Donald R. Cressey's Study Of Fraudal Fraud And Fraud

Indiana University graduate Donald R. Cressey’s (1919-1987) study of occupational fraud and abuse breaks down the reason why the “trust violators” or embezzlers committed the crime. By interviewing 200 inmates convicted of the crime of embezzling, he produced a hypothesis that is known today as the fraud triangle. The fraud triangle represents the factors that cause an employee to commit fraud which include, Opportunity, pressure and rationalization. (Wells, 2014) Cressey described that nonshareable financial problems or the pressures that causes the employee to commit the crime play a crucial role in understanding the crime. Through the interview process, Cressey discovered that the participates fell in the following six categories; violations
W. Steve Albrecht and two other colleagues created another important study involving occupational fraud and abuse that is used today within the field. Understanding that as a group occupational fraud is hard to profile and predict, however Albrecht came up with a list of fifty red flags falling under two categories; perpetrator characteristics and organizational environment, which can be used to help detect fraud. The top three for perpetrator characteristics in order include; living beyond their means, overwhelming desire for personal gain, and high personal debts. (Wells, 2014) The organizational environment top three are; placing too much trust in key employees, lack of proper procedures for authorization of transactions, and inadequate disclosures of personal investments and outcomes. (Wells, 2014) With this list Albrecht then created the fraud scale, which weighs each aspect in order to detect the level of fraud that the company is susceptible
Majority of those who commit fraud involve men in their early to mid-forties (19%), with a college degree (36.9%), working within the accounting department (22%) or one with access to assets. (Wells, 2014) Regardless of these factors almost anyone could commit fraud given the right conditions. Although the fraud triangle, red flags and fraud scales created by Cressey and Albrecht, can help predict or prevent fraud, not all situation can be covered and stopped
Objective D)
i.
The list of geographical locations where fraud happens the most is listed in order, followed by the number of cases and present. 1) United states 1021 (56.8%0 2) Asia 298 (16.6%) 3) Europe 157 (8.7%) 4) Africa 112 (6.2%) 5) Canada 99 (5.5%) 6) Central/South America and the Caribbean 70 (3.9%) 7) Oceania 40 (2.2%) (Wells, 2020) ii. The United States currently ranks with the most amount of fraudulent crimes being committed. This isn’t surprising when comparing the sheer size of the U.S.’s economy against others. The last ranked location where fraud is committed is Oceania providing only 2.2% present of the cases with only 40 cases. (Wells,