Organizational Leaders Strategies to Detect and Prevent Occupati

Section 1: Foundation of the Study

This qualitative single-case study concerned the effective methods that some

nonprofit leaders employ to detect and prevent occupational fraud. Occupational fraud

costs businesses in the United States $4,700,000,000,000 in lost income annually,

according to a 2022 report of the Association of Certified Fraud Examiners (ACFE).

Occupational fraud puts the nonprofit industry at risk.

Background of the Problem

Fraud threatens organizations, and many leaders cannot detect and prevent

fraudulent activities. Occupational fraud is the most common type of fraud that an

organization may encounter. Occupational fraud is an internal act carried out by

employees against an organization which involves misappropriation of assets, corruption,

and financial statement fraud (Owusu et al., 2022; Wells, 2017). Nonprofit organizations

are more at risk of occupational fraud than for-profit organizations (Khadra & Delen,

2020). Nonprofit organizations depend mainly on donations and volunteers to accomplish

their mission (Bennett et al., 2021). A threat such as occupational fraud will harm them

financially and economically, which may cause them to decrease their efforts or close

operations. The impact of occupational fraud hurts cultural, social, economic, and public

interests (Macailao, 2020). In this study, I explored strategies that nonprofit

organizational leaders use to detect and prevent occupational fraud.

Problem and Purpose

Business organizations lose revenue through occupational fraud yearly due to the

misappropriation of assets, corruption, and financial statement fraud (Denman, 2019).

Occupational fraud accounts for 5% loss in annual revenue, equating to an estimated

$$3,500,000,000,000 in revenue for organizations in the United States (N'Guilla Sow et

al., 2018). The general business problem was that occupational fraud negatively affects

organizations' profits, cash flow, and reputation (Archambeault & Webber, 2018; Blye &

Luamba, 2021; Todorović et al., 2020; Yekini et al., 2018). The specific business

problem was that some nonprofit organizational leaders lacked strategies to detect and

prevent occupational fraud. I explored strategies that some nonprofit organizational

leaders use to detect and prevent occupational fraud. The specific population for this

study was senior leaders in a nonprofit organization located in the central part of the U.S.

state of Alabama with successful strategies for detecting and preventing occupational

fraud.

Population and Sampling

In this study, the population was senior leaders in a nonprofit organization in

central part of the U.S. state of Alabama with successful strategies for detecting and

preventing occupational fraud. Data collection included conducting semistructured

interviews and gathering pertinent documents. I used the purposive sampling technique to

determine the sample for this study. The documents comprised managerial policies,

compliance program policies, and other records on strategies to detect and prevent

occupational fraud.

Nature of the Study

I conducted a qualitative single-case study to explore strategies that some

nonprofit leaders used to detect and prevent occupational fraud. A researcher can use

three methodologies: qualitative, quantitative, and mixed methods. Qualitative

researchers examine a phenomenon by exploring participants' lived experiences and

behaviors without statistical analysis (Basias & Pollalis, 2018). Researchers use the

qualitative approach to seek answers about a phenomenon's what, how, or why (Yin,

2018). I chose the qualitative approach for this study because I used what, how, and why

questions to analyze data related to strategies nonprofit leaders use to prevent and detect

occupational fraud. Researchers may use numeric data in a quantitative study to analyze

the relationships or differences between variables (Saunders et al., 2015). The

quantitative method was inappropriate for this study because my intent was not to

statistically analyze relationships or differences between variables. The mixed-methods

approach combines quantitative and qualitative methods (Dawadi et al., 2021). The

mixed method was not useful for this study because the intent was to use only the

qualitative method to explore strategies that some nonprofit leaders use to detect and

prevent occupational fraud.

I used a single-case study design to explore the study phenomenon. Researchers

can use single- or multiple-case designs as a research strategy (Saunders et al., 2015). A

case study is appropriate to gain an in-depth understanding of a phenomenon in a real-life

context from the participant's view (Boblin et al., 2013; Yin, 2018). Moreover, selecting a

case study strategy is contingent on the research question and the purpose (Guetterman &

Fetters, 2018). Choosing the case study as a design strategy helped me to answer the

questions of how, what, and why and to explore the real-life conditions pertinent to the

study phenomenon. Other qualitative research designs are phenomenology and

ethnography (Saunders et al., 2015). The focus of phenomenology is on participants'

personal experiences about a phenomenon and their worldview (DeVaney et al., 2018).

The phenomenology strategy was unsuited for this study because my focus was not on

the participants' personal experiences or their interpretation of the world. Ethnographic

researchers can study people in groups with the same culture and social views

(Tomaszewski et al., 2020). Ethnography was not a suitable design for this study because

I did not explore groups of people who shared the same culture and social views. I

selected a single-case study strategy because I sought to understand a specific issue or

business problem about occupational fraud.

Research Question

What strategies do some nonprofit organizational leaders use to detect and

prevent occupational fraud?

Interview Questions

1. What strategies are in place in your organization to detect and prevent occupational

fraud?

2. What are some of the methods by which employees can report fraudulent activities?

3. What are internal control strategies used within your organization to detect and

prevent occupational fraud?

4. How are strategies to detect and prevent occupational fraud discussed in the

organization?

5. What barriers did you encounter when implementing strategies to detect and prevent

occupational fraud?

6. What additional information can you provide regarding strategies to detect and

prevent occupational fraud?

Conceptual Framework

The fraud triangle theory grounded this study. Donald Cressey introduced the

fraud triangle theory in 1953 to indicate why individuals commit fraud (Sabatian &

Hutabarat, 2020). The primary constructs in this theory—pressure, opportunity, and

rationalization—are used to explore and understand why employees commit occupational

fraud (Homer, 2020). The three constructs of the fraud triangle must be present for an

employee to commit fraud (Cressey, 1986). An employee under pressure may commit

fraud due to financial problems (Malimage, 2019). An organization that has a weak

internal control system and governance provides the employee with an opportunity to

commit fraud. When an employee commits fraud, they usually rationalize their behavior

to engage in fraud, possibly due to their moral compass. The fraud triangle theory is a

tool that could assist organizational leaders in detecting and preventing occupational

fraud (Moore, 2020). Understanding employees' reasons for committing fraud would

enable nonprofit senior leaders to implement strategies to detect and prevent occupational

fraud. Nonprofit organizational leaders may benefit from using the elements of the fraud

triangle presented in this study to implement strategies to detect and prevent occupational

fraud.

Operational Definitions

Asset misappropriation: The use of organizational funds for personal gain (Bishop

et al., 2019).

Fraud prevention: A method of stopping fraudulent activities (N'Guilla Sow et al.,

2018).

Occupational fraud: An internal act carried out by employees against an

organization involving misappropriation of assets, corruption and financial statement

fraud (Owusu et al., 2022; Wells, 2017).

Assumptions, Limitations, and Delimitations

Assumptions

Assumptions are ideas and issues found in research that are taken for granted and

accepted (Theofanidis & Fountouki, 2018). I had two assumptions in conducting this

study. The first assumption was that the participants would answer the interview

questions honestly. The other assumption was that the participants knew the strategies

used in their organization to detect and prevent occupational fraud.

Limitations

Limitations are those circumstances that the researcher does not control.

Limitations can render a weak study (Blye & Luamba, 2021). The first limitation was the

number of participants willing to answer the questions honestly about occupational fraud

detection and prevention strategies in their organization. The second limitation consisted

of locating senior leaders who had developed strategies to detect and prevent

occupational fraud. The last research limitation was being unable to access the

organization's records (i.e., managerial policies, internal audit reports, or compliance

program policies).

Delimitations

Delimitations are parameters that researchers have control over so that the

objective of the study can be achieved (Coker, 2022). Delimitations refer to the

parameters of the study. For this study, I selected senior leaders of a nonprofit

organization in central part of the U.S. state of Alabama. The criteria for the senior

leaders were that they should have at least 5 years or more of experience using successful

strategies to detect and prevent occupational fraud. Another delimitation of the study was

the sample size of one nonprofit organization's senior leaders. The limited sample size

could potentially impact the findings' applicability.

Significance of the Study

This study is potentially significant in that it may provide some organizational

leaders with strategies to detect and prevent occupational fraud. Occupational fraud

causes organizations to lose millions of dollars each year (Kennedy, 2018). This type of

fraud has a negative effect on the organization's reputation and credibility. Ultimately, it

impacts the interests of all stakeholders. Occupational fraud could shut down

organizations (Moore, 2020). Leaders may benefit from the constructs of the fraud

theories presented in this study to detect and analyze fraud. The information provided in

this study may assist nonprofit leaders in detecting and preventing occupational fraud.

Contribution to Business Practice

This study could be valuable in the detection and prevention of occupational

fraud. Nonprofit organizations are more vulnerable to occupational fraud than for-profit

organizations (Khadra & Delen, 2020). Many nonprofit organizational leaders lack the

knowledge and understanding necessary to prevent fraud (Bennett et al., 2021). Nonprofit

leaders could potentially use the strategies highlighted in the findings to prevent loss of

revenue from occupational fraud. They may also be to use various techniques and tools

(e.g., employee awareness training) identified in the study to detect occupational fraud.

These techniques could assist nonprofit leaders to further their mission by providing

access to recovered assets, for instance.

Implications for Social Change

The findings from this study could promote positive social change by raising

awareness of the need to create antifraud programs and implement an effective and

efficient system of internal controls to detect and prevent occupational fraud. Through

detective and preventive measures, a nonprofit organization may increase its’ survival

and protect its reputation and creditability. Nonprofit organizations in the U.S. average

about 10% of financial fraud annually, equating to $100,000 annually (Blye & Luamba,

2021). Nonprofit organizational leaders could otherwise use the lost funds to deliver vital

community services toward education, income, and health initiatives. Thus, leaders of

nonprofit organizations can potentially create jobs to strengthen the economy through

these initiatives.

A Review of the Professional and Academic Literature

My aim in conducting this qualitative single-case study was to explore successful

strategies that some nonprofit leaders use to detect and prevent occupational fraud. The

literature review includes an analysis of literature related to the fraud triangle theory and

the fundamental concepts relating to or contrasting with the constructs of the conceptual

framework. This research consists of a brief discussion on gathering, evaluating,

contrasting, and synthesizing information from various sources about occupational fraud.

The literature review is organized as follows:

• overview of the fraud triangle theory

• alternative theories to the fraud triangle theory

• discussion on occupational fraud

• management and internal control

• tools and strategies to detect and prevent occupational fraud

The literature search strategy involved exploring various sources related to

occupational fraud. I accessed literature through the following databases of Walden

University Library: Emerald Management Journals, ProQuest Central, Sage Journals, and

Science Direct. Additionally, I used the Google Scholar search engine, which I also

accessed from Walden University Library. The literature review contains 179 peer-

reviewed articles, dissertations, conference papers, books, and reports. Eighty-five

percent of peer-reviewed articles were published between 2017 and 2023. The keywords

used in this study were employee ethics, employee theft, fraud diamond theory, fraud

triangle theory, internal controls, occupational fraud, workplace behaviors, and

workplace fraud.

