Who Commits Fraud?
Research shows that anyone can commit fraud regardless of his age, gender, education level, status and others. Findings from the Association of Certified Fraud Examiners (ACFE) Report to the Nations 2016 on Occupational Fraud and Abuse that the frequency distribution shows that 55% of fraudsters is commonly between the age of 31 to 45% and more likely male than female. Males are not only larger in number of frauds but they also generally cause larger losses which the median loss caused by male fraudster was 187,000 USD while the median loss by a female fraudster was 100,000 USD.
It is interesting to note also in the report that those with post graduate degree caused a significant higher median loss of 300,000 USD compare
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This will help us to know if most employees, customers, vendors, and business associates and partners fit the profile of fraud committers and are probably capable of committing fraud and it is impossible to predict in advance which employees, vendors, clients, and customers will become dishonest.
Why Do People Commit Fraud?
One of the basic concepts in fraud prevention and detection is the “Fraud Triangle”. This was developed by the American criminologist Donald R. Cressey which explains why people commit fraud and other unethical behavior. He worked in the fields of criminology and white-collar crimes. According to him fraud is frequently a white-collar crime.
The Fraud Triangle is an outline designed to explain the cognitive behind why people commit fraud in his/her workplace. Understanding and applying the concept of Fraud Triangle, the organization can effectively fight fraud that may harmfully impact their operations of the business.
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Wells, a CPA, CFE, founder and chairman of the Association of Certified Fraud Examiner in his article “Why Employees Commit Fraud”, according to him it is either greed or need. Greed and need has an important role on a personal level and corporate level. It’s been said that “you never get enough of what you don’t really want.” With people addicted to chasing wealth, their overwhelming, avid passion isn’t about getting rich—but richer...and still richer. Heinz Kohut, an Austrian-American psychoanalyst and best known for his development of self-psychology said that man is born good and it is the environment that corrupts him thus, greed comes out of nurture. Adam Smith, a capitalist philosopher mentioned that greed can be connected to serve social ends. Environment connects greed to such constructive purposes and it is also that decrees how much greed is enough – how we define where, say, healthy ambition ends and unsavory self-interest begins. This has the resemblance of Edwin Sutherland’s theory why people commit crime. According to him, criminal behavior is associated to person’s relationship with a criminal environment. He believed that people meet various social stimuli throughout their lives. Some individuals have social connections with individuals having criminalistics inclinations and so become criminals as a consequence of this association. Edwin Sutherland’s differential association theory can be summarized as follows: (1) Criminal
I believe that asset misappropriation by accounts payable fraud is occurring at Wayland Manufacturing Company due to a lack of proper internal controls. Making the company’s Chief Accountant responsible for additional day-to-day functions provides him with opportunity to commit by creating fictitious vendors with his information and then creating fictitious invoices. Newbaker can then conceal his fraud by approving the invoices for payment. Employees working at an organization for more than five years are more likely to commit fraud. Therefore, Newbaker’s six-year history with the company has made him trustworthy and very knowledgeable, which could indicate involvement in asset misappropriation. The high employee turnover could represent a past fraudster leaving before getting caught or employees refusing to continue with the asset misappropriation. In addition, the varying monthly accounts payable transactions ranging from the lowest being April 2014 and
Ulinski, Michael. "AN ANALYSIS OF SMALL COMPANY FRAUDS AND." American Society of Behavioral Society. Dept of Business, Pace University. 05 Feb. 2008.
The white collar crime usually forms within corporations and who is head of the organization is someone who has education to run the business. This person with education who commits this crime tends to convince staff that has less education into this type the activity. One of the white-collar crimes is the most common is fraud. White collar crimes are durable because the personals who commit them know how the system works in the business market. It is for this reason that in the case of fraud. Victims often fail to recover what has been stolen by deception. As is the case for the Internet fraud where many people fall; especially when looking for work, there are companies personals deceive those applying for work give information of their personal
There are many different views on the origins of criminal behaviors within societies. One possible reason for why people commit crimes could be because they learned it from others. Edwin Sutherland works to explain this tactic through his theory of differential association. His theory states that criminal behavior is learned in interaction with others in intimate, personal groups. The learning of criminal behavior depends on the strength of the relationship with those who commit deviant actions. This learning also depends on their definitions of legal codes. For example, some people in society rationalize traffic speeding if it is only a couple miles over the speed limit while others are strongly against speeding at any degree. When a person’s
Differential association theory best explains the burglary deviance. There are many principles associated with this type of learning theory. Edwin Sutherland’s theory discusses how crime is a learned behavior where one’s family, peers, and environment are of great influence. Differential association theory seeks to prove that criminal behavior is learned and this paper will evaluate the connection between the two.
