6.6 Fraud Triangle

Question 1

Fraud

Answer 1

Any intentional means used to gain an unfair advantage over another

Question 2

Fraud Triangle

Answer 2

1. Incentive/Pressure
2. Opportunity (what allows an individual to commit, conceal and convert the proceeds)
3. Rationalization

Question 3

Detecting Fraud

Answer 3

• creating an ethical culture
• active oversight
• assigning authority and responsibility
• assessing risk
• security policies
• training employees
• supervising
• requiring vacations
• prosecuting fraud vigorously
• make it harder to commit fraud: internal controls

Question 4

Internal Controls for Fraud

Answer 4

• segregating duties
• restricting access
• requiring appropriate authorization
• using documentation
• safeguarding assets
• requiring vacations
• independent checks
• computer based controls