According to the Fraud Triangle, which of the following best explains why individuals in a poorly designed financial system are more likely to commit fraud?

• A. Because the system increases pressure, provides opportunity, and allows rationalization for fraudulent behavior.
• B. Because the system eliminates all risks associated with fraud.
• C. Because the system strictly enforces ethical behavior at all times.
• D. Because the system guarantees high profits for everyone involved.

Answer: (A)

Verified step by step guidance

1. Understand the Fraud Triangle: The Fraud Triangle is a model that explains the three factors that contribute to fraudulent behavior—pressure, opportunity, and rationalization.
2. Analyze the options provided in the question: Evaluate each option to determine which aligns with the principles of the Fraud Triangle.
3. Option 1: 'Because the system increases pressure, provides opportunity, and allows rationalization for fraudulent behavior'—this directly corresponds to the three elements of the Fraud Triangle.
4. Option 2: 'Because the system eliminates all risks associated with fraud'—this does not align with the Fraud Triangle, as it does not address the factors that lead to fraud.
5. Option 3 and Option 4: Similarly, these options do not address the three elements of the Fraud Triangle, making them less relevant to the question.