Management of Premium Discovery Company is compensated through large salaries,stock options,and bonuses tied to the company's working capital growth.The CEO is constantly holding meetings to ensure that management is on target for increased operating income each month.Based solely on the preceding information,which element of the fraud triangle exists at the Premium Discovery Company?

Question

Quizplus · Accepted Answer

The CEO's focus on increased operating income and compensating management through salaries, stock options, and bonuses creates an incentive for fraudulent behavior. This aligns with the "incentive" element of the fraud triangle, which suggests that individuals may commit fraud when they perceive that the benefits outweigh the costs.

Management of Premium Discovery Company Is Compensated Through Large Salaries,stock