Week 6: Fraud Motivations

Differential Association theory helps to explain why fraud occurs by groups within an organisation. General Strain Theory explains why individuals turn to fraud, bribery and corruption. However, Cressey’s Fraud Triangle addresses both.

Do you agree or disagree with this view? What are your views/experiences on the above statements? What advice would you give to an organisation trying to understand why fraud, bribery, and corruption are increasing?

Provide support for your answer.

 

I disagree with the above statement in that Cressey’s Fraud Triangle only addresses why individuals commit fraud. Cressey’s Triangle was the first fraud theory I learnt about and is, in my opinion, the most heavily relied upon theory in the industry. It explains that individuals commit fraud when pressure, opportunity, and rationalisation are all present (The Fraud Triangle, 2016; Cressey, D., 1973).

 

(TED Ed, 2015)

However, it did not give me all the answers I required, so I conducted further investigation and found the General Strain and Differential Association theories, which provided me more clarity as to why fraud occurs.

General Strain Theory explains why some people commit fraud under certain pressures whilst others do not; it provides that personality traits, along with micro- and macro-level coercion impact an individual’s reaction to strain (Cullen, F. & Wilcox, P., 2013). Differential Association Theory explains why groups turn to fraud. People seek access to social support (due to strain) and turn to illegitimate sources when legitimate ones are unavailable, thereby joining a deviant sub-group and conforming to its norms. It is when the norms of the deviant sub-group differ from those of larger society that crime/fraud occurs (Hauhart, R., 2013).

(Adams, S., 2007)

I would advise all organisations trying to understand why fraud, bribery, and corruption are increasing to research and understand all three of the aforementioned theories in order to gain a comprehensive understanding of the motives behind fraud, and subsequently implement measures to proactively target decreasing the likelihood of fraud occurring (e.g. decrease strain contributors and/or create positive sub-group options).

Sources

 

Adams, S. (2007). Dilbert Comics. Retrieved May 2^nd, 2016, from http://dilbert.com/search_results?terms=that+leaves+fraud%2C+which+i%27d+like+you+to+call+marketing

Cressey, D. (1973). Other People’s Money (pp.30). Montclair: Patterson Smith.

Cullen, F. & Wilcox, P. (2013). General Strain Theory. In The Oxford Handboook of Criminological Theory (pp. 319-321). USA: OUP.

Hauhart, R. (2013). Differential Association Theory. In Encyclopedia of White-Collar and Corporate Crime (Vol 2, pp. 267). Retrieved May 2^nd, 2016, from DOI: http://dx.doi.org.ezp01.library.qut.edu.au/10.4135/9781452276175.n135

TED Ed. (2015). How People Rationalise Fraud – Kelly Richmond Pope. [Video File]. Retrieved May 3^rd, 2016, from https://www.youtube.com/watch?v=Tb6QX9Yy1GM

The Fraud Triangle. (2016). ACFE. Retrieved May 2^nd, 2016, from http://www.acfe.com/fraud-triangle.aspx