FRM Part II · FRM Exam Part II · Case Study: Financial Crime and Fraud
Under the fraud triangle, an accounts-payable clerk with unchecked authority to approve vendor payments diverts funds because of personal debts and believes the company will never miss the money. Which element is represented by the unchecked authority?
The unchecked authority represents opportunity in the fraud triangle. Weak controls let the clerk divert payments without detection. Personal debts supply the pressure, and the belief that the company will not miss the money is the rationalization.
- APressure
- BOpportunityCorrect
- CRationalization
- DCapability
Explanation
Weak controls and unchecked authority create the chance to commit fraud, which is opportunity. Personal debts are pressure, and the belief the company will not miss the money is rationalization.
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