Page 7 - Risk Management Bulletin Jan- Mar 2021

RMAI BULLETIN JANUARY TO MARCH 2021

iii. Punishment is very light X Incentive/Pressure, such as a financial need, is the
b. Mitigation factors: "purpose" for compelling the fraud.
i. What if security was tight? Motivation Aspect of the Case Study:
ii. What if comprehensive internal o Secretary originally started down her
controls require an elaborate fraudulent path because of financial
system? difficulties she found herself in before starting
work at the investment bank.
iii. What if the likelihood of finding is
high? o The motive behind the fraud as primarily
greed though, with secretary spending her ill
iv. What if punishment is severe?
gotten gains on a luxury lifestyle, including
2. Personally Created Opportunities: villas, cars, jewellery, designer clothes and
a. Familiarity with operations (including
first class holidays. She has even admitted that
cover-up capabilities) she did not steal because she needed to, but
b. Close association with contractors, because she could. She explained that she
dealers, and other key people (22%) first started taking money basically to find out
c. Unwillingness to share duties (21%) if she possibly will get away with it.
3. Organizational Characteristics: o She says that it then developed 'a bit
a. Weak internal controls addictive' and that she 'got a huge thrill from
b. Absence of periodic rotation in job duties knowing they had no impression what I was
doing.
c. Constantly operating under a crisis
environment X Rationalization: The individual committing the
fraud regularlyjustifies the fraud. Justifications
d. Little attention to details
may include, "I'll pay the money back", "They will
e. Poor morale certainly not miss the funds", or "They don't pay
C) Rationalization factors: me adequate."
1. How can you be proactive and know who will Rationalization Aspect of the Case Study:
rationalize fraudulent behavior? o She was able to rationalize her actions by
2. Embezzlers don't fit the criminal stereotypes; convincing herself that she had earned the
they appear to be trustworthy, sincere, money she stole.
likeable, sociable, etc. o De-Laurey believed that she earned the stolen
3. Personal Emotions that may lead to fraud: amounts as a just prize for her dedication,
a. Strong community or social expectations discretion and devotion, and claims that she
to succeed (6%) had the permission of her bosses to take
b. Perception of being treated unfairly by money in return for her 'vital services'.
the organization (9%) o She vindicated her activities through the
c. Resentment towards superiors belief that her superiors had cash to spare.
d. Frustration with job X Opportunity The individual committing the fraud
sees an internal control weakness and, considering
e. Insatiable desire for self-enrichment or
personal gain no one will notice if funds are taken, initiates the
fraud with a small amount of money. If no one
f. Wheeler - dealer attitude (18%)
notices, the amount will usually grow bigger.
Opportunity Aspect of the Case Study
Let us examine a case study based on the Fraud
o In terms of opportunity, her bosses trusted
Triangle:
her and held her in high regard. She had
Case study is of the Secretary Who Stole over £4.3 proved herself crucial, on both professional
million from her bosses at Goldman Sachs. We will and personal fronts, and was given access to
correlate all the aspects of the Fraud Triangle in this their cheque books in order to settle their
case study. domestic bills and personal finances.

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