Fraud Risk: Pressure, Opportunity, Rationalization

Fraud risk assessment starts with a plausible scheme and ends with an evidence-based response. Pressure, opportunity and rationalization provide a useful lens between those two points.

The fraud triangle describes conditions generally associated with fraud: an incentive or pressure, a perceived opportunity, and an ability to justify the conduct. Their significance depends on context. A risk factor is not proof that fraud occurred, and rationalization may not be observable. ASA 240, A24–A26

Pressure: examine the business incentives

Start with what the process rewards and what happens when targets are missed. In an illustrative sales process, a sharp performance threshold might encourage a team to seek unusual period-end adjustments. That is a question to investigate, not a conclusion about the team's integrity.

Ask: Which decisions could be distorted by the incentive? Who can influence those decisions? What evidence would distinguish a legitimate adjustment from manipulation?

Opportunity: follow the route around the control

A policy may require approval while the operating system allows the same person to create a customer, change terms and release a transaction. The practical question is whether a plausible scheme can pass through the process undetected.

Walk through the actual route: access rights, override capability, exception handling and independent review. Identify where the proposed control would interrupt the scheme and what record would demonstrate that interruption.

Rationalization: avoid reading minds

An explanation such as “we will correct it next month” deserves scrutiny, but an isolated comment does not establish intent. Examine how exceptions are handled, whether challenges receive a substantive response, and whether contrary evidence is ignored.

Keep observations separate from interpretations. Record what was said or done, then identify what further evidence is needed.

Convert the triangle into a working risk statement

An illustrative procurement scenario can be framed as follows: a person with supplier-maintenance access could redirect a payment if changes are not independently verified.

This formulation gives the assurance team something testable. It identifies the actor capability, action, failure point and possible business consequence without claiming that any real individual has committed fraud.

Use a short working sequence:

• Name the scheme: describe how value or reported results could be manipulated.
• Identify the enabling conditions: connect incentives and bypass points to that scheme.
• Test the response: examine preventive controls, detection and exception resolution.
• Corroborate: compare explanations with transaction records and independent information.
• Escalate appropriately: use the engagement's agreed governance and reporting route.

Respond to evidence, not a triangle score

Do not add up three labels and call the result a fraud probability. The useful output is a reasoned risk assessment and a proportionate assurance response. An unexplained exception may require further work; an ineffective control may require remediation even when fraud has not been established.

Management owns the process and its controls. Assurance work evaluates the relevant risk and evidence within its mandate.

Keep the standards context clear

This is a practical educational application, not a complete financial-statement fraud audit program or a statement of Indonesian legal requirements. AUASB's revised ASA 240 applies to financial reporting periods commencing on or after 15 December 2026. AUASB: New Fraud Standard

The triangle opens the investigation. Evidence determines the conclusion.