Risk assessment often involves considering where fraud risk may be present.

Required: For each scenario in the table below, choose the appropriate fraud triangle risk factor. Each selection may be used once, more than once, or not at all. (12 points; 2 points each)

Group of answer choices

Promotions and compensation are tied to financial performance

[ Choose ] Not a risk factor Incentives/pressures Opportunities Attitudes/rationalizations

Inadequate physical safeguards over cash, investments, or inventory

[ Choose ] Not a risk factor Incentives/pressures Opportunities Attitudes/rationalizations

The CEO has large personal debt obligations

[ Choose ] Not a risk factor Incentives/pressures Opportunities Attitudes/rationalizations

Inadequate monitoring of controls

[ Choose ] Not a risk factor Incentives/pressures Opportunities Attitudes/rationalizations

Management believes aggressive financial reporting is common throughout their industry

[ Choose ] Not a risk factor Incentives/pressures Opportunities Attitudes/rationalizations

Management is relatively unfamiliar with the most recent revenue accounting standards

[ Choose ] Not a risk factor Incentives/pressures Opportunities Attitudes/rationalizations