Which of the following factors is, according to the AICPA, an example of the rationalizations part of the fraud triangle?
A) The majority owner is also the manager of the company, and makes no distinction between his personal money and the business's money.
B) Measurement of certain assets involves estimates that are hard to double check.
C) Internal controls are deficient, due to ineffective accounting and information systems.
D) There is a high degree of competition in the company's industry.

Question

Quizplus · Accepted Answer

Rationalization is a component of the fraud triangle where the individual justifies their fraudulent behavior. In this case, the majority owner rationalizing the misuse of company funds as their own reflects this mindset, fitting the description of rationalization.

Which of the Following Factors Is, According to the AICPA