Today, worldwide, there are several thousands of crimes being committed. Some don’t necessarily require a lethal weapon but are associated with various types of sophisticated fraud, this also known as a white-collar crime. These crimes involve a few different methods that take place within a business setting. While ethical business practices add money to the bottom line, unethical practices are ultimately leading to business failure and impacting the U.S. financially.
White collar and corporate crimes are crimes that many people do not associate with criminal activity. Yet the cost to the country due to corporate and white collar crime far exceeds that of “street” crime and benefit fraud. White collar and corporate crimes refer to crimes that take place within a business or institution and include everything from Tax fraud to health and safety breaches.
Hanson, J. R. (n.d.). Fraud or confusion? RDH Magazine, 19(4). Retrieved 3 15, 2014, from http://www.rdhmag.com/articles/print/volume-19/issue-4/feature/fraud-or-confusion.html
Enron and their accounting firm Anderson Accounting brought what we know as “white collar crime” to the forefront. White-collar criminals are not known to be dirty criminals, because they use their heads to get what they want from society. White collar criminals do not use their muscle; instead they use their brain for mischievous way to manipulate people. These criminals are just as dangerous as the bank robbers and murderers in my opinion. In these times, even the most trusted people are being convicted of white-collar crimes, your neighbor, the banker you have trusted for ten plus years, the closest of family friends, no one can be ruled out. White-collar crimes can differ in the sort and magnitude of the crime. There are always new scams coming out every day that society falls victim
There were lots of problems in our society that we absolutely have no ways to prevent. One of the most serious problems in today 's society is that there are lots of swindlers around the world. Fraud is when a person intended to deceive others to get money, as today 's techniques have gotten better and better everyday; the cheaters get the advantages of it. They use those network communication techniques to get people’s information and use those information to cheat your money. There was no age limit for the target people, whom the teenage, middle age and old people can become their targets. The cheaters will use different ways to cheat money. Mostly the cheaters will use the Internet to cheat the teenagers since all the teenagers are chatting
There has always been a fascination with trying to determine what causes an individual to become a criminal? Of course a large part of that fascination has to do with the want to reduce crime, and to determine if there is a way to detect and prevent individuals from committing crime. Determining what causes criminality is still not perfectly clear and likewise, there is still debate as to whether crime is caused biologically, environmentally, or socially. Furthermore, the debate is directly correlated to the notion of 'nurture vs nature'. Over time many researchers have presented various theories pertaining to what causes criminal behavior. There are many theories that either support or oppose the concept of crime being biological rather than a learned behavior.
Nice post! Are you familiar with the theory of differential association? It is a learning theory that focuses on the processes by which individuals come to commit deviant or criminal acts. According to the theory, created by Edwin H. Sutherland, criminal behavior is learned through interactions with other people. Through this interaction and communication, people learn the values, attitudes, techniques, and motives for criminal behavior.
The principle territory we are planning to address is accounting fraud and how it could impact an organization by answering, the who, what, when and how. Its goal is to increase the awareness of accounting fraud and fraud counteraction. The intriguing thing about accounting fraud is that little disclosure as a rule usually leads to an enormous increase in fraud. A number of categories and sub-categories can be divided up for fraud.
Sociologist Edwin Sutherland first advanced the idea that an individual undergoes the same basic socialization process in learning conforming and deviant acts (Schaefer 2015). Through cultural transmission, criminal or deviant behavior is learned by interacting with others. This learned behavior also includes motives and rationale for explaining the deviant acts. Sutherland used the term differential association to describe the process through which an individual develops an attitude of favorability to deviant acts that leads to violations of rules, through interactions with social groups. These acts can also include noncriminal deviant acts, such as
These include functions in real estate (METRO properties), account processing (METRO Group Account processing, IT (METRO Systems), logistics (METRO Logistics), travel agency (METRO Group travel), purchasing (METRO Group Buying HK). insurance brokerage (METRO Group Insurance Broker), advertisement (METRO Group advertising) and facility management (METRO Group facility management). The wide ranging functions, valuable properties that the Group has put it at a high degree of risk and exposure to Fraud. Numerous individual occupying different positions and series of complicated transaction makes the Group a suitable case to study as various aspects of economics, management, law, sociology and organizational theory come into play to understand the processes for an effective design of fraud deterring schemes (Friederichs, 2010 p. 36). METRO Group diverse portfolio can provide a concrete, in-depth understanding of the dynamics and realities of a retail and consumers fraud cases but still applicable to other