top management of the company closely guards internal financial information, to the extent that even some employees on a "need to know basis" are denied full access.arrow_forwardFraud consists of some deceitful practice or willful device, resorted to with intent to deprive another of his right. Fraud is generally categorized as follows: Financial Statement Fraud a) May include employee theft – typically cash, physical assets (computers), or intellectual property. b) May encompass a variety of wrongful acts, such as, among others, bribes or kickbacks. c) Deliberate misrepresentation of the financial statements.arrow_forwardAnswer the following based on the image of the scenario A-Help management understand the issue from Jack’s perspective. Describe the ethical dilemma that Jack faces. What is the issue? Who are the parties involved? If you were Jack, what would you consider when making a decision? B-Help management understand the elements of the fraud triangle in this situation which increase the chances of fraud. Why is this fraud? What are the opportunities, motivations and rationalizations that you see? How does this affect the business financially? C-Help management come up with a plan to minimize the likelihood of this happening in the future. Be sure to mention specific components of the COSO framework.arrow_forward
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