Fraud Triangle description
The Fraud Triangle is a framework formulated to understand the logic behind an employee’s judgment to commit workplace fraud.
The three aspects, categorised by the impact on the individual, can be epitomized as pressure, opportunity and rationalisation.
• Step 1 – the pressure on the individual – is the enthusiasm behind the fraud and can be either personal financial pressure, such as debt crises, or workplace debt troubles, such as a shortfall in earnings.
The pressure is seen by the individual as Unsolvable, sanctioned routes and unshareable with others who may be eligible to contribute. A popular illustration of a perceived unshareable financial crisis is gambling debt. Keeping a lifestyle is another familiar case.
• Step 2 – the opportunity to commit fraud – is how the individual will steal the organisation. In this aspect, the employee sees a clear course of action by which they can manipulate their role to unravel the perceived unshareable financial problem in a way that – again, perceived by them – is unlikely to be found.
In various trials, the capacity to unravel the dilemma in classified is main to the perception of a viable opportunity.
• Step 3 – the ability to rationalise the crime – is the last aspect of the fraud triangle. This is a mental aspect and needs the fraudster to be apt to explain the fraud in a manner that is adequate to his or her inner ethical compass. Vastly fraudsters are first-time criminals and do not see themselves as criminals, but somewhat a victim of the situation.
Rationalisations are often established on outside components, such as a desire to take care of a family, or an unethical employer which is seen to minimise or mitigate the hurt done by the scandal.
Overview
• The fraud triangle is a framework employed to understand the purpose of an individual’s judgment to commit fraud.
• The fraud triangle includes three components: (1) Opportunity, (2) Incentive, and (3) Rationalization.
• Fraud indicates the deception that is intentional and effected by an employee or group for personal gain.
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