Question

Create an essay, explaining the fraud triangles three basic elements. Pick one and explain how you might minimize its contribution to fraud.

THE FRAUD TRIANGLE

*Rationalization: the person doing it can devise a reason or excuse for committing fraud.They pay me too little.The insurance company is making too much money.

* Pressure: need to pay bills. Drug addiction, Usually a significant financial issue.The recent recession provided lots of pressure to commit fraud.

* Opportunity: ability to commit fraud, can be especially easy in the health care environment.

Answer 1

Donald Cressey created the concept of the fraud triangle

.The three basic elements in fraud triangles are

• Pressure
• Rationalization
• Opportunity

PRESSURE::

Pressure is one of the elements leading to commitment of fraud. Personal financial problems, any antisocial behaviour which needs money, drug abuse, alcohol dependence ,gambling debts all which create pressure to steal money.The reason for fraud varies from time to time.Some people shows themselves good outside but due to addictions of various types they steal money unknowingly.

Poor internal controls in organisation leads to fraud.The pressure situation should be resolved.Education should be provided to employees about the hazards of drug abuse, alcohol dependence and gambling.Employees should work with commitment towards professionalism and effort to improve organisation.As the mortgage is increasing in present the family finance is devastated.The financial distress will lead to fear of losing everything we made in our life time makes an employee indulge in fraud. Insurance coverage and appraisal from organisations can minimise the pressure .

Savings should be made which will help in relieving pressure due to financial distress.