Question

[The following information applies to the questions displayed below.] Assume Ethan Lester and Vick Jensen are...

[The following information applies to the questions displayed below.]

Assume Ethan Lester and Vick Jensen are CPAs. Ethan was seen as a “model employee” who deserved a promotion to director of accounting, according to Kelly Fostermann, the CEO of Fostermann Corporation, a Maryland-based, largely privately held company that is a prominent global designer and marketer of stereophonic systems. The company has an eleven person board of directors.

Kelly considered Ethan to be an honest employee based on performance reviews and his unwillingness to accept the promotion, stating that he wasn’t ready yet for the position. Kelly admired his willingness to learn and grow, not just expect a promotion. Little did she know that Ethan was committing a $50,000 fraud during 2015 by embezzling cash from the company. In fact, no one seemed to catch on because Ethan was able to override internal controls. However, the external auditors were coming in and to solidify the deception, he needed the help of Vick Jensen, a close friend who was the accounting manager and also reports to Ethan. Ethan could “order” Vick to cover up the fraud but hoped he would do so out of friendship and loyalty. Besides, Ethan knew Vick had committed his own fraud two years ago and covered it up by creating false journal entries for undocumented sales, returns, transactions, and operating expenses.

Ethan went to see Vick and explained his dilemma. He could see Vick's discomfort in hearing the news. Vick had thought he had turned the corner on being involved in fraud after he quietly paid back the $20,000 he had stolen two years ago. Here is how the conversation went.

“Vick, I need your help. I blew it. You know Mary and I split up 10 months ago.”

“Yes,” Vick said.

“Well, I got involved with another woman who I tried to impress by buying her things. I wound up taking $50,000 from company funds.”

“Ethan, what were you thinking?”

“Don’t get all moral with me. Don’t you recall your own circumstances?”

Vick was quiet for a moment and then asked, “What do you want me to do?”

“I need you to make some entries in the ledger to cover up the $50,000. I promise to pay it back, just as you did. You know I’m good for it.”

Vick reacted angrily, saying, “You told me to skip the bank reconciliations—that you would do them yourself. I trusted you.”

“I know. Listen, do this one favor for me, and I’ll never ask you again.”

Vick grew increasingly uneasy. He told Ethan he needed to think about it … his relationship with the auditors was at stake.

Vick Jensen is now caught in what dynamic of the Fraud Triangle?

A) Incentive

B) Pressure

C) Opportunity

D) All of these choices are correct

Homework Answers

Answer #1

Answer is B- Pressure.

With the provided informations, it's appropriate to think that Vick Jensen is now caught in the pressure dynamics of fraud triangle.

Vick Jensen is being pressurized by his Reporting manager, Ethen, to cover up his fraud. vick is being influenced by Ethen, pin pointing to vick's history of committing fraud.

Pressure:-

Pressure in this case is another way of saying motivation. What is it in one’s life that drives one to commit fraud? Pressure sometimes involves personal situations that create a demand for more money; such situations might include vices like drug use or gambling or merely life events like a spouse losing a job. At other times, pressure arises from problems on the job; unrealistic performance targets may provide the motive to perpetrate fraud.

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