What drives someone to fraud in a company? Corporate fraud can be one of the most devastating events to happen to a company.

The easiest way to protect yourself against fraud or embezzlement in your business is to know how fraud happens, who commits it, and why. The Fraud Triangle model shows why most frauds happen and provides an easy way to determine if you have a potential criminal working within your company.

The Fraud Triangle

Many people think that they would never commit fraud, but that’s not always the case. Even the most ethical of people can get caught up in the fraud triangle. What are the three points of the fraud triangle?

#1: Opportunity

Do they have the opportunity to steal money? Are the credit card statements being audited? Are invoices scrutinized? Do they have logins to QuickBooks or other financial information?

#2: Urgent need

Most people don’t think they have a need to steal money from their employer–until they have an urgent event like sudden medical bills or debt collection.

#3: Rationalization

At this point, they have the motivation to commit fraud, but now they will rationalize why they’re not in the wrong, how they’ll secretly make it right, or why they deserve the funds they are embezzling.

Once an employee or group of people falls into the fraud triangle, it’s very likely that they will commit fraud against the company. As an employer, you can’t control urgent situations and rationalization, those are out of your control. However, you can control the opportunity. Follow up with financial statements, change up routines, and put practices in place to avoid giving someone the opportunity to commit corporate fraud in the first place.

Wanted: The Truth

Active Intel Investigations is here to help you with every aspect of your investigation, from conducting the investigation to preparing evidence to provide it in court.

Get started with your investigation, browse our video library for investigative resources, or schedule a no-obligation consultation with a licensed private investigator to discuss the specifics of your case.