Describe some social conditions within the office that can lead to a high -fraud environments?

Expert Solution

Fraud is an act of deliberate deception in order to gain an advantage.

Fraud committed by an individual consists of three components:

1. The individual had an opportunity to deceive.

2. There was a lot of pressure on the individual to show good results.

3. The fraudster rationalizes his act due either to poor tone from top management, or his spiteful relations with his managers.

The social conditions in the office which leads to the high fraud environment are:

1. Lack of adequate internal controls like job rotation, separation of duties, adequate documentation provides opportunities to potential fraudster to take advantage of the situation.

2. When the top management does not exhibit ethical and honest behavior in its dealings, the middle and lower level staff tend to follow the lead.

3. In many companies the employee's bonuses and incentives are highly dependent on the financial results of the company or the market price of its share. Due to this employee's might be tempted to manipulate the books of accounts for receiving more incentives.

ekkarill92 answered 1 year ago

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