Fraud Triangle Theory

Donald Cressey, a criminologist, sought to understand why individuals engage in

fraudulent activities. Cressey continued Sutherland's work (1940) to analyze the minds of

individuals who committed white-collar crimes. While extending this research, Cressey

(1953) noted that individuals violated the trust of others, and the same conditions were

most likely the cause that led to criminal activity. Pressure, opportunity, and

rationalization are the elements that form the fraud triangle. Pressure and opportunity are

most noticeable, while rationalization is not because it varies by individual (Kagias et al.,

2021). The fraud triangle has faced criticism for its position on fraud detection and

prevention. However, it is still the most cited theory that explains the motivation for fraud

in organizations (Ohalehi, 2019). In addition, the fraud triangle may be used to identify

general industry or economic situations that may raise overall risk.

The first element in the fraud triangle is pressure. Pressure to commit fraud can

result from financial and nonfinancial situations that may entice an individual to commit

fraud (Koomson et al., 2020). Real financial pressure can be described as falling behind

on bills, experiencing unexpected medical expenses, and/or having a large debt.

Perceived pressure is an individual living beyond their means and wanting to improve

their status (Mat et al., 2019). Other pressure signs are personal, employment stress, and

external (Kihl et al., 2021). Pressure, per Cressey, is "a non-shareable financial problem

or motive that drives a person to commit fraud” (Vousinas, 2019, p. 373). When forced

by financial pressure, employees and managers violate trust in an occupational fraud

setting (Kalovya, 2020).

Opportunity is the second element in the fraud triangle. The opportunity element

comprises the industry's nature, inadequate oversight, and organizational design.

(Christian et al., 2019). Opportunity presents itself with little or no supervision and weak

controls (Owusu et al., 2022). These situations allow insiders to commit fraud because

they know the loopholes in the organization (Fitri et al., 2019). For example, a long-

serving director or auditor may have the chance to perpetrate fraud in the event of a

change in position; given the knowledge they may have, they would be well versed in

financial statement fraud (Haqq & Budiwitjaksono, 2019; Yuniarti et al., 2019).

Companies that commit fraud often change their auditor, fearing that the old auditor

would likely detect irregularities in the financial statements (Supri et al., 2018). An

auditor with a higher tenure would detect fraud rather than having a change in auditors.

Audit risk is less for an auditor with more tenure than an auditor without tenure

(Patterson et al., 2019). An internal audit may provide oversight for the organization,

which could lessen the opportunity for employees to commit fraud.

A weak board of directors and no audit log allow employees to commit fraud. An

employee could not commit fraud without having the opportunity to do so (Mat et al.,

2019). Employees can use the lack of segregation of duties, weak internal controls, and

lack of periodic audits to commit occupational fraud. When the chance arises, the

criminal will seize it and commit theft (Malimage, 2019). For instance, an employee may

have more opportunities to commit occupational fraud in a small organization if internal

controls are less present (Othman & Ameer, 2022). To address these risks, organizational

leaders should create more robust internal controls that minimize the opportunity for

fraud.

Rationalization completes the fraud triangle. The term rationalization describes

an employee's explanations for distinguishing wrongdoing from illegal activity

(Treadwell, 2020). Technology and cryptocurrency increase fraud problems (Mintchik &

Riley, 2019). However, organizational leaders should not lose sight of the human element

to commit fraud. Additionally, attention should be given to the rationalization of the

perpetrator to make fraud possible. Before defending their acts to others, offenders

usually justify them to themselves.

An example would be the rationalization of the accountant who worked at

WorldCom during the accounting scandal in early 2000. The accountant was concerned

about her health insurance status and desire to remain employed. The WorldCom

controller relied on team spirit to justify his fraudulent actions. There was coercion on

both workers from the chief financial officer (CFO) of WorldCom to perpetrate fraud

(Mintchik & Riley, 2019). Another instance is the fraud committed by Wells Fargo

workers in 2009 was due to the incentives offered to them if sales goals were met (Hurley

& Hurley, 2020; Mintchik & Riley, 2019).Accountants may create and execute rules,

policies, and processes to avoid fraud by adopting a crook's mindset and learning how

thieves think (Mintchik & Riley, 2019). Fraudsters usually explain their actions when

they steal from their organization.

Alternatives to the Fraud Triangle

Various fraud theories describe occupational fraud and why individuals engage in

such behavior. The fraud triangle; fraud scale; fraud diamond; ABC model, money,

ideology, coercion, and ego (MICE) model; and stimulation, capability, opportunity,

rationalization, and ego (SCORE) model offer frameworks for detecting and preventing

fraud (Saluja et al., 2021). The fraud triangle is regarded as credible in explaining the

nature of employee misdeeds. However, the fraud triangle has been criticized for being

ineffective in reducing, preventing, or recognizing fraud (Yekini et al., 2018). There are

several expanded models and alternatives to the fraud triangle.

Fraud Diamond

Wolfe and Hermanson (2004) extended the fraud triangle to the fraud diamond,

which includes capabilities. Capabilities are related to one's position or organizational

status (Desai, 2020). According to Wolfe and Hermanson, an individual’s personality

traits and abilities affect the likelihood of fraud. Opportunity is the gateway to fraud;

pressure and rationalization can compel a person to commit fraud. Still, the person must

have the capability to recognize the open gate as an opportunity and to take advantage of

it by constantly walking through it. The accounting fraud scandals of Enron and

WorldCom in early 2000 would not have happened without the right person to carry out

the fraudulent activity (Mohamed et al., 2021; Sahla & Ardianto, 2023). A manager in a

position of authority would provide the capability and opportunity to commit fraud.

Fraud Heptagon

The fraud heptagon is another extension of the fraud triangle that describes the

factors affecting corruption prevention. There are two types of corruption: (a) corruption

due to conflict of interest and (b) bribes and illegal acts (Prihanto, 2021). The fraud

heptagon has seven components that explain fraudulent behaviors: incentive, pressure,

opportunity, attitude, ability, arrogance, and ignorance (Haris et al., 2022). Prihanto

(2021) examined information technology, corporate culture, leadership, and a code of

ethics as variables to analyze the elements contributing to corruption. Prihanto concluded

that poor leadership and a weak business culture were the causes of corruption.

Fraud Pentagon

In 2010, Jonathan Marks created the fraud pentagon by expanding the fraud

triangle and fraud diamond (Crowe, 2011). Pressure, opportunity, rationalization,

competence/capabilities, and arrogance are the components of the fraud pentagon

(Yuniarti et al., 2019). The elements of the fraud pentagon are used as indicators of the

causes of fraud in corporate financial statements. Rationalization causes fraud

perpetrators to justify their actions (Christian et al., 2019). An individual with the

capability is considered competent because the conditions are known in the organization,

which presents an opportunity to commit fraud. An arrogant person portrays the

characteristics of being above the organization’s policies and can circumvent the internal

control system (Haqq & Budiwitjaksono, 2019). Inadequate operational controls and

ineffective governance laws are among the causes leading to fraud because they generate

conditions for employees to act dishonestly (Mohamed et al., 2021).

Fraud Scale

Albrecht et al. (1984) proposed the fraud scale model (Vousinas, 2019). The

model consists of situational pressures, opportunity, and personal integrity. The fraud

scale may have a different intensity than the fraud triangle (Koomson et al., 2020).

Rationalization and integrity relate to personal values. Occupational fraud is more likely

to happen in environments with high pressure, plenty of opportunities, and low-integrity

personalities. The individual's behavior is the basis for the fraud scale. Financial

statement fraud lends itself to this idea (Lokanan, 2018). For example, falling profits

might pressure leaders to commit fraud. There is a gap in internal control, which presents

an opportunity for fraudulent activities.

Fraud Square

The fraud square includes pressure, opportunity, rationalization, and integrity.

According to Saluja et al. (2021), integrity is essential to comprehending the motivations

behind fraud. Integrity is crucial in occupational fraud as it influences people's behavior,

whether it be illogical or rational. People who lack integrity are more inclined to

perpetrate fraud. It is likely that employees with high moral standards will perform better

and need less oversight (Kakati & Goswami, 2019). Although there is not much

information available, the fraud square does contribute to the theoretical framework by

illuminating the motivations for fraud (Saluja et al., 2021). The fraud square is driven by

behavior, such as the motivating factors that cause an individual to steal.

Money, Ideology, Coercion, and Ego Model

MICE is a fraud model developed by Kranacher et al. (2010). MICE stands for

money, ideology, coercion, and ego. According to the authors, these motivators could

cause an employee to commit fraud. MICE alters the pressure component in the fraud

triangle because the motivators go beyond nonshareable financial pressure (Saluja et al.,

2021). Ideology is more like rationalizing, where the fraudster is giving justifications for

committing fraud (Kranacher et al., 2010). Coercion is closely related to pressure,

including someone who does not want to participate in fraudulent schemes (Apriliana &

Agustina, 2017; Kagias et al., 2021). Individuals driven by ideological beliefs justify their

theft and fraudulent activities to achieve a higher purpose that coincides with their ideas

(Kassem & Higson, 2012).

Stimulation, Capability, Opportunity, Rationalization, and Ego Model

Vousinas (2019) examined the theoretical underpinnings that explain the

motivations behind fraud; given the latest advancements in the industry and the

expanding problems related to fraud, it made sense to update prior fraud models.

Vousinas developed the SCORE model, whose acronym stands for stimulation,

capability, opportunity, rationalization, and ego. Vousinas presented the ego aspect to

improve fraud detection and prevention. When the offense goes undetected, the offender's

ego gets a boost (Koomson et al., 2020). This means the individual will more likely

continue the fraudulent activities until caught.

Collusion

The fraud triangle has drawn criticism for failing to identify collusion. Villaescusa

and Amat (2021) explored how the different elements of the fraud triangle are present in

the Prescanova accounting collusion case. The authors cited that the multifaceted fraud

phenomenon does not assess the fraud conditions under collusion. Villaescusa and Amat

analyzed the Prescanova case of collusive accounting fraud in Spain using the fraud

triangle. The executives and others colluded together to make the organization look

profitable. The actions of the leaders were caused by pressure. The organization's leaders

were convicted, sentenced, and ordered to pay back millions of dollars in damages

(Villaescusa & Amat, 2021). The case of Prescanova presented opportunities for fraud

because the organization’s board of directors did not perform well. Plus, some of the

board members were family members. The staff who were found guilty rationalized or

attributed their conduct to the regulators and the auditor.

The fraud triangle could not be used to analyze collusion in accounting or

financial statement fraud (Villaescusa & Amat, 2021). The HealthSouth scandal is a

prime example of how collusion in the organization acted as a vehicle for fraud. Richard

Scrushy, the CEO, directed the employees to manipulate the accounting numbers. The

made-up numbers resulted in the earnings being overstated by $1,400,000,000. This

caused HealthSouth to suffer losses of $2,700,000,000 (Zahari et al., 2020). Accounting

collusion fraud is hard to detect by an outsider or the fraud triangle (Grandstaff &

Solsma, 2021; Villaescusa & Amat, 2021).

