What are the most common approaches that perpetrators use to commit fraudulent financial reporting?You are asked to be interviewed by a student newspaper regarding the nature of accounting fraud. The reporter says, “As I understand it, asset misappropriations are more likely to be found are more likely to be found in small organizations, but not in larger organizations. On the other hand, fraudulent financial reporting is more likely to be found in larger organizations.” How would you respond to the reporter’s observation?The fraud triangle identifies incentives, opportunities, and rationalizations as the three elements associated with most frauds. Describe how each of these elements is necessary for fraud to occur.

A fraud in an audit is an activity performed with the intent of deceiving the users of the financial…

Answered: What are the most common approaches…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter2: The Auditor’s Responsibilities Regarding Fraud And Mechanisms To Address Fraud: Regulation And Corporate Governance

Section: Chapter Questions

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What are the most common approaches that perpetrators use to commit fraudulent financial reporting?
You are asked to be interviewed by a student newspaper regarding the nature of accounting fraud. The reporter says, “As I understand it, asset misappropriations are more likely to be found are more likely to be found in small organizations, but not in larger organizations. On the other hand, fraudulent financial reporting is more likely to be found in larger organizations.” How would you respond to the reporter’s observation?
The fraud triangle identifies incentives, opportunities, and rationalizations as the three elements associated with most frauds. Describe how each of these elements is necessary for fraud to occur.

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