Question

1. The managers in the company made a decision based on what each employee would do had s/he be given the opportunity. Upon which ethical principle is this based and write an issue?

Answer 1

The fraud triangle components in a company include the opportunity, incentive, and rationalization that cause a high probability of fraud. An opportunity to an employee refers to the circumstances that may help an employee to commit the fraud. For example: Inadequate policies on accounting and lack of efficient internal controls such as lack of strong supervision, poor management on separation of duties and poor processes of documentation may create the fraud opportunities in the company. The ethical principle based on what an employee would do if provided an opportunity will be based on integrity as it expects both the honesty and trustworthiness from an employee when they get an opportunity to commit a fraud. For example: Enron company corporate scandals was due to lack of principle of accounting standards of integrity where the managers abandoned to act in the best interest of the company and its shareholders; and when got the opportunity they committed fraud and unethical and illegal activities path was followed by them