When attempting to comprehend the act of collusion, it is crucial to consider the

managers' positions (Maas & Yin, 2022). Businesses that are open about the kindness

with which management treats its staff are likely to discourage collusion (Maas & Yin,

2022; Zhang et al., 2020). It is up to managers to decide how to handle their staff. For

instance, if an employee refuses to collude with them, a manager may refuse to provide

funding for certain activities or make changes to the workplace. A work atmosphere that

is welcoming, pleasant, respectful, and conducive may encourage employees to behave

morally and reduce the likelihood of fraud.

Occupational Fraud

Occupational fraud is a crime committed by an employee or group of employees

for personal gain (Koomson et al., 2020; Moore, 2020; Ruankaew, 2019). Occupational

fraud could be an organization's most significant and prevalent threat (Mouamer et al.,

2020). The ACFE (2022) classified occupational fraud as asset misappropriation,

corruption, and financial statement fraud. Asset misappropriation accounted for

approximately 89% of all fraud cases and schemes in 2018 (Ghani et al., 2021). To

reduce losses, fraud risks must be addressed as soon as they are identified.

Misappropriation of Assets

Asset misappropriation is the most common type of occupational fraud because it

is easy to commit (Ahmad et al., 2020; Balfour et al., 2021; Ghani et al., 2021; Koomson

et al., 2020). There are two categories of misappropriation: cash-related misappropriation

and misappropriation involving inventory and other assets (Koomson et al., 2020). For

the fraudster to misappropriate assets, the act of theft, concealment, and conversion must

be present. An individual can steal from the company before the asset is recorded in the

books (Ghani et al., 2021). Misusing an organization's resources can seriously harm its

reputation and expose it to risk.

Misappropriation of assets includes paying for goods or services when no

service/goods have been supplied and stealing intellectual property (Ghani et al., 2021;

Hashim et al., 2020). Misappropriation of assets also includes theft of cash on hand, theft

of cash receipts, fraudulent disbursement, check and payment tampering, misuse of

assets, and theft of assets (Ghani et al., 2021; Koomson et al., 2020). Asset

misappropriation could rob organizations of the resources chosen to increase their

performance and profitability. Leaders should implement proper controls to cover all

stakeholders.

Misappropriation of funds could happen in all types of organizations. However,

nonprofit organizations experience fraud risk in numerous ways, including risk associated

with donations (Balfour et al., 2021). Nonprofit organizations like churches are not

immune to fraudulent activities (Ohalehi, 2019). Treadwell (2020) provided insight into

methods to misappropriate funds in Protestant and Catholic churches in the United States.

In the 50 embezzlement cases reviewed by Treadwell, the preacher and the priest were

the two most common individuals who committed fraud in churches. The church's

financial activities should not be controlled by the preacher or priest (Treadwell, 2020).

The causes attributed to embezzlement are lack of controls, trust, and failure to prosecute.

Developing preventive measures that promote responsibility and monitoring

could safeguard the organization against the consequences of embezzlement.

Lack of internal controls and a manager using the position of trust creates an

opportunity to commit fraud (Balfour et al., 2021; Faboyede et al., 2022; Treadwell,

2020). Because of trust in the leader, some churches let their guard down and do not put

controls in place to prevent fraud. Treadwell suggested the following solutions to

minimize fraud:

• background checks on employees

• controls over offerings

• fraud training and segregation of duties

To avoid falling prey to asset misappropriation, organizational leaders should assess their

internal controls to determine if they are sufficient to reduce the risk of asset

misappropriation.

Financial Statement Fraud

Fraudulent financial statements are errors and mistakes made intentionally to

make the business appear profitable (Sabatian & Hutabarat, 2020). Financial statements

are based on the organization's performance and, thus, are essential to outside

stakeholders. Management should ensure that the financial statements are dependable

(Koutoupis & Pappa, 2018). Financial statement fraud occurs in corporate organizations

by improperly capitalizing assets, altering accounting records, and using fictitious

amounts to record revenue and expenses (Hashim et al., 2020). Attributes that fall on the

pressure side of the fraud triangle are financial stability, external pressure, personal

financial needs, and financial targets (Sabatian & Hutabarat, 2020). Management is often

pressured to commit financial fraud to meet the financial goal of the organization.

Leaders make the company’s performance look profitable to stakeholders through

false revenue reporting in the financials (Vasilev et al., 2019). Fraudulent revenue is

when the company has no customers, creates fake billings, and has no inflow of funds

(Vasilev et al., 2019). Altman’s Z, Benford's law, and Beneish M-score are tools that can

be used to detect illegal financial procedures and predict bankruptcy due to financial

fraud (Othman & Ameer, 2022; Vasilev et al., 2019).

Corruption

There are many definitions of corruption, and many standards do not mention

corruption. In financial auditing, corruption is not considered a fraudulent act. Corruption

is behavioral-focused and classified as noncompliance with laws and regulations

(Jeppesen, 2019). Corruption is hard to detect because there is no evidence, and it does

not leave any errors in financial statements or audit trails (Kassem & Higson, 2012).

Corruption is also hard to discover because of the nature of the crime (Marchenko et al.,

2021). Corruption includes bribery, insider trading, padding expense accounts, conflicts

of interest, illegal gratuities, and economic extortion (Hashim et al., 2020; Jeppesen,

2019; Kassem & Higson, 2012). Favoritism, nepotism, and protectionism are less-known

forms of corruption (Marchenko et al., 2021). Nepotism and favoritism are political

corruption and may be controlled by performance and evaluation measures. Political

corruption affects an organization's economy, efficiency, and effectiveness due to the

lack of free competition (Jeppesen, 2019). A reporting mechanism such as

whistleblowers or hotlines may be able to detect this type of fraud.

Occupational Fraud in the Nonprofit Sector

Nonprofit organizations include educational, religious, and social services to

improve the community and people (Joloko & Audu, 2019). These organizations rely on

government funding and donations to meet their objective. Fraud could damper the work

of nonprofit businesses and cause them to go out of business or reduce the benefits they

provide to the community (Boland et al., 2020). Fraud harms nonprofit and for-profit

organizations, and the estimated annual loss in revenue is 5% (Archambeault & Webber,

2018). Management is the one that commits internal fraud (Archambeault & Webber,

2018). Upper-level management, notably the CEO and chief financial officer, is

responsible for 89% of fraud instances (Christian et al., 2019). A moral issue arises from

fraudulent scandals, particularly when contributors are engaged in immoral or criminal

activity. A nonprofit organization might suffer reputational harm and public confidence

erosion from hostile acts like fraud (Eining et al., 2020).

Businesses that victimize the public could eventually fail. Following fraudulent

activity, nonprofit organizations typically survive for 5 years (Archambeault & Webber,

2018; Chapman et al., 2023). In their research, Archambeault and Webber (2018)

considered the age, size, and role of the perpetrators of the fraud as well as the extent of

the loss. Older and larger organizations are more likely to survive a fraud event

(Archambeault & Webber, 2018). Older nonprofits would survive a fraudulent event

beyond 3 years because of their high-income level. These organizations are more likely to

have good governance policies (Chapman et al., 2023). Older, educated men at the senior

level in the organization are more likely to be involved in corruption or commit financial

statement fraud (Bishop et al., 2019). Men between 21 and 30 years of age with full-time

positions often commit employee theft (Goh & Kong, 2018).

The size of the organization matters, as well as its impact on control and risks.

Smaller nonprofit organizations have less risk exposure than larger ones (Eining et al.,

2020). Since they are small, nonprofits might need help to deal with fraudulent attacks.

Nonprofit organizations have fewer resources and fewer controls than larger

organizations. Large nonprofit organizations typically must contend with their size and

collusion attempts (Eining et al., 2020).

Location is another area to consider when analyzing the status of nonprofit

organizations and fraud. Nonprofit organizations in rural areas may be prone to fraud or

mismanagement. Nonprofit leaders who manage small organizations should consider

implementing more robust policies and procedures that could increase their survival from

fraudulent activities (Chapman et al., 2023; Eining et al., 2020). Becoming a victim of

fraud will likely impact the organization’s survival.

Eining et al (2020) found that some organizations are tax-exempt, while others are

not. Donations to 501(c)(3) organizations are tax-exempt; however, donations to

501(c)(6) gifts are not tax-exempt. Nonprofit organizations are free from taxes under the

U.S. Internal Revenue Service (IRS) tax code section 501(c)(3) due to the public and

social services they offer. IRS Form 990 does not require nonprofit organizations

exempted from taxes to disclose their financial activities fully. Archambeault and Webber

(2018) noted that IRS Form 990 could be used to establish the relationship between good

governance and asset diversion. Reducing asset diversion may be encouraged by having

the board of directors evaluate the yearly financial report and implementing an ethical

policy (Chapman et al., 2023). Asset diversion may be reported if the organization has an

independent panel and accountants (Chapman et al., 2023; Khadra & Delen, 2020). While

disclosing how their asset was shifted, many nonprofit organizations must utilize IRS

Form 990 (Archambeault & Webber, 2018).

Scandals due to fraud, corruption, or bribery have plagued organizations around

the globe. These types of crimes could occur in businesses at any level, and the causes of

these activities vary (Hashim et al., 2020; Macailao, 2020). Mismanagement could also

happen in any business. The ACFE (2022) reported that the nonprofit sector makes up

9% of reported fraud cases. The ACFE also reported the median loss for nonprofit

organizations to be $75,000, an amount that could be harmful (see also Abu-Khadra,

2020).

The fraud triggers are poor internal control, lack of expertise, and lack of fraud

education (Hashim et al., 2020). Enron, WorldCom, and the Lehman Brothers are

examples of businesses in the United States that are notable for financial misdeeds (Ozili,

2020). The retail sector loses approximately 1.61% of sales, supermarkets lose about

52.9%, and the hospitality industry loses about 10% annually (Ruankaew, 2019). Private

organizations are the most significant type of business with a higher employee theft rate

(Ruankaew, 2019). This assessment includes government and nonprofit organizations.

Smaller businesses claim asset theft, whereas larger corporations claim financial

statement fraud and corruption (Hashim et al., 2020). The impact of fraud could be large

or small; nevertheless, it would cause harm to all of those involved based on the decisions

made by management. Fraud in charities is often underestimated. An insider does most of

the fraud in these types of businesses. Smaller charities are under-reported in the media

when victimized by fraud (Ohalehi, 2019). Ohalehi (2019) compared small and large

charities' internal control and governance. Small charities lean more on volunteers to

manage the daily operations, whereas large charities have multiple individuals to perform

various duties. Large charities can afford a fraud unit or department, whereas smaller

charities have limited resources and may not have a fraud unit. No matter the size or

charitable organization, revenue is lost from fraud. Recommendations to minimize fraud

were to have policies, communicate with all employees, and include training in risk

management. The social impact of occupational fraud on charities could impact the

morale of volunteers and donations and damage the organization's reputation (Ohalehi,

2019). Ohalehi (2019) noted that more literature on fraudulent small charity activities is

needed.

Nonprofit organizations are more prone to fraud risk when they have fundraising

activities. Having an audit committee that includes outside members could reduce the risk

of fraud (Eining et al., 2020). Furthermore, auditors, board members, and other

stakeholders should have information on the risk factors for nonprofit organizations.

