CFA Practice Question

There are 90 practice questions for this study session.

CFA Practice Question

Which of the following is least likely a condition present in a "fraud triangle" (Opportunity-Motivation-Rationalization)?

A. Constraining debt covenants
B. Adding independent members to the board of directors
C. Management's belief that a decline in performance is due to temporary economic conditions
Correct Answer: B

The "fraud triangle" requires incentives (e.g., debt covenants), opportunities, and management's ability to rationalize (temporary economic conditions). Adding independent members to the board of directors should improve corporate governance and hence decrease the opportunity for fraud.

User Contributed Comments 1

User Comment
Yrazzaq88 C = rationalization
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