Weekly Blog 6 - Identifying and profiling fraudsters

When an individual commits fraud, it can usually be explained through Cressey's Fraud Triangle. However, in the case of massive fraud where top management is involved, for example, Enron and WorldCom, the fraud triangle does not cover all the variables. That is why with the help of two leading fraud theories, Differential Association theory and General Strain theory, will assists in the explanation.

General Strain theory suggests that an individual leads to fraud due to a strain in their life, this could be for a behavioural, environmental and social reason (Ramamoorti, 2008), which goes into detail to interpret the pressures in the fraud triangle. On the other hand, Differential Association theory proposes that people commit fraud in groups due to the association with a criminal environment, they seek social support from them as a result from a strain and gets influenced towards crime as criminal behaviour is learned not inherited (Albrecht, 2014). The criminal environment could be within the organisation or an external group, therefore an opportunity is present for individuals to commit fraud as detailed in the fraud triangle.

In my opinion, Cressey's Fraud Triangle does address both concepts of Differential Association and General Strain theory , however, to a smaller degree. General Strain goes deeper by suggesting that there is more pressure than just financial, an individual's personality is also a variable to consider and there are micro and macro strains. Differential Association deals with how individuals coerce in dealing fraud, whereas, the fraud triangle is on a individual basis.

(Akkeren, 2015)

The key to understanding why fraud, bribery and corruption are increasing is to know that it usually starts off with a pressure or strain, most fraudsters are first time offenders that have some sort of need, mostly financial so solving that problem could in the long term benefit an organisation.

Relevant links

Enron overview:
                http://content.time.com/time/specials/packages/0,28757,2021097,00.html

WorldCom overview:
                http://www.nytimes.com/2002/07/22/us/worldcom-s-collapse-the-overview-worldcom-files- for-bankruptcy-largest-us-case.html

Global profiles of the fraudster:                http://www.kpmg.com/AU/en/IssuesAndInsights/ArticlesPublications/Documents/fraudster- global-profiles.pdf

References

Akkeren, J.V. (2015). AYB115 Governance, Fraud& Investigation: Week 7 Resources. Retrieved 22 May, 2015 from
                https://blackboard.qut.edu.au/webapps/blackboard/content/listContent.jsp?

course_id=_11681                6_1&content_id=_5376704_1&mode=reset

Albrecht, S. (2014). Iconic Fraud Triangle endures, Metaphor diagram helps everybody understand fraud. Retrieved 28 April, 2015 from
                http://www.fraud-magazine.com/article.aspx?id=4294983342

Ramamoorti, S. (2008). The psychology and sociology of fraud: Integrating the behavioral sciences component into fraud and forensic accounting curricula. Issues in Accounting Education, 23(4), 521-533. doi:10.2308/iace.2008.23.4.521