United Way and the American Red Cross are two nonprofit organizations hit by internal

financial fraud (Hou et al., 2020). Implementing antifraud controls is vital in nonprofit

organizations. Many nonprofit organizations raise large amounts of money, making them

a prime fraud target.

Management and Internal Control Procedures

An organization's management must lead by ensuring everyone follows internal

control procedures. Management should review the internal control systems regularly to

ensure that the system's goals are achieved (Kereri, 2019). An employee has a chance to

commit fraud when an organization has a poor internal system. Therefore, management

must oversee the implementation of internal controls and ensure they are practical and

efficient (Faboyede et al., 2022; Kereri, 2019). Management should gear their efforts

toward decreasing opportunity by implementing fraud prevention and deterrence

procedures (Hashim et al., 2020).

Research indicates that the opportunity to engage in financial reporting fraud rises

when the organization does not have a robust governance (Kassem & Higson, 2012).

Also, good governance should be free of any loopholes, transparent, and accountable to

prevent corruption and nepotism in government. Corporate governance includes

management, board of directors, and stockholders. This group of individuals ensures that

the organization's objectives are met (Koutoupis & Pappa, 2018). As such, there is a level

of trust, transparency, and accountability. Management and employees should be

responsible for conducting organizational goals (Taufik, 2019). Fraudulent activities

hamper the growth of businesses and affect society, shareholders, and stakeholders. Fraud

harms organizations and is one of the most dominant barriers to the economic

development of any country (Hashim et al., 2020). Therefore, all stakeholders should be

aware of the controls meant to prevent fraud.

An organization’s internal control could appear effective, but management can

render it ineffective by overriding it. A threat to fraud prevention is the ability of

managers to override transactions (Ghani et al., 2021). Management override is

considered a weakness in the internal control system, leading to occupational fraud

(Bishop et al., 2019). Management override would occur in a solid antifraud environment

rather than an environment lacking internal controls. Bishop et al. (2019) cited that a

senior leader used management override to misuse $500,000. The lack of internal

controls is strongly associated with asset misappropriation and management override

links to corruption (Bishop et al., 2019). To minimize fraud, we first need to prevent it

and then find ways to detect it.

An effective fraud control plan is a practical solution to minimize acts of fraud.

This plan should be paired with risk management in the organization. Fraud prevention

could include monitoring, passwords to access vital information, and bank reconciliation

(Handayani & Kawedar, 2021). Since management put internal controls in place, they

can override them, rendering them ineffective. Awareness of the community and a solid

reporting system could enhance the organization’s accountability structure (Handayani &

Kawedar, 2021). The organization's strategic plans should include a plan to minimize

fraudulent activities.

Internal auditors are considered part of the management staff in an organization.

Internal auditors are management's business partners and are integral to meeting the

organization’s objectives (Macailao, 2020). Leadership is essentially responsible for

detecting fraud, but internal auditors are responsible for providing a service to the

organization. Internal auditors should have adequate knowledge about occupational fraud

and should be able to determine if the organization has a reliable structure of operations

to detect and prevent occupational fraud (Macailao, 2020). The internal auditors know

fraud auditing, forensic accounting, investigation, law, and legal processes (Macailao,

2020). Despite the various techniques that fraudsters employ, internal auditors discover

fraudulent behavior. Internal auditors should be relied upon to assess the fraud problems

in organizations.

Internal auditors are needed in the organization to respond to unfavorable acts that

may impede the mission and goals (Macailao, 2020). The internal auditor's view of

occupational fraud stems from the power of the position that could create opportunity or

capacity (Macailao, 2020). Internal auditors provide the ability to detect, prevent, or

minimize occupational fraud through antifraud training, seminars, and fraud prevention

initiatives. Red flags are signals that internal auditors should note and conduct further

investigations of fraudulent activity. There needs to be more clarity between the public

and private sectors about the role of auditing in preventing and detecting corruption.

(Macailao, 2020). More research is needed on the relationship between corruption and

auditing (Jeppesen, 2019). Auditing could prevent corruption by segregating duties,

monitoring, and whistleblowing. Monitoring the internal control systems plays a crucial

role in auditing. (Jeppesen, 2019). Internal auditors play an important role in preventing

and detecting fraud, which helps the organization achieve its goals.

Internal Control

Effective internal control is an integral component of an organization's

operational structure. To achieve effective and efficient operations, dependable reporting,

and compliance with rules and regulations, internal control is the method management

uses (Ghani et al., 2021; Henk, 2020; Suh et al., 2019). Internal control implementation

affects effective management and fraud prevention (Taufik, 2019). The separation of

responsibilities, transaction authorization, and ethical behavior should all be considered

while implementing a fraud prevention plan.

An example of an organization with a weak internal control system was revealed

in a case where a soccer club president defrauded the sports community twice, and the

successor again victimized the soccer club (Kihl et al., 2021). The volunteer treasurers

and board presidents carried out most of the theft. The money was embezzled through

counterfeit checks, money transfers into personal accounts, credit card accounts, and

fictitious supplier accounts. Community sports organizations (CSO) fraud should have

been discovered as soon as it occurred. It is also vital for CSO leaders to be mindful of

the internal controls in their organization. Procedures should be put in place and regularly

followed to identify fraud. An organization needs a strong internal control system to deter

fraudulent activity.

Tools and Strategies to Detect and Prevent Fraudulent Activities

The business world is changing, and there should be suitable frameworks to

handle this fast-paced environment. Today, organizations are investing in information

technology to assist their accounting function. Donning et al. (2019) highlighted the

Volkswagen "Dieselgate" scandal and how their organizational culture and poor internal

controls led to unethical practices. Due to the volume of big data, traditional ways of

identifying fraud are no longer practical. Various technologies could assist in monitoring,

analyzing, learning, and predicting human behaviors. Data mining, artificial intelligence

systems, machine learning, and meta-learning are some technologies that could detect

and prevent fraud (Donning et al., 2019).

Forensic Accounting

Although technology can be helpful in assessing fraud risk, these technical aids

will not be beneficial if the organizational culture is terrible (Donning et al., 2019).

Organizational culture could create technological change that can be used in fraud

prevention. Due to the lack of knowledge and training in forensic techniques, forensic

accountants should be involved in audit planning to identify management fraud. Other

recommendations include training staff in information technology, setting up an

anonymous hotline, and using software to capture patterns such as management overrides

(Eko et al., 2020). The accounting discipline has changed over the years; therefore,

organizations could benefit from using forensic accounting tools to detect and prevent

fraud.

Forensic accounting could reduce fraud if used effectively and added to the

organization's structure (Akinbowale et al., 2020). Forensic accounting combines

accounting, auditing, and investigating tools (Eko et al., 2020). Forensic accounting

research evaluates this tool's usefulness in detecting fraud patterns (Ozili, 2020). Because

of their expertise and training in accounting, auditing, and management, forensic

accountants can recognize improper and unethical behavior inside a company (Eko et al.,

2020). There is a link connecting forensic accounting and traditional accounting systems

to the legal system, thus providing a way to track and identify financial crime cases

(Akinbowale et al., 2020). Forensic accountants use the following steps to carry out their

role: a preliminary survey, information gathering, document review, comprehensive data

analysis, reporting, and expert witness or fact establishment (Akinbowale et al., 2020).

Forensic accounting is emerging as a viable tool for fraud detection and prevention.

Data Mining

Commercial data mining involves searching the organization’s database for

negative anomalies and patterns that could indicate fraud. Ratio analysis compares

various elements in financial statements using historical or industry information. Data can

be analyzed using percentages or examining changes in information over periods.

Transactions are focused on trend analysis in which current transactions are compared

with previous transactions (Eko et al., 2020). Data mining is primarily used in the

financial and insurance sector; however, more companies will have this tool available to

detect fraudulent behavior with the onset of digitization. Using dining mining over

manual analysis to detect fraud is more efficient. Mystery shopping or audit studies are

another tool to discover whether employees or customers cheat (Sánchez-Aguayo et al.,

2021). Most organizations do not perform field experiments because it is perceived as not

trusting the stakeholders and may lose their loyalty. These tools positively impact the

detection of dishonesty, and stakeholders may not like being under surveillance. These

tools are limited in fraud protection because of the changing fraud schemes and will not

be effective (Houdek, 2020). Organizational leaders could benefit from training in data

analytics, machine learning, or data mining on how these tools could detect fraud and

fraud patterns.

Data Analytics

Several organizations do not use data analytics, machine learning, or data mining.

Some organizations need help deploying and implementing these tools. There are privacy

and cost issues (Aboud & Robinson, 2022). Tools such as logistic regression and outlier

detection models have the characteristics of searching for unusual patterns and could

identify fraudulent behaviors and unusual transactions in real time (Houdek, 2020).

Decision trees, logistics regression, support vectors, and financial ratios are valuable tools

for detecting and preventing financial statement fraud (Aboud & Robinson, 2022).

Although research is not consistent on any of these tools as having the ability to detect

fraud, Aboud and Robinson (2022) cited that big data analytics can quickly detect fraud

and that data analytics could assist auditors in providing quality reports and help other

leaders make decisions.

Data analytics is being used across all spectrums of our society. However, many

organizational leaders need help dealing with this type of technology. Using machine

learning, business intelligence, and artificial intelligence can assist in detecting fraudulent

activities. There should be training on data analytics tools so managers can be proficient

at them and implement them in the organization.

Deeper Learning

Fraudulent activities continue to rise, and managers seek different avenues to

detect and prevent them. Technology such as deep learning can assist leaders in this

effort. Deep learning is vital in detecting financial statement fraud using financial ratios

in the management comments of the organization's annual reports (Craja et al., 2020).

There are efforts to develop smart systems to detect financial statement fraud; however,

there has not been any research on deep learning to detect financial statement fraud.

Several other techniques mentioned in the literature are logistic regression, support vector

machines, random forest, extreme gradient boosting, and artificial neural networks.

However, these items have not been evaluated for financial fraud.

Deep learning was suggested by Craja et al. (2020) as a means of using textual

analysis to find fraud indications in financial accounts. Deep learning could detect red

flags sentences that can be helpful to management in the investigation phase. Machine

learning is not as effective at identifying fraud as deep learning (Craja et al., 2020).

Machine learning techniques may be more beneficial than deep learning when handling

complex nonlinear data, slow processing, ineffective memory use, and lack of

parallelism. In contrast to deep learning, machine learning methods are unable to predict

new patterns or handle large amounts of data that may improve accuracy. According to

Alghofaili et al. (2020), real-time deep learning and machine learning approaches can

find fraud and determine the exact moment of occurrence.

The Business Group Model

Using data to detect financial statement fraud reduces investment losses and risks,

which benefits investors and creditors. Chen et al. (2019) suggested a model that would

detect fraud in the financial statements of business groups, including developing

techniques to detect financial statements and fraud and an evaluation system to examine

the suggested model. According to Chen et al. (2019), their fraud detection model

considers internal and external documents. This model may detect fraud cases in other

languages or can be applied to detect collusion among employees, vendors, and sales

fraud.

