Ethical Obligations And Decision Making Of Accounting

Fraud is intentionally or deliberately deceives others, which led others lose their benefits or person who made fraud obtain benefits. There are three elements of fraud occurrence, which is called the fraud triangle (exhibit 1): incentives or pressure, opportunity, and rationalization; also people will rationalize their fraud. (exhibit 11, from book â€Å"Ethical Obligations and Decision Making in Accounting† page 253 by Steven M. Mintz and Roselyn E. Morris) The fraud incentives or pressure. The pressure on fraudsters is the first condition occurred fraud. Such as financial stability or profitability is threatened by economic condition, industry condition or business condition; management has pressure to meet the requirements or†¦show more content†¦Under a great pressure, fraudsters will try their best to find any little opportunity, and of course they will look for the best way to cover their malicious actions. The ability to find excuses for their fraud. An excuse can be looked as an attitude, character or value, so that fraudsters can make a dishonest action, or fraudsters’ environment can facilitate their ability to rationalize their fraud. Excuse is one of the important conditions for the occurrence of fraud. Only fraudsters able to rationalize their behavior, they can succeed to ease mind after the fraud. Such as management attitudes misconduct or lack of good reputation, or the tense relationship between management and the current or former auditors, all will make fraudsters to mix their personal interests with collective interests. In addition, there are several common types of fraud, which are as follow: First, fraudulent financial reporting, which include: manipulate, falsify or alter accounting entries or related documents; or deliberately ignoring in financial statements, misrepresentation, and intentional wrong accounting principles. Second, misappropriation of assets: Accounts embezzlement; misappropriation or theft of cash, inventory, or equipment; overpayments or early payment of money. All organizations are