Profiling The Fraudster: Removing the Mask to Prevent and Detect Fraud

Chapter 6The Fraud Triangle Becomes the Fraud Diamond: A Journey through the Theory

THE FRAUDSTER CAN BE A CEO, a mail room clerk, or anyone in between. While mid- and lower-level employees commit the most fraud, fraud committed by owners or executives is more than three times as costly as frauds committed by managers and more than nine times as costly as employee frauds, according to the ACFE Report to the Nations (2012), as depicted in Figure 6.1.

Figure 6.1 Position of Fraud Perpetrator.

Source: ACFE, Report to the Nations, 2012.

Executive-driven fraud also takes much longer to detect as, at this level, with what is quite often many years of experience, fraudulent acts can be better covered and executives may also be in a better position to deter or steer the investigation in certain directions. The fact that males commit more fraud than females is a statistic that may be distorted due to the fact that there are ordinarily more males in the workforce than females.

The advantages of understanding the fraudster's profile are obvious. It can focus one's attention in an investigation on higher risk areas, people, and situations, but, primarily, these characteristics can be used to prevent exposure to fraud risk, for example, by being a significant component in the antifraud program toolbox or by being considered by human resources departments when recruiting.

The Fraud Triangle ...