Donald R Cressey hypothesis became known as the “fraud triangle.” He studied the reasons behind the fraud. What led them to commit the fraud. His fraud triangle can explain of occupational offenders but not all. According to Cressey: “The first point represents a perceived non-sharable financial need which fell into six basic categories: violation of ascribed obligations, problems resulting from personal failure, business reversals, physical isolation, status gaining, and employer – employee relations.” The second element of the fraud triangle is: The perceived opportunity. Cressey’s view is there are two components to the perceived opportunity: general information and the technical skill. The final point stands for rationalization.
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By doing this study, Cressey come up with the ten recurring factors dealing with organizational environment, where Albrecht created a list of ten most factors dealing with personal characteristics. “The study by Albrecht supported Cressey’s model of the Fraud Triangle.” (Wells, 2011, p. 23) These two lists are similar in nature of non-shareable financial problems.
Is there a typical fraudster? Who really knows? There has been studies done that say a typical fraudster is usually a male, between 36-45 years of age, commits fraud against their own employer, had an accounting job or in the finance spectra in a business, usually is higher management, and has been working for the same company for over 10 years. It doesn’t matter who you hire, how you interview, or how you screen the individuals, if they want to commit fraud or if they have the ability and the means to commit the fraud they will find a way. There are two main types of fraud, malicious and non-malicious. Usually when one commits fraud it’s out of greed.
The fraud triangle consists of the following: opportunity, pressure (incentive) and rationalization. If you add on the fourth element of capability, then instead of it being a triangle it will be a diamond. An individual in the organization had the ability or opportunity to commit the fraud. Then one has to be smart enough to create a plan and learn the ins and