Within the risk of fraud continuing to be on the rise within businesses in the 21st Century, many theories have been developed to predict and prevent scenarios where it is likely. The three main theories are, Differential Association Theory, Strain Theory and Cressey’s Triangle.
Differential Association Theory provides and explanation into why individuals form a subgroup to commit fraud. Alternatively, Strain Theory looks into external and internal strains that can push individuals to crack and commit fraud.
I believe that Cressey’s triangle is most useful out of these 3 for being able to prevent fraud in terms of groups and individuals. This theory explores with 3 factors, fraud can and likely will happen; Opportunity, Rationalisation and Pressure. This can be applied to a business by reducing the pressure on employees by not setting high targets, reducing opportunity by implementing secure governance and reduce rationalisation by ensuring all employees are treated with respect/ Reducing these factors will undoubtable decrease the likelihood for fraud to be committed.
The woman who previously had be role at my current workplace committed fraud by processing an additional $3000.00 into her last paycheque. The whole time she was with the company both opportunity and pressure were there due to few internal controls and the fast paced nature of the role with very high expectations. The fraud never occurred however until the third factor, Rationalisation, was presented. Before her resignation, the owner of the small company wasn’t ever at the office and reduced everyones rate of pay. With this, she was able to rationalise committing fraud by believing that the owner didn’t deserve the extra money.
My advice for preventing fraud in businesses would be to follow Cressey’s Triangle and reduce all 3 factors as much as possible.
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