What are the three elements of every fraud, known as the Fraud Element Triangle?

The correct answer identifies the Fraud Triangle, which consists of three elements that are essential for understanding the dynamics of fraud: opportunity, motivation, and rationalization.

• Opportunity refers to the circumstances that allow an individual to commit fraud. Without the opportunity to exploit weaknesses in internal controls or systems, fraud is less likely to occur.

• Motivation often relates to the personal reasons that drive an individual to commit fraud, such as financial pressure, personal issues, or other incentives.

• Rationalization is the process by which an individual justifies their fraudulent actions, typically to relieve guilt or to convince themselves that their actions are acceptable.

These three elements work together to create a situation where fraud can occur, and understanding them can aid in the prevention and detection of fraudulent activities.

The other options do not accurately represent the core components of the Fraud Triangle. The first option refers to actions associated with fraud but does not capture the foundational elements needed to commit fraud. The third option mentions aspects related to fraud but focuses on strategies for concealing and handling fraud after it occurs rather than the underlying causes. The last option involves the processes that follow the discovery of fraud, which do not pertain to the essential elements that lead to the commission of fraud in the first place.