Have you ever heard of the “80/10/10” saying? It suggests that 10 percent of the population is honest; they will not lie, steal or cheat under any circumstances. Another 10 percent of the population is dishonest and will participate in criminal activities whenever they can. The remaining 80 percent, given sufficient pressures and the right opportunity may behave unethically.
See article 'The Fraud Triangle'.
Second article
The first element needed for fraud is OPPORTUNITY. Simply put, it’s the ability to commit fraud.
Employees have the opportunity if they have access to assets and information that allows them to conceal their fraudulent activities. While employees need access to perform their jobs, that access can provide the employee with opportunity.
Committing fraud through use of one’s position normally happens when internal controls are weak or nonexistent, or where there is poor management oversight
Example:
Pulling cash out of the collections from a special event to pay for costs of the special event.
Not keeping track of how many computers you have.
Leaving the Sunday offering in a place where one person could get into the offering by themselves without anyone knowing they had accessed the offering.
The second element of the fraud triangle is PRESSURE. Desperate people do desperate things. Pressure comes in many forms, both financial and non-financial. Individuals may have personal financial issues such as high medical bills or past-due mortgages. Others gamble or have addictions that may compel them to commit fraud. For some, it is simply the desire for a lifestyle they couldn’t afford otherwise. Lastly, unrealistic
goals and deadlines can also provide incentives for employees to commit financial reporting fraud.
The final fraud triangle element is RATIONALIZATION. Rationalization occurs when an employee justifies why they commit fraud. For example, a person who faces losing their home might say “I deserve to have a nice home.” Employees who have not received pay increases might say “I’m just making up for being under paid. I haven’t had a raise in years.”
Sometimes, an employee will rationalize theft as “borrowing.” Other times, individuals may believe that “the company deserves it” for the way they treat customers or employees. Another approach is the entitlement mentality. I’ve worked so hard for this organization that I deserve a raise. That’s all this is – just a raise.
A theological description of rationalization can be found in Jeremiah 17:9, which says “The heart is deceitful above all things and beyond cure. Who can understand it?” (NIV) Our human ability to deceive ourselves is beyond comprehension.
See article 'The Fraud Triangle'.
Second article
The first element needed for fraud is OPPORTUNITY. Simply put, it’s the ability to commit fraud.
Employees have the opportunity if they have access to assets and information that allows them to conceal their fraudulent activities. While employees need access to perform their jobs, that access can provide the employee with opportunity.
Committing fraud through use of one’s position normally happens when internal controls are weak or nonexistent, or where there is poor management oversight
Example:
Pulling cash out of the collections from a special event to pay for costs of the special event.
Not keeping track of how many computers you have.
Leaving the Sunday offering in a place where one person could get into the offering by themselves without anyone knowing they had accessed the offering.
The second element of the fraud triangle is PRESSURE. Desperate people do desperate things. Pressure comes in many forms, both financial and non-financial. Individuals may have personal financial issues such as high medical bills or past-due mortgages. Others gamble or have addictions that may compel them to commit fraud. For some, it is simply the desire for a lifestyle they couldn’t afford otherwise. Lastly, unrealistic
goals and deadlines can also provide incentives for employees to commit financial reporting fraud.
The final fraud triangle element is RATIONALIZATION. Rationalization occurs when an employee justifies why they commit fraud. For example, a person who faces losing their home might say “I deserve to have a nice home.” Employees who have not received pay increases might say “I’m just making up for being under paid. I haven’t had a raise in years.”
Sometimes, an employee will rationalize theft as “borrowing.” Other times, individuals may believe that “the company deserves it” for the way they treat customers or employees. Another approach is the entitlement mentality. I’ve worked so hard for this organization that I deserve a raise. That’s all this is – just a raise.
A theological description of rationalization can be found in Jeremiah 17:9, which says “The heart is deceitful above all things and beyond cure. Who can understand it?” (NIV) Our human ability to deceive ourselves is beyond comprehension.
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