We’ve all heard about the
Bermuda Triangle – and all the stories and myths that go along with it. So, as
we head into Hurricane Season 2016 it may be timely to discuss another
triangle that has just as many war stories – The Fraud Triangle. This one is
possibly less well known but can be just as devastating to business owners, if
not acknowledged. The good thing is, with the proper attention, the effects can
be minimized or avoided altogether.
All businesses can be subject to
fraud – some more likely than others. The most likely individuals who will perpetrate
a fraud often have multiple parts of the Fraud Triangle in place. So, what is
it? The three angles of the Fraud Triangle are: Pressure, Opportunity and
Rationalization. The more of these elements that are present in a loosely
controlled business environment, the more likely fraud will be attempted
against a company. The attached article from the Association of Certified
Fraud Examiners further describes and illustrates the operation of the Triangle.
Please let us know if you have
questions or would like to discuss how the Fraud Triangle may apply to you.
There are often several simple internal controls that can be implemented to
help mitigate this risk. Like a hurricane, proper planning can minimize its
disastrous results.
Jay Pease, CPA
