Question

he fraud triangle asserts that the following three factors must exist for a person to commit fraud. Identify the fraud risk factor in each of the following situations 1. Salespeople are expected to make unrealistic sales numbers. 2. Managers are told to make extreme cuts in expenses 3. Officers are told to show rising income or risk layoffs 4. Top management beleves competitors overstate income 5. A workersees other employees regularly take inventory for personal use. 6. A worker feels that fellow employees are not honest. Opportunity ho Pressure Rationalization

Answer 1

Answer:

1.	salespeople are expected to make unrealistic sales numbers	Pressure
2.	Managers are told to make extreme cuts in expenses	Pressure
3.	Officers are told to show rising income or risk layoff	Pressure
4.	Top management believes competitors overstate income	Rationalization
5.	A worker sees other employees regularly take inventory for personal use	Rationalization
6.	A worker feels that fellow employees are not honest.	Rationalization

Explanations;

Fraud triangle is a model created to explain that there exists three factors for a person to commit fraud.The following are the three factors: -

(1). Opportunity - A person will always search for an opportunity to commit fraud. There will be a low perceived risk of getting caught.

(2). Pressure - This factor means that there will be a pressure to commit fraud.

(3). Rationalization - A person will always finds a reason to justify the fraud and sees no criminal nature.

Reasons:

1. here the sales persons are pressured to make an unrealistic sales number, this create a chance for salesperson to show an wrong sales number.

2. Here managers are pressured to commit fraud by telling them to make extreme cuts in expenses.

3. Here Officers are pressured to commit fraud by telling them to show rising income or risk layoffs.

4. Top management is rationalizing that competitors overstate income.

5. This worker will rationalizes that other workers are taking inventory for personal use.

6. This employees is rationalizing that the employees are not honest for conducting a fraud.