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! Required information [ The following information applies to the questions displayed below. ] Management fraud ( e . g . , fraudulent financial reporting
Required information
The following information applies to the questions displayed below.
Management fraud eg fraudulent financial reporting is a relatively rare event. However, when it does occur, the frauds eg Enron and WorldCom can have a significant effect on shareholders, employees, and other parties. The PCAOB's AS Consideration of Fraud in a Financial Statement Audit, provides the relevant guidance for auditors.
b Select the three conditions that are generally present when fraud occurs:
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Management or other employees have an incentive or are under pressure that provides a reason to commit fraud.
Circumstances exist that provide an opportunity for a fraud to be carried out.
Those involved are able to rationalize committing a fraudulent act. Some individuals possess an attitude, character, or set of ethical values that allow them to knowingly and intentionally commit a dishonest act.
Those involved have less than a highschool education.
Those involved have no religious affiliations.
Those involved are in their first year at the company.
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