ACCA Applied Knowledge · Business and Technology · Regulation and financial crime
Which of the following best describes the 'fraud triangle', used to explain why fraud occurs?
The fraud triangle consists of opportunity, pressure (or incentive) and rationalisation. These three conditions together explain why a person commits fraud: they have a motive, a chance to act, and a way to justify the act to themselves. Remove any one and fraud becomes less likely.
- AOpportunity, pressure (incentive) and rationalisationCorrect
- BPlanning, execution and concealment
- CDetection, prevention and punishment
- DAuthorisation, custody and recording
Explanation
The fraud triangle identifies three conditions that are usually present when fraud occurs: pressure or incentive, opportunity, and rationalisation by the perpetrator. The other options describe different ideas, such as segregation of duties (authorisation, custody, recording).
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