Chapter 3, Problem 18MCQ

What is an example of incentive as one of the three elements causing a person to commit fraud?

Give specific examples of  fraud risk factors - incentives, opportunities, and attitudes/rationalization.

What are the three key points about a fraud perpetrator?

If one of the three elements of the fraud triangle is not present, can fraud still be perpetrated? Explain. Identify factors (red flags) that would be strong indicators of opportunities to commit fraud. Is the ability to rationalize the fraud an important aspect to consider when analyzing a potentially fraudulent situation? What are some of the common rationalizations used by fraud perpetrators? Define and illustrate kiting. What controls should the client institute to prevent it?

Fraud consists of some deceitful practice or willful device, resorted to with intent to deprive another of his right.  Fraud is generally categorized as follows: Asset Misappropriation a) May include employee theft – typically cash, physical assets (computers), or intellectual property. b) May encompass a variety of wrongful acts, such as, among others, bribes or kickbacks. c) Deliberate misrepresentation of the financial statements.