Download Type of People That Commit Fraud Who commits fraud?

Fraud Examination
Chapter 2
Why People Commit Fraud
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
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To the Student
 This chapter covers some of the basic principles of fraud. It begins
with a description of the types of people who perpetrate fraud.
 We then discuss why people commit fraud, including the fraud
triangle. Finally, we examine how honest individuals are recruited to
participate in fraud schemes.
 By understanding these basic principles, you will see fraud
perpetrators in a different light and begin to understand how a trusted
friend or colleague could, unfortunately, become involved in fraud.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Learning Objectives
 Know the types of people that commit fraud.
 Explain why people commit fraud.
 Describe the fraud triangle.
 Explain the fraud scale.
 Understand how pressure contributes to fraud.
 Understand why people rationalize.
 Understand how people are recruited to
participate in fraud schemes. Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Type of People That Commit
Fraud
Who commits fraud?
 Anyone!
 Not demographically or psychologically differentiated
 Have the profile of other honest people
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
The Fraud Triangle
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
The Element of Pressure
Divided into four main groups:
1. Financial pressures
2. Vices
3. Work-related pressures
4. Other pressures
Financial pressure is the most common type of pressure
to commit fraud.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
The Element of Pressure
Financial Pressures
Common Financial Pressures:
1. Greed
2. Living beyond one’s means
3. High bills or personal debt
4. Poor credit
5. Personal financial losses
6. Unexpected financial needs
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
The Element of Pressure
Vice Pressures
1.Gambling
2.Drugs
3.Alcohol
4.Expensive extramarital relationships
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
The Element of Pressure
Work-related Pressures
“Get even with the employer”
Motivated by these factors:





Getting little recognition
Feeling job dissatisfaction
Fear of losing one’s job
Being overlooked for a promotion
Feeling underpaid
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
The Element of Opportunity
 Six major factors that
increase opportunity:
 Lack of controls
 Inability to judge
performance quality
 Fail to discipline fraudsters
 Lack of access to
information
 Ignorance, apathy and
incapacity
 Lack of audit trail
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Fraud Recruitment
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license