Question

In this unit, you have been introduced to the most commonly used fraud theory (Fraud Triangle Theory) created by Donald R. Cressey in 1950 while he was working on his doctoral thesis. Select one of the elements. Why do you find this element intriguing? Do you think these elements are relevant in today’s society? Why do you think fraud still exists even after the scandals of Enron and WorldCom?

Answer 1

1. Donald R. Cressey in 1950 came up with the theory called the Fraud Triangle Theory in order to explain why people commit fraud and he identified mainly three elements in it.

2. The three elements are

i. Opportunity: When employees have access to control assets, there will be a possibility to commit fraud. So minimizing the opportunities for control over those valuable things can reduce the chances of committing fraud. Only those access should be provided to employee where he/she has the necessity for completion of his/her job.

ii. Motivation: This can be financial need or materialistic need of an employee to commit fraud. Some employees are in real need but this type of possession also results in fraud and the other kind of person is a greedy one which also is a fraud.

iii. Rationalization: Here the person committing fraud find excuses for his/her criminal behavior

3. What I find intriguing is the third element Rationalization because even he/she commits or amounts to fraud they find excuses for themselves like for example. ''Company earned the major revenue through bad measures or sources.'' Here if the company earns its revenue from those type of illegal sources, the respective government is there to take actions regarding those organizations/companies and here rationalizing for their behavior is intriguing is what I feel as they find excuses instead of realizing they are amounting to fraud.