The business group model may be able to detect fraud via text-based systems that

would look at emails and annual reports. Patterns could reveal fraud via text analysis.

Performing lexicographical text analysis is a form of data mining used in human

communication (Houdek, 2020). The model suggested by Chen et al. (2019) is a viable

solution for leaders trying to detect financial statement fraud. However, the focus is on

reducing investment losses and risks. Many advanced technologies are being used to

detect fraud.

Smart Contracts

Using smart contracts could benefit an organization by providing or strengthening

internal audit functions, enhancing business ethics, and offering random inspections.

Gupta et al. (2020) examined how blockchain could minimize corporate fraud through

smart contracts. Blockchain is primarily used in banking and insurance institutions. The

framework for using a smart contract is fair access and dynamic access control. Both use

a digital signature that gives access to resources. The digital signature is hard to forge

because all transactions are paired with a token on the blockchain network (Gupta et al.,

2020). Smart contracts cannot be changed once they are issued. Therefore, all

transactions within the blockchain system are traceable. Blockchain could benefit

accountants because it creates an audit trail and can be a basis for audit evidence (Zheng

et al., 2020). Smart contracts could assist in the reduction of corporate fraud (Gupta et al.,

2020). There is better internal audit control with the blockchain platform.

Lifestyle Audits

Lifestyle audits are a forensic investigation method used to investigate tax evasion

allegations and other white-collar crimes (Ijere & Osho, 2020). Lifestyle audits could be

a viable tool for management to use because they aid in identifying which employee

lifestyle does not match their income. The two most significant indicators of occupational

fraud are when employees live over their means and experience financial difficulties

(Ijere & Osho, 2020; McIntyre et al., 2022). An individual’s sudden increase in revenue

would cause an employer to look at this red flag as an indication of wrongdoing.

Ijere and Osho (2020) examined the relationship between lifestyle and white-

collar crimes. Lifestyle audits often include a study of bank statements, thorough

verifications, asset declarations, and field monitoring (McIntyre et al., 2022). Good

governance and transparency are needed from public leaders. Employers may not be able

to perform lifestyle audits on their employees like the government but can use them to

compare a change in lifestyle with their financial means (Ijere & Osho, 2020). Behavior

changes such as argumentative, uncooperative, or defensive could indicate a dissatisfied

employee, leading them to commit fraud. Other warning signs are an individual’s drug or

alcohol use, which may need funds to support their habit. While lifestyle changes do not

guarantee fraudulent activity, they are a starting point worth investigating (Ijere & Osho,

2020; Sihanya & Ngumbi, 2020). No legislation in any country currently uses all the

constructs of lifestyle audits to fight corruption (Sihanya & Ngumbi, 2020). Paying

attention to a sudden change in an employee's lifestyle could be a signal that points to

fraud.

Low-Cost Measures

Many small businesses need more funds to invest in a sophisticated internal

control system like larger businesses. However, they could undertake low-cost measures

to deter fraud in their organization. Small companies could use low-cost strategies to

reduce occupational fraud (Treadwell, 2021). Some of these strategies are purchasing

employee theft insurance, establishing a code of conduct, acceptable hiring practices,

hiring employees with fraud training, and developing a way to have employees report any

fraudulent activities.

Additionally, conducting exit interviews, job rotation, and having employees take

an annual vacation could identify and uncover fraudulent activities (Othman & Ameer,

2022; Treadwell, 2021). Managers could detect fraudulent activities simply by walking

around, observing, and listening to conversations regarding desperation (Treadwell,

2021). The fraudster is usually not prosecuted because of high litigation costs (Treadwell,

2021). Thus, having the employee dismissed from the company provides an opportunity

to commit fraud with another organization. Low-cost methods could be used in any

organization to prevent, detect, or deter occupational fraud.

AntiFraud Strategy

There are four main elements to consider in developing an antifraud strategy:

prevention, detection, response, and deterrence. These constructs can be used to manage

fraud risk (N’Guilla Sow et al., 2018). Prevention is meant to stop an organization from

being victimized by fraud. Organizations should recognize fraud incidents when they

occur. Deterrence and response are ways to let those who engage in fraudulent activities

know that fraud will not be allowed (N'Guilla Sow et al., 2018). Implementing an

antifraud strategy will take a legislative framework, corporate governance, and ethical

culture to manage risk. Corporate governance principles are the key to preventing and

detecting fraud in financial reporting (Todorović et al., 2020). An organization's honesty

culture measures internal control, monitoring, fraud prevention, and detection processes

(N'Guilla Sow et al., 2018). The antifraud strategy model by Todorović et al. (2020)

consists of six steps: internal auditing and refining antifraud strategy; antifraud

procedure; design of a system for control fraud; snapshots; and antifraud strategy

implementation. The Todorović et al. (2020) framework advocates for the following:

• increasing openness, responsibility, and integrity in the workplace;

• establishing prerequisites for fraud prevention, detection, reaction,

monitoring, assessment, and reporting;

• creating a culture that opposes fraud; and

• reiterating that there is no room for fraud.

According to Todorović et al. (2020), their model could be used in all businesses. A line

of defense for organizations is to put strong mechanisms in place to prevent, detect, and

respond to fraudulent activities.

Blockchain Technique

In recent years, corruption and fraudulent activities have increased academically.

Accreditation fraud is a financial advantage by deception and the institution's failure to

comply with higher education policies. de Souza-Daw and Ross (2021) analyzed fraud in

higher education and explored detection and prevention techniques using blockchain.

There is systemic corruption in higher education. Policies on higher education can be

broken. It is possible for complacency to develop and protocols to be disregarded (de

Souza-Daw & Ross, 2021). Fraudulent degrees and certificates are widely available.

Most counterfeit credentials are created internally (Saleh et al., 2020). A fraudulent

academic accreditation is expected to cost $600. Academic corruption is caused by a

mismatch of teaching and research and excessive competitiveness (de Souza-Daw &

Ross, 2021). Transparency, accountability, and information exchange are preventive

methods against corruption (de Souza-Daw & Ross, 2021).

de Souza-Daw and Ross (2021) suggested blockchain as a framework for

identifying, mitigating, and stopping fraudulent activity in the accreditation process.

Accreditors could conduct an audit in real-time anywhere and anytime during the pre-

accreditation cycles. Using blockchain could prevent changes in the system. Therefore,

altering information and reducing fraud is prevented (Bhaskar et al., 2021). The

blockchain framework could identify corrupt practices in the higher education

accreditation process and offer preventive and detective measures.

Financial Detection Tools

Fraud scandals have undermined the trust of all stakeholders. The risk of fraud

could hurt all organizations, both public and nonpublic. The impact of the damages could

cause economic and social harm to the economy. Therefore, organizations have focused

on using fraud prevention and detection tools. The Beneish model and Benford's law are

designed to detect financial statement anomalies (Gabrielli & Medioli, 2019). These two

tools are often used in forensic accounting to detect complex accounting fraud (Gabrielli

& Medioli, 2019; Othman et al., 2019).

The Beneish model and Benford's law require statistical analysis to examine the

financial statement after the audit process. The Beneish model uses financial ratios to

detect earning manipulation in financial statements for 2 years or more (Gabrielli &

Medioli, 2019). Benford's law uses digital analysis to detect the frequency of digits in

data. Benford's law is commonly used in insurance claims, corporate income tax, expense

reports, and accounts receivables process. Benford's law is a viable tool because it is hard

to manipulate numbers that follow frequencies and patterns. The Enron case used the

Benish model (Gabrielli & Medioli, 2019). Enron and WorldCom's fraudulent financial

reporting caused financial losses to investors of approximately $120,000,000,000

(Kukreja et al., 2020).

The Beneish model and Benford's law would enable accounting professionals to

discover fraud-related red flags (Gabrielli & Medioli, 2019). Fraudulent financial

statements reporting could prevent the organization from losing the public's trust and

investors. Auditors in these organizations must be skilled, knowledgeable, and trained in

using advanced tools like the Beneish model and Benford's law.

Digital Forensics

Businesses cannot fight corruption alone. Leaders need viable tools that could be

used to prevent corruption. There is a need to utilize modern technology to handle

various corruption and cybercrimes (Roljić, 2019). The evidence collected using digital

forensics could be used in legal proceedings. There are four stages of gathering evidence

in the digital forensics process. The results obtained through investigation are presented

to the requester. The pragmatic model could create awareness of crime and cybercrime

through school training and education. Although digital forensics is used after an event, it

could mitigate the damage (Roljić, 2019).

Information and Communication Technology

Digitalization and the emergence of technologies pave the way for organizations

to detect and prevent fraud, such as corruption. Adam and Fazekas (2021) reviewed the

role of information and communication technology (ICT) as a tool to fight corruption.

However, there are mixed thoughts on how effective ICT is in reducing corruption

because it depends on intervention, channels, and context. There is a discussion on grand

and petty corruption, as the ICT tool could do better on grand corruption. Petty and grand

corruption is located at different levels of government (Jancsics, 2019).

Other technology combatting corruption includes distributed ledger technology,

artificial intelligence, whistleblower tools, digital public services, and crowdsourcing

platforms (Adam & Fazekas, 2021). These technology instruments are equivalent in

increasing citizen engagement and government-citizen connections while aiding

anticorruption efforts by reporting corruption, fostering openness and accountability, and

other measures (Adam & Fazekas, 2021). ICT creates more opportunities for corruption

via the dark web, cryptocurrencies, and the misuse of centralized databases (Adam &

Fazekas, 2021). Corruption reduces public trust in government because it uses resources

meant to provide citizens with goods and services. ICT to detect fraudulent activities and

other detection methods may save the company money (Vasilev et al., 2019). Fraudsters

continue to evolve in their craft. For organizations to stay updated with fraudsters,

processes must be established regularly. How communities deal with corruption differs;

thus, education and developing anticorruption instruments are essential to lessen the

threat posed by this kind of fraud.

AntiCorruption Strategies

Anticorruption strategies used for corruption could be more effective in public

administration because they are aimed at the incorrect type of corruption. The forms of

corruption are bribery and extortion (Jancsics, 2019). The theories of corruption are

organizational culture, clashing moral values, public choice, bad apples, the ethos of

public administration, correlation, and collective action (Jancsics, 2019). Anticorruption

strategies are classified as top-down or bottom-up. The four primary categories of

corruption are state culture, social bribery, market corruption, and corrupt organizations.

Many political leaders and heads of organizations do not want corruption exposed

in their area for fear that it would reflect poorly or may implicate them in the crime

(Artello & Albaneseb, 2020). According to Jancsics (2019), market trade, reciprocity, and

redistribution are the transfer forms for various kinds of corruption. People,

organizations, or groups may be the main benefactors of corruption (Jancsics, 2019).

Human knowledge is crucial in discovering corruption from a whistleblower, criminal

defendant, a newspaper story, or a tip (Artello & Albaneseb, 2020). Corruption is

revealed to law enforcement by those who have experienced it, by a community member

during other investigations, tips, and regularly required audits. Anticorruption policies

should fit the organization because they are more than a one-size-fits-all type of strategy

(Jancsics, 2019). Many tools to combat corruption could be practical if used in an actual

case (Jancsics, 2019). Investing in tools to fight corruption will only be effective in

understanding the crime.

