Chapter 12 Flashcards
Which of the following is not an example of the fraud triangle characteristic concerned with rationalization?
A) Revenge against the company
B) Intent to repay “borrowed” funds in the future
C) Sense of entitlement as compensation for receiving a lower than average raise
D) Belief that the company won’t suffer because an insurance company will reimburse losses
Revenge against the company
Insiders are frequently the ones who commit fraud because
they know more about the system and its weaknesses than outsiders
Identify the opportunity below that could enable an employee to commit fraud.
A) An employee’s spouse loses her job.
B) The company does not have a clear policies and procedures for the employee to follow.
C) The employee is experiencing financial hardship.
D) An employee is upset that he was passed over for a promotion.
The company does not have a clear policies and procedures for the employee to follow.
Which of the following is a financial pressure that could cause an employee to commit fraud?
A) A feeling of not being valued.
B) Having a grumbling and drug addiction.
C) Having a close association with suppliers and customers.
D) Having an anger management issue.
Having a grumbling and drug addiction.
Which of the following is the best way to hide theft of assets?
A) Only steal an immaterial amount of assets.
B) Conversion of stolen assets into cash.
C) Stealing cash from customer A and then using customer B’s balance to pay customer A’s accounts receivable.
D) Charging the stolen asset to an expense account.
Charging the stolen asset to an expense account.
Which of the following is not one of the components of the fraud triangle? A) Incentive B) Rationalization C) Susceptibility D) Opportunity
Susceptibility
Which characteristic of the fraud triangle often stems from a lack of internal controls within an organization?
Opportunity
Which characteristic of the fraud triangle often stems from the belief that “the rules do not apply to me” within an organization?h
Rationalization
