The Perfect Recipe for Fraud

Fraud is most likely to occur in one of these departments: Accounting, Customer Service, Executive/Upper management, Operations, Sales or Purchasing — according to the Association of Certified Fraud Examiners (AFCE). In fact, in the ACFE’s most recent Report to the Nations on Occupational Fraud and Abuse, some 77% of frauds are committed in at least one of these departments. While most employees won’t even consider fraudulent behavior, others may look at fraud as a great way to get ahead. So, what should you know about conditions that make fraud likely to happen?

Just as fire requires fuel, oxygen, and heat, occupational fraud requires motive, opportunity and rationalization. These are what forensic accountants call the “fraud triangle.” And economic downturns, such as the ones we have experienced in the past, can ignite fraud by fueling all three factors.

Don't use plagiarized sources. Get Your Custom Essay on
The Perfect Recipe for Fraud
Just from $13/Page
Order Essay

As described by J.K Loebbecke, M.M. Eining, and J.J. Willingham, Jr., “Auditors’ experience with material irregularities: Frequency, nature, and Detectability” (Auditing: A Journal of Practice & Theory, Fall 1989), the fraud recipe contains three ingredients: Incentive, Opportunity, and Attitude/Rationalization.

The first ingredient, Incentive, addresses whether executives have a reason to commit accounting fraud. Common reasons include compensation factors (stock options, bonus targets), strong pressure to perform, and expectations analysts place on the company. Putting pressure on executives certainly is a good motivator, but it is important to recognize when the pressure becomes so intense that people resort to fraud to make the numbers.

The second ingredient is the Opportunity to commit accounting fraud. The main deterrent to opportunity is strong internal controls, the focus of section 404 of the Sarbanes-Oxley Act. Controls should address routine transaction processing and asset safeguarding, as well as estimates and assumptions used in preparing the financial statements. If section 404 work improves internal controls, the side benefit should be a reduced risk of accounting fraud.

The third ingredient in the fraud recipe is Attitude/Rationalization. In other words, can someone with a reason to commit fraud and the opportunity to do so explain away such behavior? Is the fraud okay because it saved jobs? Is it okay because it happened only once and will be corrected in the future? Is it okay because the CEO said “make the numbers or else”?

For this discussion, please address the following:

1. What four elements make for the perfect recipe for fraud?

2. How do they apply to every day business?

3. What conditions make fraud more likely to happen? Any thoughts or suggestions on how to prevent fraud from happening? For full credit on this assignment, please respond to at least one of your classmates’ responses to this 3rd question only.

Calculate your order
275 words
Total price: $0.00

Top-quality papers guaranteed


100% original papers

We sell only unique pieces of writing completed according to your demands.


Confidential service

We use security encryption to keep your personal data protected.


Money-back guarantee

We can give your money back if something goes wrong with your order.

Get free features with our reliable essay writing service

  1. Title page

    We offer you a free title page tailored according to the specifics of your particular style.

  2. Custom formatting

    Include your preferred formatting style when you order from us to accompany your paper.

  3. Bibliography page

    Get a list of references to go with your ordered paper.

  4. 24/7 support assistance

    Reach out to our support agents anytime for free assistance.

Calculate how much your essay costs

Type of paper
Academic level
550 words

How to place an order

  • Choose the number of pages, your academic level, and deadline
  • Push the orange button
  • Give instructions for your paper
  • Pay with PayPal or a credit card
  • Track the progress of your order
  • Approve and enjoy your custom paper

Ask our experts to write you a cheap essay of excellent quality

Place an order