Multiple Choice
Which of the following actions would be considered an agency problem in the context of the fraud triangle?
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Fraud and the Fraud Triangle
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Which of the following is NOT one of the components of the fraud triangle?
A
Rationalization
B
Collusion
C
Opportunity
D
Pressure
Verified step by step guidance1
Understand the fraud triangle: The fraud triangle is a model used to explain the factors that lead to fraudulent behavior. It consists of three components: Pressure, Opportunity, and Rationalization.
Define each component: Pressure refers to the motivation or incentive to commit fraud, such as financial difficulties. Opportunity is the ability to commit fraud due to weak internal controls or oversight. Rationalization is the justification or reasoning that makes the fraudulent act seem acceptable to the perpetrator.
Identify the term 'Collusion': Collusion refers to the act of two or more individuals working together to commit fraud. It is not a component of the fraud triangle but rather a method by which fraud can be carried out.
Compare the options provided: Rationalization, Opportunity, and Pressure are all components of the fraud triangle. Collusion, however, is not part of the fraud triangle.
Conclude that the correct answer is 'Collusion' because it does not belong to the fraud triangle components.
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