Fraud Triangle
Discussion Topic #1
The fraud Triangle is a very important tool in seeking to understand why people commit fraud. In the examination of any fraud case according to the Fraud triangle there are three major elements, pressure, opportunity and rationalization. To illustrate the relevance of these three factors we can examine a recent fraud case i.e. the South Carolina Hospitality Association. In this case Rachel Duncan was the accountant for South Carolina Hospitality association, she is charged with the embezzlement of funds and tax evasion, In other words Ms. Duncan is said to have used her position as an accountant to steal company funds for her own benefit on further review it is claimed that approximately $500,000 was embezzled from the Hospitality Association of South Carolina.
In an attempt to understand why Rachel Duncan committed this fraud we can examine the case in terms of the following three factors:
Pressure: This factor looks at what causes or drives an individual to commit fraud. Albrecht indicated that these perceived pressures can fall into the following categories, financial, Vice, Work related or other pressures. However in relation to the HASC fraud case the pressure that caused Ms. Rachel Duncan to commit fraud was a combination of both Financial & Vice pressures. On review of the case it is reported that she embezzled monies in order to support her gambling Problem thus her vice was her insatiable gambling problem and the financial pressure was the fact that she resorted to fraudulent practices to steal the funds from HASC in order to support her gambling problem.
Opportunity: In the fraud triangle opportunity refers to the situations or atmosphere that exists which makes it easy for an individual to commit and conceal fraud. Albrecht identified the control environment which looks at areas such as management role , Management communication, Appropriate hiring, and control activities such as segregation of duties, independent checks
The fraud Triangle is a very important tool in seeking to understand why people commit fraud. In the examination of any fraud case according to the Fraud triangle there are three major elements, pressure, opportunity and rationalization. To illustrate the relevance of these three factors we can examine a recent fraud case i.e. the South Carolina Hospitality Association. In this case Rachel Duncan was the accountant for South Carolina Hospitality association, she is charged with the embezzlement of funds and tax evasion, In other words Ms. Duncan is said to have used her position as an accountant to steal company funds for her own benefit on further review it is claimed that approximately $500,000 was embezzled from the Hospitality Association of South Carolina.
In an attempt to understand why Rachel Duncan committed this fraud we can examine the case in terms of the following three factors:
Pressure: This factor looks at what causes or drives an individual to commit fraud. Albrecht indicated that these perceived pressures can fall into the following categories, financial, Vice, Work related or other pressures. However in relation to the HASC fraud case the pressure that caused Ms. Rachel Duncan to commit fraud was a combination of both Financial & Vice pressures. On review of the case it is reported that she embezzled monies in order to support her gambling Problem thus her vice was her insatiable gambling problem and the financial pressure was the fact that she resorted to fraudulent practices to steal the funds from HASC in order to support her gambling problem.
Opportunity: In the fraud triangle opportunity refers to the situations or atmosphere that exists which makes it easy for an individual to commit and conceal fraud. Albrecht identified the control environment which looks at areas such as management role , Management communication, Appropriate hiring, and control activities such as segregation of duties, independent checks
References: Wessel Accounting- Fraud Triangle and the Hospitality Association The State News South Carolina Home page- Exclusive Interview with Rachel Duncan Fraud Examination 4e- Albrecht, Albrecht & Albretch