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ACCA Strategic Professional · Strategic Business Leader · Identification, assessment and measurement of risk

Dalton Logistics has a finance clerk who raises payments, approves them and reconciles the bank account, with little supervision. A director asks which fraud-risk element, from the fraud triangle, is most directly addressed by splitting these duties. Which element is it?

The fraud triangle element addressed is opportunity. Segregating the raising, approving and reconciling of payments means one person cannot commit and conceal fraud alone. Pressure and rationalisation are personal factors that control structures do not directly alter.

  1. AOpportunity, because segregation of duties removes the ability to commit and conceal fraud unnoticedCorrect
  2. BPressure, because separating duties reduces the clerk's personal financial difficulties
  3. CRationalisation, because separating duties changes the clerk's belief that the behaviour is justified
  4. DMotive, because the clerk will no longer wish to benefit from the company's assets

Explanation

Segregation of duties is a control that limits opportunity, as no single person can both commit and hide a fraud. Pressure and rationalisation are personal factors that internal controls do not directly change. Controls therefore mainly address opportunity.

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