Two professors in Istanbul, Turkey compiled secondary research to identify a myriad of information regarding fraud. The article covers an impressive amount of data, and there is a particularly interesting section regarding forensic accounting versus fraud examination, but for the purpose of this review and examination of the article, the focus will be on the stereotypical fraud committer and why they commit fraud.

The Association of Certified Fraud Examiners surveyed 2,000 respondents who had committed a type of fraud. Many of the characteristics of fraudsters were anticipated, but the authors did identify characteristics which were more astute.

The typical fraudster is:

  • Male
  • Married
  • Highly educated
  • Older
  • High IQ, or perceives themselves as having a high IQ
  • Managerial types

The additional characteristics which were not necessarily expected are those who come in early and leave late, and those who have highly intimate relationships with buyers and/or sellers of the goods or services produced by the employer of the fraudster. The authors elaborated that those who come in early and leave late, especially those who attribute the need for extra hours to unfinished work, use the alone time within the company to commit fraud. The relationship with the buyers and sellers was attributed to the increased willingness of the employed individual to make unethical concessions for buyer/seller. The result of managerial types being more likely to commit fraud is unsurprising because the managers have a higher amount of autonomy, especially concerning budgets and operations. Managers have a higher opportunity to commit fraud, which leads into reasons why fraudsters commit fraud.

The reasons why people commit fraud is identified through the “fraud triangle”: 1) pressure, 2) opportunity, 3) justification. When all three components are combined within an individual, or situation, the likelihood of fraud increases.

1) Pressure factors include financial, bad habits, and job related. Financial pressures equate to money problems for the individual, often times people who commit fraud are in debt, have unmet financial responsibilities, or have a sense of need towards providing a “better life” for their families. Bad habits basically constitute addictions, such as gambling, drugs, and other vices. Finally, job related pressures can be primarily defined within job dissatisfaction, i.e. not getting promoted, having a low wage, not being admired by supervisors.

2) Opportunity factors are tied back to top management decisions on ctronl and operations of the company. If a distinctive and decisive control structure of the company is not established, there is a direct correlation with increase in fraud. If fraudsters believe, “[If] you can get away with it”, then they will commit fraud in some manner. A statistic provided within the article states that within the first three years of employment, 30% of employees will commit fraud in some manner.

3) Justification of fraud is within the fraudsters’ psyche, in the fact that the justification is a defense mechanism which allows them to believe that they are warranted in their choices.

Being able to identify the typical fraud committer, as well as the factors that lead a person to commit fraud are vital for companies, especially larger ones because the amount of opportunity increase with the size of the employer. For forensic accountants, it is important to understand the demographics of fraudsters in order to effectively investigate and implicate the fraudulent behaviors, as well as the fraudster.

Ulucan Ozkul, Fatma, and Ayse Pamukuc. “Fraud Detection and Forensic Accounting.”Emerging Fraud XXV (2012): 19-41