Whistle-Blower Policy

Many organizations need a viable whistle-blower policy to aid in the detection of

fraudulent activities. Whistle-blowing is a strategy that allows employees to report

unlawful activities (Izevbigie & Omozusi, 2021). This strategy would enable an

individual to report the crime anonymously. In the whistle-blowing policy, leaders should

include confidentiality and an anonymity clause. Whistle-blowing could provide

accountability and save the organization billions of dollars. A whistleblowing policy will

motivate staff members to report any acts they witness that are unlawful or immoral

(Izevbigie & Omozusi, 2021). Still, there are reasons why people choose not to disclose

unethical and illegal activity, including a culture of silence and fear of reprisals (Artello

& Albaneseb, 2020). A whistleblowing policy would decrease employees' silence and

create a culture of honesty and integrity (Maulida & Bayunitri, 2021). An antiretaliation

policy to protect the whistleblower is suggested by Peltier-Rivest (2018a). The policy

should be communicated during ethical or fraud awareness, internal control training, and

onboarding personnel and conducted periodically for all employees (Izevbigie &

Omozusi, 2021; Peltier-Rivest, 2018b). Other ways to establish a reporting system

include creating neutral campaigns, drop boxes, and 24-hr hotlines (Peltier-Rivest,

2018a). The WorldCom accounting fraud was discovered by Cynthia Cooper and her

internal audit team. WorldCom had no reporting system; otherwise, the employees may

have come forward to report the crime (Peltier-Rivest, 2018a). If the employees had

reported the fraudulent activities earlier, it might have saved the company billions of

dollars.

Leaders should encourage employees, suppliers, and customers to report fraud

and other activities like human rights violations or environmental issues. Fraudulent acts

that are reported should be looked at and handled independently (Peltier-Rivest, 2018a).

Monitoring all stakeholders could deter fraudulent activities. Whistleblowing detects

more fraud through employee reporting than an auditor's report (Maulida & Bayunitri,

2021). Hence, the whistle-blowing system is an effective internal control mechanism to

prevent fraud. A fraud risk management policy will be equally important because it will

focus on detecting and preventing fraudulent workplace activities, including cybercrime

(Pandit, 2018). A policy could aid the company's financial recovery, but it might be more

challenging to repair the harm to its brand and the interruption of operations.

Employment of a Certified Fraud Examiner

Effective fraud detection and prevention might be achieved by having a certified

fraud examiner on staff. Kennedy (2018) examined small businesses that did not have an

accredited fraud examiner on staff or were hired to address asset misappropriation.

Companies might lose up to $10,000,000 daily due to employee theft. Companies are

impacted by income loss because it would be more difficult for them to pay their bills,

purchase equipment, or hire new staff. Kennedy (2018) added that a decreased income

resulted in increased costs, job losses, or company collapses. Fraudulent cash

disbursement (billing) and theft of cash receipts (skimming) are the two subcategories

and schemes of misappropriation. Cash disbursements are more likely to be caught

during an internal audit.

Fraud can be discovered through tips, manager reviews, and internal audits.

Certified fraud examiners could assist in detecting fraudulent activities when there is a

lack of controls. In a study identified by (Kennedy, 2018), antifraud policies were

implemented by small firms. If the small firms reported the theft to the police, the thieves

would be arrested and imprisoned. Supervisors received jail or prison sentences at a

higher rate than employees in lower classifications. Compared to monies taken by upper-

level management, the amount misappropriated by personnel in the lower group is often

little and occurs just once.

Most companies have written rules and a code of conduct that provide anonymous

reporting of misconduct. In Kennedy (2018), ethical training was completed; however, it

was needed more often. Having a certified fraud examiner on staff does not affect the

amount of reported fraud (Kennedy, 2018). The internal auditor can strengthen fraud

monitoring and perhaps reduce the number of occupational fraud occurrences.

Changes in Organizational Policies and Culture

Organizational leaders should examine and identify strategies to mitigate the

elements that lead to unethical behavior. A compliance program may lessen the

likelihood of fraud, as pressure from other parties is one element that drives inclinations

toward fraud (Indriasih et al., 2020). Other factors indicated by Indriasih et al. (2020)

were the unethical behaviors of managers and the work environment. Auditors should

evaluate managerial attitudes and look for behavioral changes. Establishing individual

accountability and providing higher compensation and benefits might help organizations

curb unethical behavior. Indriasih et al. (2020) suggested that compliance initiatives,

robust internal controls, and moral workplace culture may boost the public's trust.

Red Flags and Early Fraud Detection

Red flags could help in the early detection of fraud. The red flags Sandhu (2020)

cited align with other literature. Early fraud detection might protect organizations from

criminal and civil lawsuits (Peltier-Rivest, 2018a). The notion is that the officers'

fiduciary duty is to develop antifraud policies and programs. Therefore, early detection of

fraudulent activities is essential and could save organizations from going bankrupt.

Organizations shell out a lot of money after a fraudulent event (Sandhu, 2020).

Organizations must adopt a more stringent antifraud prevention program and include risk

management in their strategic plans. Despite these efforts, there were no improvements in

the effectiveness of fraud detection. Fraud perpetrators are skillful, but it is difficult to

stop them. Managers might prevent fraud by getting to know their staff members'

routines, attitudes, and behaviors (Sandhu, 2020). Because most criminals exhibit

particular characteristics that might be warning signals of their crimes, employees should

get training in recognizing warning signs (Vasilev et al., 2019). The process of spotting

fraudulent activity needs to be ongoing. If fraudulent activity is not detected right away, it

may result in bankruptcy. Red flags could alert leaders that something is wrong and

should lead to corrective action.

Summary

Sometimes, the organization's culture and environment could entice an individual

to engage in fraudulent activities. Nawawi and Salin (2018) analyzed the weakness in

internal control regarding expenditure claims and cash advance systems. The company

outsourced the internal control task, for which an assessment is provided annually.

Organizations could prevent fraud through "assessment and evaluation, the structure of

the organization, identification of environmental pressure and competition, strengthening

the formal structure, process management of an organization and review employee

compensation structure" (Nawawi & Salin, 2018, p. 894). Fraud prevention is dependent

on the culture of the organization. An organization could implement whistleblower policy

and procedures, have internal control reviews, and implement job rotation to detect and

prevent fraud. Ingrassia (2021) investigated whether job rotation/organizational

development-oriented strategies were compatible with job rotation strategies to curb

corporate bribery. Job rotation could enhance employees' well-being and improve the

organization's performance (Ingrassia, 2021). However, Ingrassia argued that the risk of

job rotation could lead to slow productivity, cause errors in performing new tasks, and

increase workloads.

Human resource management could reduce occupational fraud by conducting

thorough background checks, media searches, driving history, and verifying references.

Employees might commit fraud because of pressure if working conditions are unsuitable.

There is a need to improve the internal controls of the expenditure of claims procedures

(Nawawi & Salin, 2018). Nawawi and Salin (2018) discovered fraud in mileage claims,

petrol claims, hotel and accommodations, suppliers' invoices, parking and toll fee claims,

printing, and stationery. As a result, all departments in the company were at risk of an

employee committing fraud. The working conditions at the company were poor, and there

was a high turnover rate. The high turnover was due to low job satisfaction. Weakness in

internal control and not attending to the needs of the employees would negatively affect

business growth (Nawawi & Salin, 2018). A healthy working environment could be

associated with job satisfaction and organizational commitment.

Transition

In Section 1 of this study, I provided an overview of the study, the problem, and

the purpose statement. I explained the rationale for choosing a qualitative research

methodology and using a single-case study as my research design. The study's conceptual

framework and assumptions were also discussed, as well as research questions, interview

questions, and definitions of terms. A thorough analysis of scholarly and professional

literature is included in this section.

In Section 2 of this study, I will summarize and restate the study's purpose and

discuss my role as the principal researcher. The study's target population, participants,

methodology, and research design are described in detail. The plan is to ensure that

ethical research of how the data will be collected, organized, and analyzed is discussed.

Section 2 concludes with a detailed discussion of reliability and validity.

Section 3 contains the study's purpose and results, a detailed discussion of the

findings, and support for the study's conclusions. There is also a discussion of how the

findings could be applied to professional business practices and implications for social

change. Section 3 concludes with recommendations for future research and reflections

from the researcher about the doctoral journey.

Section 2: The Project

Introduction

In this section, I provide information on the purpose of the study, the role of the

researcher, and the selection of participants in the nonprofit organization.

Purpose Statement

The purpose of this qualitative single-case study was to explore strategies that

some nonprofit organizational leaders use to detect and prevent occupational fraud. The

specific population for this study consisted of three senior leaders in a nonprofit

organization located in the central part of the U.S. state of Alabama who have

successfully implemented strategies for detecting and preventing occupational fraud.

Role of the Researcher

As a researcher in this qualitative single-case study, I collected, analyzed, and

summarized the results. Data for this study included interviews and open-ended questions

at a nonprofit organization in central part of the U.S. state of Alabama. I am a certified

manager as well as a certified internal control auditor. My work experience includes

compliance auditing, grant-related auditing, and work regarding financial operations.

Additionally, I have experience as an office manager at a nonprofit organization. As a

researcher, it is essential to set aside knowledge and previous professional experiences

during the data collection process (McGrath et al., 2019; Nassaji, 2020). Setting aside my

viewpoint would mitigate interpretation by focusing on the participants' viewpoint.

The Belmont Report outlines three fundamental ethical principles for human

subject research (National Commission for the Protection of Human Subjects of

Biomedical and Behavioral Research, 1979). There should be respect for individuals,

which includes protecting those with less autonomy and allowing them to make their own

decisions. Minimizing damage to subjects and increasing benefits are the two main

principles of beneficence. The fair division of the rewards and costs associated with

research is justice. As stated in the Belmont Report, informed consent, risk minimization,

and subject selection and generalization are the three ethical guidelines researchers

should adhere to. By adhering to the Belmont procedures, researchers can considerably

lower their chances of breaking the guidelines outlined in the Belmont Report. To

safeguard Walden University, the participants, and myself, I adhered to the standards and

values outlined in the Belmont Report, which The National Commission published for

the Protection of Human Subjects of Biomedical and Behavioral Research.

Ethical considerations are essential to any research. The researcher must ensure

that participants know and understand their role in the research study. The organization's

and individual’s privacy and confidentiality are protected during and after the research

process. Neither the organization’s nor the participant’s name is included in the study.

Before the participants engage in the study, they should be given consent forms and

information sheets (Rashid et al., 2019). I did not start collecting data until receiving

approval from Walden University's Institutional Review Board. Before commencing with

the interviews, I acknowledged the participant’s consent to be interviewed. The

participants were advised of their freedom to leave the research at any time during the

study.

