1.Types of frauds committed by Carol Argo according to the classification of fraud include:Management and financial statement fraud– Often called financial statement fraud involves top management deceptive manipulation of financial statements. Carol Argo, President, CFO, and COO and Anthony Caputo, Chair of the Board and CEO, both intentionally backdated stock options by choosing a previous grantdate where stock prices were low and recording that as date of exercise to reduce stock compensation expense, thereby overstating net income. Argo was also able to override internal controls to achieve the results she wanted. Caputo and Argo had stock options that valued a huge amount in SafeNet, Inc. Corruption– Corruption means using power to manipulate and influence decisions in an organization. Argo held top three positions in the company that allowed her to make decisions without reviewal by any supervisor.2.The elements of the fraud triangle are opportunity, pressure and rationalization. We can see the three elements in this case as follows:Pressure – In order to remain competitive and meet investor expectations, Argo and Caputo were pressured in to falsifying financial reports. They then understated compensation expenses, thereby overstating net income to make the company’s financial reports attractive. Argo also wanted to perform better than her previous jobs. She held top positions in at her past employers, hence was determined to perform better at her current position and climb up the ladder to increase her earnings. Caputo and Argo were also motivated to increase their personal earnings. Argo’s compensation package was set above competitor CFOs and the values of her stock options increased by 267% while her unexercised stock options valued at nearly $5 million by 2004.Opportunity– Because Argo held three top positions in the company, she could easily manipulate lower level employees to do as she instructed. As CFO, she manipulated financial reports easily and could also override internal controls. Caputo who was CEO and Chair of the Board was also involved in manipulating the financial reports, hence there was no one to review their work. Because duties were not divided in the company, it was easy to manipulate the books. The subcommittee members were also not independent as they occupied positions in the board as well. Rationalization– Argo rationalized the fraud by implicating that backdating stock options was not illegal, and she was not doing this for herself, but also helping other employees in the company with their stock options. Backdating stock is not itself illegal, however adequate disclosures need to be made on financial reports regarding them. In addition, Argo frequently backdated stock options to gain favorable market prices without shareholder and investors knowledge.