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Employee Fraud and a Failing Economy

Today’s economy, and its impact on organizations and individuals, can aggravate all sides of the Fraud Triangle, criminologist Donald Cressey’s widely accepted hypothesis to explain why people commit fraud.

Opportunity exists when people have access to assets and information that allows them to commit and conceal fraud. Downsizing, taking on new duties, and changes to existing procedures and policies can increase these opportunities for employees.

Motivation is the pressure or “need” felt by the person that commits fraud. Motivation is often a financial need. Pay cuts, an unemployed spouse, declines in real income and the value of homes and investment can create this “need”.

Rationalization is the excuse that employees use to justify fraudulent behavior. When employees don’t receive the raises and bonuses that they think they deserve, and they’re asked to do more and work longer hours after staff reductions, it becomes easier to justify stealing from their employer.

Officials and employees, charged with stewardship of public dollars, must manage the risk of fraud by addressing that portion of the fraud triangle over which they have the most control: the opportunity. A sound system of internal controls minimizes opportunities to commit fraud, and helps to detect fraud when it occurs.

Trout, Ebersole & Groff, LLP
We are a full service certified public accounting firm located in Lancaster, Pennsylvania with an established reputation of professionalism, responsiveness and quality since 1929. Our 16 partners provide a depth of knowledge and expertise in a wide array of services. Trout, Ebersole & Groff, LLP was voted the best accounting firm in Lancaster by readers of Lancaster County Magazine in 2006, 2007, 2008 and 2009.