Question

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:

1. The business has no cameras or security devices at its warehouse.

2. Managers are expected to grow business or be fired.

3. A worker sees other employees regularly take inventory for personal use.

4. No one matches the cash in the register to receipts when shifts end.

5. Officers are expected to show rising income or risk dismissal.

6. A worker feels that fellow employees are not honest.

Short answer

Fraud triangle comprises of three motives of a person who commits fraud, and the situations are matched with the relevant factors.

Step-by-step solution

Definition of the fraud triangle

Fraud triangle is defined as the framework used in auditing which explains the various reasons behind a person’s decision to commit fraud.

Matching of factors with the situations

Situations	Factors
1.	Opportunity
2.	Pressure
3.	Pressure
4.	Opportunity
5.	Pressure
6.	Rationalization