Final Answer:
management pressure for profitability (I) and employees' financial difficulties (II) are dual contributors to the incentives for perpetrating fraud within an organization, creating a synergistic risk. The correct answer is 3) Both I and II.
Step-by-step explanation:
Incentives to perpetrate fraud can arise from various sources, and in this case, both I and II contribute to the potential for fraudulent activities.
I. Pressure for management to meet profitability requirements creates a motive for financial manipulation, as managers may resort to fraudulent practices to artificially boost profits and meet targets.
II. Employees facing personal financial difficulties may be tempted to engage in fraudulent activities to alleviate their financial stress, such as embezzlement or misappropriation of funds.
The combination of management pressure for profitability and employees' financial challenges increases the likelihood of fraudulent behavior within an organization. These factors create a conducive environment where individuals may succumb to unethical actions to meet financial goals or overcome personal difficulties.
In conclusion, both pressure for profitability and employees' financial struggles can be significant incentives for fraud. Organizations need to be vigilant and implement robust internal controls to mitigate these risks and foster a culture of integrity and ethical conduct.