Question

Using Cressy’s fraud triangle theory use a know fraud case that has been in the news (Enron, Bernie Madoff, Wisconsin case at Koss Sue Sachdeva) or one that you are aware from your own experiences to support Cressy’s theory or the dis-prove his theory

Answer 1

Before jumping to Cressy fraud triangle let us discuss wht fraud is?

In a basic language we can term fraud as cheating or tricking someone or intentional or unlawful gain.

Now fraud triangle:

It can be said as a framework or a model that explains the reason behind commeting fraud.The fraud triangle consists of three conditions that increase the chances of fraud being committed.

1: Percieved Pressure

2:Opportunity

3.Rationalisation

Let us discuss all three one by one

What do you mean by perceived pressure- a purson who is liable for too many things under immense pressure of performance target or having any habit that require big funding(for example - gambling).So when there is immensive pressure of anything that kills moral of the employee and his greeds or liability or duty whatever it is bounds him to commit a fraud.

For example: Two friends are working in same organisation at same post but one is baing paid higher now the other one is always under pressure to overcome his friend monetarily.He ignores his friend hardwork dedication and only sees what he is being paid at the end,hence in this circumstances there is possibility that he will do some wrong thing to support his will and ego.

Opportunity:

Sometimes pressure gives a person an opportunity to commit fraud.let us understand this with simple example;

In banks there are joint custodian of cash and vault room(where cash is kept).Now a days there is extreme pressure on bank for various works the cashier needs to handover the cash at the end of the day to the vault (other person or servicde manager).Its vault duty to check whether the cash is as per the records or not but due to heavy work load he trust the cashier and do not cross check now the cashier has an opportunity to commit fraud .He can take few notes out from the cash bundles as at the end of the day he is not the custodian and can claim later the there is less cash .

or we can say there is a construction site where there are number of workers and number of tools in the evening no one is checking the workers while they rteturn home.Here also the workers have opportunity to take the tools or materials along with them.They can sell it and earn mony or can use it personelly.

Rationalisation

It can be termed as making up for being underpaid or thinking it as bonus that he or she deserved but not received.It can be also said as ones mindset.

let me explain with an example

I will again give example of bank

I wont name the bank but will let you know what has happened as its a real incident as i have worked there and i know

The head cashier who looks after the cash transactions of the bank take cash for no dues also.No dues means you need to pay few hundreds to bank in order to take NOC regarding that you have not taken any loan from the concerned bank if you are applying in some other bank.Like if you want to have a current accout in certain ABC bank you need to fetch NOC from other bank in that region regarding you dont have a current account in any other bank under the firms name.Yoy pay rupees 230 for the NOC certificate.Now this transaction can be notes by the head cashir at the end of the day but if his inner rationale told his to keep the amount as no body knows in lieu of work he has doner through out the day no one will knows.

The same example can be used under opportunity or preceived pressure