Fraud Triangle

What is Fraud Triangle?

 

The ‘Fraud Triangle’ is an analysis of the factors which makes an employee commit workplace fraud. It was developed to understand the reasoning behind an employee’s reasoning to commit such fraud.

 

The three-stage process includes:

 

1. Building Pressure: It refers to the pressure built on the individual leading them to commit fraud. It could be any financial liability like loan repayment or even a family emergency that enables the employee to reason that traditional legal ways will not be able to help.

 

2. Finding Opportunity: When an employee under pressure gets the ideal opportunity, they are overwhelmed with the desire to get out of the pressure using any means necessary and they commit the fraud for the same reason.

 

3. Rationalize the Fraud: At this stage, the employee has committed the fraud and is looking for ways to reason with themselves that what they did was morally right under the circumstances.

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