Researchers should ask the participants questions without bias (Yin, 2018). Yin

recommends an interview protocol to guide case study interviews. Prejudice is not

removed due to human involvement; however, using an interview protocol will mitigate

personal bias (Fusch et al., 2018). Using an interview protocol will assist in establishing

validity (McGrath et al., 2019). The interview protocol (see Appendix A) was used

throughout the interview process to ensure that each participant was asked the same

questions. The questions on the interview protocol serve as prompts for the researchers so

that questions may not be overlooked (Yin, 2018). I listened to the participants and

recorded their responses to curtail my bias. Other sources that can mitigate bias are

member checking and achieving data saturation. Using multiple sources of evidence will

decrease the bias of using a single source (Noble & Heale, 2019). The importance of data

triangulation from various sources will strengthen the case study and give the findings

more validity (Yin, 2018). I used organizational documents to triangulate the data.

Researchers must take all required safeguards to conduct a trustworthy and morally sound

study. In order to prevent being overheard, the interviews were conducted privately.

Participants

I contacted the Chamber of Commerce, the Better Business Bureau, and the

Alabama Association of Non-profits to obtain a listing of nonprofit organizations in

Alabama specifically, central Alabama. From there, I reviewed the listing to search for

organizations with senior leaders such as the chief financial officer, chief executive

officer, internal auditors, accountants, and board of directors. The participants should be

knowledgeable and have experience with the research topic (DeJonckheere & Vaughn.,

2019; Pathiranage et al., 2020). I invited those meeting the criteria to participate in the

study using the email invitation (see Appendix B). I conducted semistructured interviews

with three senior leaders in a nonprofit organization in the central part of Alabama who

demonstrated successful strategies for detecting and preventing occupational fraud.

Additionally, senior leaders were more appropriate in answering the research

question in this study. Face-to-face and telephone interviews were conducted with the

participants. Audio recording is beneficial when conducting interviews (Saunders et al.,

2015). I used a digital voice recorder and my smartphone to record the interviews. I took

detailed notes, which served as a backup and aided in probing and follow-up questions.

The strategy for gaining access to potential research participants included making

initial telephone calls to the potential research participants. During the initial telephone

calls, I introduced myself and stated the purpose of the call, hoping to build trust and a

working relationship with the potential participants. Building a relationship with the

participants helps the researcher understand their social identity and experience, making

them feel more at ease and confident (Bush & Amechi, 2019). Another means to establish

rapport is by sending a short project summary to the participants beforehand and

informing them of what to expect and why the research is essential (McGrath et al.,

2019). After establishing the initial connection, I set a time and date for face-to-face or

telephone interviews with participants. I reiterated the benefits of participation and

obtained (a) a confidentiality agreement, (b) letters of cooperation, and (c) a data use

agreement.

Research Method and Design

The aim of this study was to explore strategies that some nonprofit leaders use to

detect and prevent occupational fraud. There are three standard research methods to

select from: (a) qualitative, (b) quantitative, and (c) mixed method.

Research Method

The qualitative research method was the best approach for this study. In

qualitative research, researchers seek to understand and explore a phenomenon (Ranjith

et al., 2021). The qualitative approach uses empirical information gained from case

studies and life experiences that individuals face, which is not captured by numbers

(Aspers & Corte, 2019; Taherdoost, 2022). As such, a qualitative method is naturalistic,

deals with nonnumerical data (Nassaji, 2020), and aims to understand a problem from

multiple perspectives (Panda, 2019). The quantitative method can be defined as an

analysis of an identified social phenomenon based on testing a hypothesis on variables; it

is therefore measured using numbers and analyzes data using statistical techniques

(Taherdoost, 2022). Taherdoost (2022) described the quantitative method as being

designed to answer specific questions regarding how many, how much, and what

percentages are driven by mathematical interpretation.

In contrast, the qualitative method explores a social phenomenon, how, what, and

why (Bazen et al., 2021) and utilizes words to better understand human experiences and

behaviors (Ranjith et al., 2021). The mixed method approach is a combination of

qualitative and quantitative methods. The mixed method approach provides deeper

insights into research problems and helps to understand complex social issues better than

the qualitative or quantitative approaches alone (Truong et al., 2020). While keeping the

individual components identifiable, researchers could use qualitative and quantitative

data to explain, explore, and triangulate the findings (Yousefi Nooraie et al., 2020).

Qualitative data is obtained from open-ended sources such as interviews, whereas

quantitative data comes from close-ended data sources like tests, questionnaires, or

psychological instruments (Hafsa, 2019). The purpose of this study was to gain a better

understanding of the strategies that some nonprofit leaders employ to detect and prevent

occupational fraud. The qualitative method was the best approach because it allowed me

to conduct semistructured interviews from the participant's perspectives. The quantitative

method was unsuitable for this study because it uses numerical data. Likewise, the mix-

method was inappropriate because it used words and numerical information to draw

conclusions.

Research Design

Three qualitative research designs were considered for this study:

phenomenology, ethnography, and case study. I decided to use a single-case study design

for this study to explore successful strategies to detect and prevent occupational fraud.

The case study's primary focus is to explore people, processes, events, and programs

(Ranjith et al., 2021; Taherdoost, 2022). When using multiple data sources in case

studies, they bring out specific information from the participants' viewpoints

(Ebneyamini & Sadeghi Moghadam, 2018). A researcher could gain valuable knowledge

from face-to-face interviews, documents, artifacts, and visual or audio sources

(Taherdoost, 2022; Tomaszewski et al., 2020). Researchers know that some participants

are more likely to be informed and might offer insightful information to help the study

achieve its goal (Johnson et al., 2020).

Researchers can use ethnography as a research design to study a group of people

who share the same setting and culture (Bazen et al., 2021). Researchers could directly

observe human relationships and behavior in their natural environment, which are

explained through a cultural context (Turhan, 2019). The data is collected in several

extensive ways, requiring the researcher to spend much time with participants (Bush &

Amechi, 2019). The ethnography design is inappropriate for this study because direct

observation of a particular group in their natural setting was not the focus of this study.

Phenomenology is a qualitative research strategy in which researchers aim to gain

information on a phenomenon's lived experiences from the participant's perspective

(Joubert & Van der Merwe, 2020). Phenomenological strength reveals the value of the

participant's credit to their experiences and their interpretation of the definition of a

phenomenon (Joubert & Van der Merwe, 2020). Phenomenology aims to explain the

significance of this experience in terms of what was experienced and how it was

experienced (Neubauer et al., 2019). Phenomenology design was not selected because the

focus was not on the lived experience of the participants nor their worldview of a

phenomenon.

I conducted semistructured interviews and used the member checking process to

achieve data saturation. Member checking is a process that involves sharing data

interpretations with the participants (Nassaji, 2020). After the interview, I shared the

interpretations with the participants for validation. Follow-up interview questions were

performed as part of the member checking process to gain more clarification of the

participants' responses. To ensure data saturation, I continued the interview process until

the data were no longer repetitive and no new information was provided.

Population and Sampling

The population consisted of three senior leaders in a nonprofit organization in

central Alabama. The conceptual framework defines the sample definitions, size, and

recruitment of participants (Johnson et al., 2020). The sampling methods are generally

nonrandom because researchers seek in-depth descriptions of the experiences and

behaviors of specific groups (Bazen et al., 2021). Qualitative research is not concerned

with statistical calculations or large sample sizes (DeJonckheere & Vaughn, 2019). There

is flexibility and no set formula for sample size in qualitative research (Staller, 2021).

In qualitative research, researchers want an in-depth understanding and typically

use purposeful sampling as a strategy. Purposeful sampling was the method used in this

study. In purposeful sampling, the researcher is deliberately selecting participants. The

leaders should have knowledge suitable for answering the interview questions (Staller,

2021). The leaders should also have demonstrated strategies to detect and prevent

occupational fraud. Therefore, I selected senior leaders in a nonprofit organization that

was best suited to give information regarding the research question: What strategies do

some nonprofit organizational leaders use to detect and prevent occupational fraud?

The sample size varies because the scope, data quality, research design, and how

data are used change throughout the study (Staller, 2021; Turhan, 2019). The sample size

in a qualitative case study is generally small (Braun et al., 2021; Sarfo et al., 2021). I

interviewed three senior leaders in a nonprofit organization that provided relevant details

of their strategies for detecting and preventing occupational fraud. Data richness will also

be important because rich data will provide valuable in-depth insight and aid in

understanding the findings (Ames et al., 2019).

Researchers could use data saturation as a checkpoint. Data saturation can be

achieved using as little as six interviews with a population of six (Sarfo et al., 2021), and

information becomes redundant (Staller, 2021). Data saturation is attained if no new

information emerges or is repeated by the participants (Hennink & Kaiser, 2022). If the

initial participants' data is not saturated, researchers might use snowball sampling to find

volunteers inside the organization (Saunders et al., 2015). I did not use snowball

sampling because I achieved data saturation with the three senior leaders and by

reviewing the organizational documents.

Ethical Research

Every research has ethical concerns. Researchers must take precautions to avoid

harming participants, other researchers, or the organization that the research represents

(Wa-Mbaleka, 2019). The participants in the study need to be aware of the research

process and able to comprehend the information. A detailed information sheet can

provide participants with pertinent details about a study (Saunders et al., 2015). Potential

participants' consent is voluntary; they can refuse or withdraw from the study at any time

(DeJonckheere & Vaughn, 2019). I conducted the study after receiving approval from

Walden’s Institutional Review Board (approval no. 03-06-24-1057564).

Following an explanation of the purpose of the study and the data collecting

procedure, I provided interested participants with a consent form via email, to which they

replied, “I consent.” The usage of audio recordings was stated on the consent form. Each

participant was given a chance to express any issues with the process. If they wanted to

withdraw from the study, they could do so without repercussion. The participants could

email, text, or call me anytime if they did not want to participate in the study. I assured

the participants about their confidentiality when taking part in the study. A pseudonym

was assigned to each participant to mask their identity. The interviews were conducted in

a private, quiet area inaccessible to others. A password-protected USB flash drive was

used for the study’s data. The written and electronic records will be stored for 5 years in a

secure location. There were no incentives or compensation for participation in the study.

Data Collection Instrument

The researcher is the primary instrument in the data collection process (McGrath

et al., 2019; Roberts, 2020). As the primary data collection instrument in this study, I

performed data collection by collecting data from open-ended interview questions and

document reviews. The interview questions were semistructured, and I used an interview

guide (see Appendix A). By using the guide, I ensured that each participant was asked the

same questions (Mwita, 2022). I conducted follow-up questions to gain more clarification

of the participants' responses. Interviews can be face-to-face, telephone, or email

(DeJonckheere & Vaughn, 2019). The interviews should be conducted at a place and time

convenient for the participants (Bush & Amechi, 2019). As the researcher, I ensured that

the area selected for the face-to-face interviews was private so there would not be

interruptions or the potential to be overheard. During my initial contact with the

participants, I informed them that the interview would be recorded and that neither their

name nor their organization's name would be included in the research study. The

participants can refuse to be recorded (DeJonckheere & Vaughn, 2019).

