Fraud theories l.jpg
This presentation is the property of its rightful owner.
Sponsored Links
1 / 24

Fraud Theories PowerPoint PPT Presentation


  • 1293 Views
  • Updated On :
  • Presentation posted in: General

Fraud Theories. Dr. Raymond S. Kulzick, CPA, CFE St. Thomas University Miami, Florida Copyright 2004 R. S. Kulzick. Fraud Theories. Sutherland – White Collar Crime Cressey – Fraud Triangle Albrecht – Fraud Scale Hollinger - Clark Study. Edwin H. Sutherland.

Download Presentation

Fraud Theories

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Fraud theories l.jpg

Fraud Theories

Dr. Raymond S. Kulzick, CPA, CFE

St. Thomas University

Miami, Florida

Copyright 2004 R. S. Kulzick


Fraud theories2 l.jpg

Fraud Theories

  • Sutherland – White Collar Crime

  • Cressey – Fraud Triangle

  • Albrecht – Fraud Scale

  • Hollinger - Clark Study


Edwin h sutherland l.jpg

Edwin H. Sutherland

  • 1939 First defined “white-collar crime”

    • Criminal acts of corporations

    • Individuals in corporate capacity

  • Theory of differential association

    • Crime is learned

    • Not genetic

    • Learned from intimate personal groups


Cressey s offender types l.jpg

Cressey’s Offender Types

  • 1. Independent businessmen

    • “Borrowing”

    • Funds really theirs

  • 2. Long-term violators

    • “Borrowing”

    • Protect family

    • Company cheating them

    • Company generally dishonest


Cressey s offender types5 l.jpg

Cressey’s Offender Types

  • 3. Absconders

    • Take the money and run

    • Usually unmarried, loners

    • Blame “outside influences” or “personal defects


The fraud triangle l.jpg

The Fraud Triangle

PRESSURE

RATIONALIZATION

OPPORTUNITY


Nonsharable problems l.jpg

Nonsharable Problems

  • Violation of ascribed obligations

  • Personal failures

  • Business reversals

  • Physical isolation

  • Status gaining

  • Employer-employee relations


Pressure l.jpg

Pressure

  • Financial

  • Vice

  • Work-related

  • Other


Opportunity l.jpg

Opportunity

  • Controls

    • Environment

    • Accounting

    • Procedures

  • Performance quality

  • Discipline perpetrators

  • Access to information

  • Ignorance, apathy, incapacity

  • Audit trail


Rationalization l.jpg

Rationalization

  • They owe me

  • Borrowing

  • Nobody will get hurt

  • I deserve more

  • It’s for a good purpose


W steve albrecht l.jpg

W. Steve Albrecht

Nine motivators of fraud

  • Living beyond means

  • Overwhelming desire for personal gain

  • High personal debt

  • Close association with customers

  • Pay not commensurate with job


W steve albrecht12 l.jpg

W. Steve Albrecht

Nine motivators of fraud

  • Wheeler-dealer

  • Strong challenge to beat system

  • Excessive gambling

  • Family/peer pressure


The fraud scale l.jpg

The Fraud Scale

  • Situational pressures

    • Immediate problems with environment

    • Usually debts/losses

  • Perceived opportunities

    • Poor controls

  • Personal integrity

    • Individual code of behavior


The fraud scale14 l.jpg

The Fraud Scale


Hollinger clark study l.jpg

Hollinger-Clark Study

  • Hollinger-Clark study (1983)

  • Surveyed 10,000 workers

  • Theft caused by job dissatisfaction

  • True costs vastly understated


Employee deviance l.jpg

Employee Deviance

  • Two categories:

    • Acts against property

    • Production violations (goldbricking)

  • Strong relationship: theft and concern over financial situation


Age and theft l.jpg

Age and Theft

  • Direct correlation

  • Younger employees less committed

  • But, higher position = bigger theft

  • Opportunity is only a secondary factor


Job satisfaction and deviance l.jpg

Job Satisfaction and Deviance

  • Dissatisfied employees

    • More likely to break rules

    • Regardless of age/position

    • Trying to right perceived inequities

  • Wages in kind


Organizational controls l.jpg

Organizational Controls

  • Some impact, but limited

  • Hollinger studied five aspects:

    • Company policy

    • Selection of personnel

    • Inventory control

    • Security

    • Punishment


Hollinger s conclusions l.jpg

Hollinger’s Conclusions

  • Employee perception of controls is important

  • Increased security may hurt, not help

  • Employee-thieves exhibit other deviance

    • Sloppy work, sick leave abuses, etc.

  • Management should be sensitive to employees

  • Pay special attention to young employees


Hollinger s conclusions21 l.jpg

Hollinger’s Conclusions

Four key aspects of policy development

  • Understand theft behavior

  • Spread positive info on company policies

  • Enforce sanctions

  • Publicize sanctions


Overall conclusion 1 l.jpg

Overall Conclusion 1

  • Perpetrators feel justified

  • Must counter this

    • Morally

    • Legally

    • Consequences


Overall conclusion 2 l.jpg

Overall Conclusion 2

  • Concept of wages-in-kind

    • Hire the right people

    • Treat them well

    • Have reasonable expectations


Overall conclusion 3 l.jpg

Overall Conclusion 3

  • Controls must pose a visible and highly likely threat of apprehension

    • Perception of detection is the greatest deterrent

  • Hidden controls do not deter

  • Controls cannot be predictable


  • Login