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Beyond the Fraud Triangle

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Written by: Jack W. Dorminey, Ph.D. A. Scott Fleming, Ph.D., CPA, CMA Mary-Jo Kranacher, MBA, CFE, CPA/CFF Richard A. Riley, Jr., Ph.D., CFE, CPA
Date: September 1, 2011
Read Time: 15 mins
Criminology and Psychology Fraud Investigation and Examination Fraud Prevention and Deterrence

Fraud examiners have used the fraud triangle as a standard method since the 1950s to understand fraudsters' motivations. However, the triangle is inadequate for deterring, preventing and detecting fraud because pressure and rationalization cannot be observed and do not adequately explain every occurrence of fraud. Here are some tools that go further.

Adapted from "Beyond the Fraud Triangle," published in the July 2010 issue of The CPA Journal, copyright 2010, with permission from the New York State Society of Certified Public Accountants (NYSSCPA).

An impossible triangle.In 1978, Walmart hired Thomas Coughlin as director of loss prevention. Over the years, Coughlin worked his way up in the organization to become vice chairman, one of the most powerful positions in the organization. But in March 2005, Walmart's board of directors forced Coughlin to resign amid allegations of fraud and deceit.

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