Question

Discuss factors that might drive an individual to commit fraud against their organization.

Answer 1

Solution:

Fraud is a big deal for any business.Internal fraud is something organizations should keep cautious all of the time. When things are going well, people don’t really think about fraud, and that’s a good opportunity for certain people to commit fraud.

So why do people commit fraud? The answer is that they do it out of greed, but there’s more to the crime than just that. People need certain motivations to be driven to steal from their company. The Fraud Triangle presents three factors that can make an employee consider internal fraud:

1. Pressure

2. Rationalization

3. Opportunity

Once those elements fall into place, the idea of fraud becomes more of a possibility.

Pressure to Commit Fraud:

Bad situations can lead to bad decisions. Employees in stressful situations can see fraud as an easy way to eliminate their problems.Pressure can also be caused by other people. A spouse, relative, or friend might push a person down the fraudulent path. Even another employee looking to commit fraud may pressure another if that coworker would be needed to complete the crime. Pressure can force a variety of human responses, and sometimes that can lead to internal fraud.

Rationalization:

Rationalization can come in multiple forms. Sometimes it’s a justification. An employee who hasn’t gotten a raise in 10 years may feel the company owes him or her, so the person commits fraud to try and get the money he or she feels is long overdue.

Fraud doesn’t have to result in the theft of big dollar amounts. An employee may justify that by stealing small amounts, what they’re doing isn’t all that bad. In truth, it’s always bad, but the person committing fraud may have him or herself convinced otherwise.

Opportunity:

This is the biggest factor in The Fraud Triangle. Even if a person is under pressure to commit fraud or has rationalized the idea to the point of no return, it’s impossible to commit fraud without having an opportunity to do so.