Explain Each of the Three Sides of the Fraud Triangle

question 67

Essay

Explain each of the three sides of the fraud triangle (SAS 99) with respect to how it contributes toward the possibility that fraud in the financial statements may be present.

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Definitions:

Administrative Expense

Costs associated with the general administration of a business, including salaries of non-sales personnel, office supplies, and rent, not directly tied to production or sales.

Tenant-Days

A metric used in property management, representing the total number of days that tenants occupy a space within a specific period.

Planning Budget

A budget created for a particular level of activity; it can be adjusted over time as actual activity levels change.

Wages

Payments made to employees for their labor or services, typically calculated on an hourly, daily, or piecework basis.