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Categorize scenario as primarily indicating an incentive

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Reference no: EM13887345

Each of the following scenarios is based on facts in an actual fraud. Categorize each scenario as primarily indicating (1) an incentive to commit fraud, (2) an opportunity to commit fraud, or (3) a rationalization for committing fraud. Also state your reasoning for each scenario.

a. There was intense pressure to keep the corporation's stock from declining further. This pressure came from investors, analysts, and the CEO, whose financial well-being was significantly dependent on the corporation's stock price.

b. A group of top-level management was compensated (mostly in the form of stock-options) well in excess of what would be considered normal for their positions in this industry.

c. Top management of the company closely guards internal financial information, to the extent that even some employees on a "need-to-know basis" are denied full access.

d. Managing specific financial ratios is very important to the com- pany, and both management and analysts are keenly observant of variability in key ratios. Key ratios for the company changed very little even though the ratios for the overall industry were quite volatile during the time period.

Reference no: EM13887345

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