ITPEC FE Subject A October 2025 Question 30
When a fraud occurs, all three (3) elements of the “fraud triangle” are believed to exist. Which of the following is the appropriate explanation of an element of the “fraud triangle”?
Explanation
Opportunity — the fraud triangle's element for an environment that makes fraud possible or easy, and option (b) describes it correctly.
The fraud triangle (Cressey) holds that fraud occurs when three elements exist together:
- •Opportunity — weak controls, system access, physical environment or organisational rules that let fraud be committed.
- •Pressure (incentive, motivation) — a force pushing the person, such as debts or unrealistic performance targets.
- •Rationalization — self-justification that overcomes guilt, such as "I will pay it back" or "everyone does it".
Answer (b)
Why not others:
- •(a) — "information and communication" is one of the components of internal control in the COSO framework, not an element of the fraud triangle.
- •(c) — the self-justification described here is Rationalization, wrongly labelled as Pressure.
- •(d) — feeling forced by unrealistic targets is Pressure, wrongly labelled as Rationalization.
Key rule: Fraud needs opportunity, pressure and rationalization together; controls work mainly by removing the opportunity.
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