Question

It is amazing how the different aspects of the fraud trangle can arise in one's life to tempt a person to commit fraud. Accountant are known to be the biggest fraudsters because they know and understand how the system works. Discuss how you would deal with such temptations if you find yourself in such a situation.  

.

Answer 1

TO undestand what need to be done when we get tempted to commit fraud we first need to know Fraud Triangle.

this triangle is designed to know the reason behind workers decision to commit fraud at the workplace.

The main elements of a Fraud Triangle are

1. Oppurtunity - this arises when employees have access to records and this loophole allows him to commit fraud.

2. Motivation - this involves needs of the individual which could be financial, social etc, which tempts him to commit fraud.

3. Rationalization - this is how an individual who commits fraud rationalizes his action that it was right on his part to have commited such frauds.

HOW TO DEAL WITH SUCH FRAUDS

As it is important that there must be presence of all three elements as mentioned above for fraud to occur. so the best way of preventing it from occuring is to focus on these elements.

1. in case of oppurtunity

look at the serious financial problems of individuals,whether they have been having past history of such acts or criminal history

2. in case of motivation

whether they have piled up debts, additcted to gambling or likewise, they desire to live a luxurious life

3. in case of rationalization

a proper seminars should be held from time to time as these individuals justify their actions.

4. encouraging whistleblowers and keeping their identity safe

5. all organisation should have system of internal accounting control which should be reviwed timely to mitigate possibility of any risks.