Segregation of Duties and the Fraud Triangle:

The Fraud Triangle identifies three conditions that contribute to fraud: pressure, opportunity, and rationalization.

Segregating duties (e.g., separating authorization, recordkeeping, and asset custody) is specifically designed to reduce opportunity, which is the chance for an employee to commit fraud without detection.

Why Opportunity Is Key:

If one person has too much control over a process, they may exploit it for personal gain. Segregating duties creates checks and balances, making it harder for fraudulent activities to go unnoticed.

Why Other Options Are Incorrect:

A . Pressure: Pressure refers to personal or financial stresses that drive someone to commit fraud, but segregation of duties does not address this directly.

C . Rationalization: Rationalization involves justifying fraudulent behavior, which segregation does not prevent.

D . Detection: While segregation can aid in fraud detection, its primary role is to reduce opportunities for fraud.

Reference and Documents:

GAO Standards for Internal Control (Green Book): Emphasizes segregation of duties as a control to mitigate opportunities for fraud.

COSO Internal Control Framework: Identifies segregation of duties as a key tool to reduce fraud risk.