1. Creating fictitious journal entries, fictitious documentation, and altering the numbers in the financial statements often conceal financial statement frauds.
2. They are (1) a perceived un-shareable financial need (motive/pressure), (2) a perceived opportunity to commit fraud, and (3) the rationalization of committing the fraud.
3. Belief that no one is going to be harmed. A fraud perpetrator scanned a company paycheck, used desktop publishing software to erase the payee and amount, and printed fictitious paychecks.
4. The distinguishing factor between fraud and error is whether the underlying action that results in distortion of financial statements is intentional or unintentional" (240-6).
5. Essentially, the three elements of the Fraud Triangle are: Opportunity, Pressure (also known as incentive or motivation) and Rationalization (sometimes called justification or attitude). For fraud to occur, all three elements must be present.
Answers & Comments
1. Creating fictitious journal entries, fictitious documentation, and altering the numbers in the financial statements often conceal financial statement frauds.
2. They are (1) a perceived un-shareable financial need (motive/pressure), (2) a perceived opportunity to commit fraud, and (3) the rationalization of committing the fraud.
3. Belief that no one is going to be harmed. A fraud perpetrator scanned a company paycheck, used desktop publishing software to erase the payee and amount, and printed fictitious paychecks.
4. The distinguishing factor between fraud and error is whether the underlying action that results in distortion of financial statements is intentional or unintentional" (240-6).
5. Essentially, the three elements of the Fraud Triangle are: Opportunity, Pressure (also known as incentive or motivation) and Rationalization (sometimes called justification or attitude). For fraud to occur, all three elements must be present.