Question

What additional or meaningful response do you have on this student's paragraph below about characteristics of a person likely to perpetrate a large fraud, debated his decision over person with these characteristics, and gave reasons why a person is likely to be a fraud perpetrator than person with different characteristics? This is based on Chapter 14 in the textbook called "Fraud Examination" by Steve Albrecht.

Characteristics of person to commit fraud is someone in high position of responsibility, which is costly and cause damage. Fraud perpetrator has no prior fraud charges/convictions. Offender is between age of 31-45, and is male than female. Executive-level frauds take longer to detect, undetected longer, could grow and large scale fraud. More than 80 percent of frauds committed by individuals in accounting, operations, sales, executive/upper management, customer service or purchasing. Fraudsters display warning signs they engage in illicit activity, single most common behavioral red flags shown by perpetrators is living beyond their means. Management that drive nice cars, have boats, big houses and vacation a lot are under the scope for investigation. Anyone going through divorce, death in the family or major event that take place are likely to commit fraud as well.

Answer 1

A person likely to perpetuate a large fraud often shows certain behavioral changes which if detected can go a long way in combating and preventing such frauds. Following are the characteristics of such person:

1. Anyone who tends to spend more on lifestyle than what he/she can afford from his usual earning is a prime suspect for fraud.
2. Anyone who is undergoing a mid-life crisis like a break-up, divorce, death in the family, loan, mortgage, etc. is more likely to commit the fraud.
3. Having an unusually close association with vendors or customers can make a person more vulnerable to conduct a fraud.
4. Most of the fraudsters are first time offenders and have no criminal records. They usually have a family and are in their early 30s to mid- 40s.
5. Departments plays a significant role in the fraud. Anyone who has access to critical data which can be useful for some external stakeholder or has access to the company's funds and fund management system are more likely to commit fraud.