What is one element that constitutes a perceived opportunity for fraud?

A perceived opportunity for fraud arises when individuals believe they can commit fraud without being detected or punished. This perception is often rooted in the presence or absence of organizational controls. A lack of controls that prevent and/or detect fraudulent behavior creates an environment where fraud can occur with reduced risk of apprehension. In situations where there are insufficient safeguards, individuals may feel empowered to exploit gaps in the system, leading to an increased likelihood of fraudulent behavior.

In contrast, excessive oversight typically serves as a deterrent to fraud, as it makes it more difficult for individuals to carry out dishonest activities without being noticed. High employee morale and a strong organizational culture are also important for ethical behavior, as they foster trust and commitment among employees. However, they do not directly relate to the perceived opportunity for fraud, which hinges on the presence of robust preventive and detective controls.