Managing Fraud Risk: A Practical Guide for Directors and Managers

Motives of Fraudsters – Bringing the Fraud Triangle up to Date

The Fraud Triangle remains the classic explanatory model for occupational fraud. Clearly, it cannot explain every situation but it does provide directors and managers with a methodology to enable them to understand and manage their fraud risks more effectively. The framework of the Fraud Triangle has gained widespread acclaim, for example it has been formally adopted by the auditing profession and has become an integral part of SAS 99 and IAS 240.

However, the Fraud Triangle is based upon Dr Cressey's research which is now over 50 years old. There have been many changes in society since then and many subsequent academic studies of bad attitudes at work, in particular why people engage in counter-productive work behaviours. It is the first leg of the Fraud Triangle – that of motivation – that needs some further comment and additions as a result of this more recent research.

I have summarised below the key conclusions from the later research that deals specifically with motives for occupational fraud – there are insights here that in certain respects go beyond the Fraud Triangle. However, there is little doubt that Dr Cressey's original conclusions on the other two legs of the Fraud Triangle remain as true today as they were in the 1950s: opportunity exists where fraudsters think they have the ability both to commit and to conceal the crime because of weaknesses in internal controls; and every fraudster that I have ever ...