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.
The Term Paper on The Different Types Of Fraud That Were Committed By Enron
Enron committed all types of fraud, from mail fraud and shareholder fraud to security, wire fraud and money laundering. While analyzing these frauds it will be seen who committed the fraud, why did they commit it, how did they commit it, the penalty and punishment given to those who were apart of it, the key players, the penalty and punishment given to those who are innocent bystanders, the ...
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 etc. In this case opportunity can be seen by the following: No segregation of duties- Rachel Duncan was the accountant who was solely in charge of the accounting functions, in fact she was not only responsible for nine bank accounts but she was also charged with the responsibilities of being able to write checks, sign checks and also make deposits.
By being in charge of all these processes it placed her in a strong position to commit and conceal embezzlement of funds from the HASC, had there been a segregation of duties it could have prevented the frauds unless there is collusion. Lack of independent checks- In review of the case Rachel Duncan was considered a trusted employee as a result she was given sole responsibility over the finances of the organization. However they were not any independent checks by her Boss Mr.
Sponseller this could have deterred the fraud, thus a combination of high levels of trust in Rachel Duncan by her boss combined with failure to independently check the transactions not only increased the opportunity but made it very easy for her to commit fraud. Hiring- in review of this case it was noted that this was not the first time the HASC experienced fraud in terms of embezzlement in fact prior to the hiring of Ms. Duncan a former employee also embezzled money, it stands to question whether proper background checks were done prior to hiring.
The Research paper on Internal Control And Fraud Detection In Banks
ABSTRACT The Central Bank of Nigeria reported that the backward development of Nigeria was attributable to weakness in the internal control systems of the banks. This has clearly pointed out the picture of how fraud is being penetrated in the financial strength of Nigerian banks. In a nut-shell , the damage which the menace, called fraud has done to the banks is innumerable and needs urgent ...
If they weren’t then it was the first step to creating an opportunity for fraud to occur. Thus a combination of all three factors coupled with the high levels of trust provided the perfect atmosphere for Rachel Duncan to commit and conceal fraud. Rationalization- This refers to the reasons that fraudsters may use to justify why they have committed fraud according to Albrecht it may range from reasons such as the following: * The organization owes me * I deserve more It’s for a good purpose. In relation to this case Rachel Duncan rationalized by indicating that she never meant to hurt or abuse anyone’s trust. Thus in the time of committing her fraudulent activities she would have reasoned to herself that no one would be hurt and it was not an abuse of anyone’s trust. By constantly rationalizing this way, she would have embezzled hundreds of thousands still believing that nothing was wrong. It was also reported that her Boss Mr.
Sponseller who placed a great level of trust in her eventually committed suicide, so in review there was an abuse of trust and someone did in fact get hurt. In the HASC/ Rachel Duncan case all three factors existed for this fraud to take place however if they were able to manipulate the opportunity factor it may have been prevented.
