How to Incorporate the Fraud Triangle Theory

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The term of “fraud triangle” was developed by Dr. Donald Cressey, a criminologist who studied embezzlers. The three basic elements of fraud triangle include perceived pressure, perceived opportunity, and the ability to rationalize. It explains the nature of many fraud offenders and also become a tool to assess the risk of fraud. It is important to companies to incorporate the fraud triangle theory in order to reduce the risk of fraud within their organization. From my standpoint, companies should incorporate the fraud triangle from the following aspects. First, companies should perform background investigation in order to uncover the perceived pressure. The factors that create pressure include personal financial pressure (high levels of…show more content…
While some employees feel they are underpaid and deserve more money. A strong ethical culture and could be helpful in preventing rationalization, since the employees may not regards fraud is morally acceptable in good corporate culture. Attractive employee benefit also helps company reduce the risk. Once everyone is treated as a family member and satisfied with what they get from the company, they will not commit fraud definitely. Although it is impossible to satisfy every employee, attractive benefit should reduce the risk a lot. In conclusion, I believe the fraud triangle is significant to a corporation. It is necessary to companies to prevent fraud by incorporating the fraud triangle theory. After all, companies cannot only rely on the external auditors or the fraud examiners. They have the responsibility to reduce the risk of fraud by themselves. Probably, they can avoid some further costs as well. References Bliss, G. (2012, Jul 06). Commentary: Fraud facts: The fraud triangle - a tool to assess risk of fraud. Daily Record, pp. n/a. Retrieved from Dorminey, J. W., Fleming, A. S., Kranacher, M., & Riley,Richard A.,,Jr. (2010). Beyond the fraud triangle. The CPA Journal, 80(7), 17-23,3. Retrieved from

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