Rationale for Correct Answer:The ACFE describes occupational fraud and abuse as an expense of doing business because organizations inevitably face losses from it, just as they incur other operating costs. This framing emphasizes the importance of prevention and detection to minimize this “expense.”
Analysis of Incorrect Options:
A. Equity – Residual ownership interest, not relevant here.
B. Balance sheet – A report, not a cost.
D. Financial record – Too vague.
Key Concept:Occupational Fraud as a Cost of Business.
[Reference:ACFE Fraud Examiners Manual (2020 International Edition), Fraud Theory — Fraud as a Cost of Doing Business., , ]
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