LambWorld has been very successful in selling its medium-quality lamb meat to the United Kingdom. This success has been partly due to the low value of the Australian dollar compared with the British pound. However, the company manages its foreign exchange risk through hedging, which is controlled by the financial controller, Victoria. Victorias bonus is attached to the profit performance from the hedging account. Managing Director, Mick has been very happy with Victorias performance in this area as she has made some healthy profits on her hedging contracts.

i) Identify and explain the type of fraud risk that is present in the case. (2 marks)

ii) Identify and explain the potential fraud risk factor. (4 marks)