It has been argued in the literature that “the fraud triangle and its three stages (categorised by the effect on the individual) of (1) pressure, (2) opportunity and (3) rationalisation” can be improved by considering which ‘fourth element’: Group of answer choicesGreedEaseCapabilityWealthNone of the available answers
Question
It has been argued in the literature that “the fraud triangle and its three stages (categorised by the effect on the individual) of (1) pressure, (2) opportunity and (3) rationalisation” can be improved by considering which ‘fourth element’: Group of answer choicesGreedEaseCapabilityWealthNone of the available answers
Solution
The Fraud Triangle is a model for explaining the factors that cause someone to commit occupational fraud. It consists of three components which, together, lead to fraudulent behavior:
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Pressure: Also known as motivation, this is what drives the fraudster to commit fraud. It's a problem that the person is unable to solve legally, so he or she resorts to fraud.
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Opportunity: This is the situation that enables fraud to occur. Most often, the fraudster has been trusted with certain privileges due to their position in the organization, and abuses this trust.
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Rationalization: This is the mindset of the fraudster. They find a way to justify their fraudulent behavior, often with the belief that they are only "borrowing" the assets, or that they are somehow entitled to them.
Some researchers and practitioners have suggested adding a fourth element to the Fraud Triangle to give it more depth and make it a more useful tool. The fourth element that is often suggested is "Capability".
Capability refers to the fraudster's ability to understand and exploit the system to carry out the fraud, and to avoid detection. This includes the individual's position within the organization, their knowledge and skills, and their ability to manipulate others.
Therefore, the correct answer is "Capability".
Similar Questions
Opportunity, Financial Pressure, and Rationalization are the three main factors contribute to fraud activity. In your view, discuss the factor that you believe is the most crucial to creating a fraud. Provide examples to support your conclusion and defend your choice in the discussion.
Which of the following is not one of the components of the fraud triangle?Multiple choice question.PressureOpportunityRationalizationDishonesty
Question 6From an investigatory perspective, the shortcoming ofthe fraud triangle is as follows:1 pointThe fraud triangle doesn’t help the investigatorunderstand the motivations of the fraudster.The fraud triangle doesn’t help the investigator understand why thefraudster committed fraud.Pressure and rationalization are generally notobservable.The fraud triangle is as important to an investigation as any othertool
Which of the following statements is true about theFraud Scale1 pointIt identifies those conditions lowering fraud risk,tipping the scales against the likelihood of fraudIt was developed by Wolfe and Hermanson in the 2000s in the spirit ofCresseyIt mirrors the fraud triangle with the exception ofintegrity being substituted for rationalizationThe fraud scale balances low pressure against low opportunity as a basisto minimize fraud risk
Incentive (or pressure) is a necessary element for a person to commit fraud. Which of the following is NOT considered a type of pressure?Question 14Answera.Financial pressuresb.Work pressurec.Personal achievementsd.Other pressures
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