Week 7 - Identifying and Profiling Fraudsters

Week 7

In my view, the differential association theory explains why fraud occurs by groups within an organisation because it focuses on how individuals learn the criminality behaviour influenced by their associated groups (Sutherland, 1924). In particulars, when an individual is socialising with an associated group who has criminal behaviour involved, the individual is more likely to follow that group’s footstep. Although I do not associate with these groups, I do agree with this view. From working at a law firm, I mostly associate with solicitors and by interacting with them I am able to learn the values, attitudes and techniques required to work in the industry.The General Strain theory argues that strains or stressors increase the likelihood of negative emotions like anger and frustration which could result to crime (Agnew, 1992). In my view this explains how an individual turn to fraud by the pressure applied from their lives (work or personal). For example, at my work place there is a target of billing six hours of work. This can cause stress to an individual and allowing fraud or corruption to meet these targets at work. Personal financial issues could also be a motive under this theory. In contrast Cressey’s Fraud Triangle in my view postulates that employee’s commit fraud when they have the opportunity to do so, when they are motivated to do so, and when they can justify or rationalise their behaviour. I believe the fraud triangle indeed addresses both matters as discussed with the elements presented with opportunity provided by associated groups, pressure or motivation from the groups or external factors (ie. Finance) and rationalization (Cressey, 1973). Unfortunately, many organizations have no insight into the behavioral factors. These organizations tend to take a legalistic approach and focus primarily on battling fraud by adding more “opportunity” controls. Doing so might even result in bureaucratic and costly internal control systems with many sign-offs, yet they still experience incidents of non-compliance (Kiewit, 2014).

Reference

Agnew, Robert 1992. “Foundation for a General Strain Theory of Crime and Delinquency.” Criminology 30:47-87

Donald R. Cressey, Other People's Money (Montclair: Patterson Smith, 1973) p. 30.

Kiewit, Martijn D. (2014) Preventing Fraud: Behavioral Factors in the Fraud Triangle: Expert blog KPMG Switzerland.

Sutherland, Edwin H. (1924) Principles of Criminology, Chicago: University of Chicago Press