FINANCIAL & MANAGERIAL ACCT. CONNECT
FINANCIAL & MANAGERIAL ACCT. CONNECT
9th Edition
ISBN: 9781266418211
Author: Wild
Publisher: INTER MCG
Question
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Chapter 6, Problem 3QS
To determine

Fraud triangle:

Opportunity risk in fraud triangle occurs if opportunity is provided to employees to steal assets belonging to the company or commit frauds because of weak internal control systems of the company. Pressure risks in fraud triangle occurs when pressure is exerted by senior management on their subordinates for manipulating the financial statements for showing good operating and financial results to make them eligible for payment of higher performance bonus and / or manipulate the price of shares on the stock exchange. The management may also over-ride internal control systems for committing frauds. Rationalisation risks in the fraud triangle occur when employees steal assets / commit frauds and then justify it on some rational grounds.

To state: The type of risk in the fraud triangle.

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