I reviewed documents from the compliance program policy, personnel

management policy, financial accounting policy, and other records relevant to the

strategies used to detect and prevent occupational fraud. The documents were collected

with permission using the partner organization form (see Appendix C). I requested access

to documents from the participants after receiving Institutional Review Board approval to

conduct this study. The documents were scanned using Adobe Scan and uploaded to a

safe password-protected folder. Member checking is essential to enhance the reliability

and validity of data collection (Yin, 2018). As part of member checking, I returned the

participant's transcripts for validation to ensure I understood all of the information stated

during the interview. The participants validated the accuracy of their transcripts.

Data Collection Technique

Interviews are the most frequently used method in qualitative research. Interviews

may either be structured or semistructured (Mwita, 2022). Data collection techniques

include open-ended semistructured interviews and document analysis (Pathiranage et al.,

2020; Turhan, 2019). Semistructured interviews can be accomplished face-to-face or via

telephone, email, or videoconference (DeJonckheere & Vaughn, 2019). The interviews

for this study were open-ended, semistructured, and face-to-face. Face-to-face interviews

allow the researcher to gauge the participants' emotions (Pathiranage et al., 2020).

Utilizing open-ended questions would prevent the participants from answering the

questions with yes or no answers. Semistructured interviews offer more flexibility than

structured interviews. Telephone interviews are an option, but the researcher cannot see

the participants' body language as in face-to-face interviews. Videoconferencing is

similar to face-to-face interviews but is limited to seeing nonverbal signals (Saarijärvi &

Bratt, 2021). Videoconferencing was not an option per Walden University policy.

Two face-to-face interviews were conducted, while one was performed over the phone.

Other forms of data collection techniques are surveys and observation. Surveys

are a quantitative technique that is used for gathering data from a large number of

participants. Surveys usually comprise pre-selected, closed-ended questions with

predefined response alternatives, facilitating comparison and analysis. Surveys can be

distributed using email, online forms, and paper-based questionnaires. A disadvantage of

using surveys is that the response rate may be low if the participants are not provided

with incentives (Alam, 2021). Observations entail methodically observing and

documenting actions or occurrences within a specific setting. It is possible to undertake

observations in a controlled environment, like a laboratory, or a natural context, like a

workplace or school. There are two types of observations: unstructured, in which the

researcher is free to watch and document any relevant behavior, and structured, in which

the researcher has a predetermined list of behaviors to look for (Busetto et al., 2020).

Observations might take a while, and it may take several observations to obtain a

complete image.

Semistructured, open-ended interviews facilitate two-way contact between the

participants and the researcher, allowing in-depth analysis of the research subject.

Depending on the researcher's desire and the research needs, interviews could be done in

person, over the phone, or by videoconference. A disadvantage of interviews is that the

questions might be formulated or replies interpreted differently due to the researcher's

prejudices and assumptions. Member checking could alleviate the researcher's bias.

To increase data quality, Turhan (2019) suggested sending interview questions to

the participants before the scheduled interviews. I emailed the participants the interview

questions in advance. I also used the interview protocol (see Appendix A). Member

checking is vital to establish accuracy and credibility (Stahl & King, 2020; Yin, 2018). I

used member checking by providing the participants with a summary of their interview

data to obtain their views on the accuracy and credibility of the data. I took the following

steps to collect data for this study:

1. Selected participants.

2. Made initial contact with participants by phone calls and email.

3. Sent the interview questions to participants to aid in data quality.

4. Selected the interview location.

5. Acknowledged the participant’s consent to proceed with the interview.

6. Informed participants of the use of audio

7. Informed participants of their right to withdraw from the study.

8. Started the semistructured, open-ended interviews with participants.

9. Asked probing questions for clarification.

10. Transcribed information after each interview.

11. Sent my interpretations of the interview to participants for accuracy and

credibility.

Data Organization Technique

Codes were assigned to the participants to provide adequate protection of

participant’s privacy. Data can also be organized using a word processor like Microsoft

Word (Saunders et al., 2015). Microsoft Word was used to maintain a separate file for

each interview and manage the files using the participants' pseudonyms. The interviews

were transcribed using the transcribing feature located in the Microsoft Word application.

I used pseudonyms to keep the identity of the participants confidential.

Furthermore, care must be taken to use a software program that can offer

encryption to protect the identity of the participants (Saarijärvi & Bratt, 2021). I used a

password for the electronic data files so that the participants' privacy would not be

revealed. The data will be stored safely for at least 5 years before destruction (see

American Psychological Association, 2020).

Data Analysis

There are four different ways to triangulate data: (a) using multiple researchers in

a study to gather perspectives from different periods, places, and people; (b) using

multiple investigators to gather data from different sources; (c) using multiple

perspectives from the same data set for theory triangulation; and (d) using multiple data

collection methods, including interviews and observations, for methodological

triangulation (Noble & Heale, 2019; Pathiranage et al., 2020; Yin, 2018). Triangulation is

using multiple sources of evidence. Methodological triangulation from semistructured

interviews and documents was used for this study. The documents for this study included

managerial policies, compliance program policies, and other records about the strategies

used to detect and prevent occupational fraud.

Yin’s five-step approach to data analysis is used to analyze and enable researchers

to analyze textual data. The thematic analysis method identifies, analyzes, and reports

themes (Castleberry & Nolen, 2018). I used thematic analysis and Yin's five-step process

to analyze the data from interviews and organizational documents. Yin's method

comprised the subsequent five steps: gathering the data, breaking it down, putting it back

together, interpreting its significance, and drawing conclusions from it (Castleberry &

Nolen, 2018). Step 1 included compiling the data via transcription into a form that may

be used. Step 2 involved using code to break down the data into categories. In Step 3, the

data were reconstructed and grouped by the main topics. In the fourth phase, I analyzed

the data by cross-referencing patterns with the documents and interview transcripts to

determine its significance to the literature review and the conceptual framework. Lastly, I

described how coding led to the development of themes and interpretations.

Ideas are listed during the coding process, and related data is categorized to

organize the data into understandable segments (Pathiranage et al., 2020). Microsoft

Word was used to transcribe interview recordings verbatim. Before using software to

code, I manually developed the codes. All interview questions and documents were coded

automatically using Atlas. ti coding tool. The four primary themes surfaced:

accountability, communication, empowerment, and trust. After both coding procedures, I

compared them and used the most prevalent codes to generate the themes for this study.

The frequency of themes was analyzed using the Microsoft Excel analyzing tool. These

themes connect with the literature on occupational fraud and the fraud triangle

framework.

Reliability and Validity

Reliability

Lincoln and Guba (1985) provided a framework for creating trustworthiness in

qualitative research. Within this framework are four components: (a) confirmability, (b)

creditability, (c) dependability, and (d) transferability (Fusch et al., 2018; McGinley et

al., 2021). In this section, I discuss how I addressed these components. The goal of the

researcher is to ensure that the research is trustworthy.

Dependability is based on the consistency and replicability of research

information (Coleman, 2022). Researchers should ensure that their data is reported so that

similar interpretations will be found if another researcher examines the same data

(McGinley et al., 2021). Dependability is linked to trustworthiness. In this study, the

literature review and an audit trail strengthened the reliability of the information

presented. During the audit trail, the researcher details each step to arrive at a conclusion.

Additionally, being transparent will aid in the reliability and credibility of the

study (Coleman, 2022). Another way to assure dependability is through member

checking. Member checking is when the researcher sends the data and interpretation back

to the participants to ensure the information is accurate and complete (Coleman, 2022;

Nassaji, 2020). Transcribing data early allows the researcher to see if there are any

comparisons between the participant's experiences (McGrath et al., 2019). I transcribed

the data verbatim as soon as possible. After doing so, I sent my interpretations back to the

participants for verification of the accuracy of the research data. The participants verified

the accuracy of the information they shared during the interviews.

Validity

The validity of qualitative research ensures that the findings are reported

accurately (DeJonckheere & Vaughn, 2019). Confirmability, creditability, transferability,

and data saturation can increase the study's validity. Using numerous resources as

convergence evidence will increase the reader's confidence in the case study and ensure

that the events are stated accurately (FitzPatrick, 2019; Yin, 2018). Examples of

convergence evidence are documents, historical records, open-ended interviews, and

observations (Yin, 2018). I used open-ended interviews and organizational documents to

increase the validity of the data.

Triangulation involves using multiple sources of data. Also, using triangulation

confirms the validity of the research data and adds depth and richness to the research data

(Saunders et al., 2015). Triangulation can help characterize the outcomes and approaches

with the same impact, which might boost the credibility of the findings (Noble & Heale,

2019). Interviews and documents were used as multiple sources of evidence from the

nonprofit organization's senior leaders during the triangulation process. The documents

included managerial policies, compliance program policies, and other records on

strategies to detect and prevent occupational fraud. Member checking is another part of

the validation process. As part of the member-checking process, the participants are

provided with the researcher’s interpretation to ensure validity (FitzPatrick, 2019). I used

member checking to ensure the validation and accuracy of data by providing the

participants with the interpretations of the data collected from the interviews.

Transferability and confirmability are the last two aspects that I would like to

apply to this study. Transferability involves using detailed, thick descriptions to transfer

the results to another setting (McGinley et al., 2021). The researchers can provide

information regarding the sampling process. For instance, the geographical location,

number of participants and their characteristics, and data collection duration enhance

credibility and allow the reader to transfer the results to another contextual setting.

(Johnson et al., 2020). The interview guide, detailed data collection information, and

analysis process steps are provided to ensure transferability.

The research should be free of bias, and the results should be those from the

participants' perspective (McGinley et al., 2021). To ensure the confirmability of the

findings, I used semistructured interview questions and followed the interview protocol to

avoid personal biases during the interview process. An audit trail would allow another

individual to critique the research (Nassaji, 2020). Using an audit trail allows the data and

the findings to be confirmed by another individual. I maintained the audio recordings,

field notes, documents, and the proposal as part of auditable items for further evaluation

and confirmation.

Researchers reach data saturation when the participants or document review no

longer provide additional information or insight into the phenomenon being studied

(Guest et al., 2020; Mwita, 2022; Sarfo et al., 2021). When a researcher hears and

observes the same thing repeatedly, that may be a signal to stop the data collection

process (Mwita, 2022). The data has become saturated at this point. The data for this

study was collected until it became repetitive, and no more relevant information met the

objective of this study.

Transition and Summary

In Section 2, I summarized and restated the study's purpose and discussed my role

as the principal researcher. The study's target population, participants, methodology, and

research design were described in detail. The plans were provided to ensure ethical

research and explain how the data will be collected, organized, and analyzed. A detailed

discussion of reliability and validity followed. Section 3 will contain the study's purpose

and results, a detailed discussion of the findings, and support for the study's conclusions.

Also, there is a discussion of how the findings could be applied to professional business

practices. Additionally, I will discuss the implications of the results for professional

business practice. Section 3 will conclude with a reflection on my research process and

conclusions.

Section 3: Application to Professional Practice and Implications for Change

Introduction

In this qualitative single-case study, I explored the strategies some nonprofit

organizational leaders in the central Alabama use to detect and prevent occupational

fraud. Semistructured interviews were conducted face-to-face and by telephone with

three nonprofit senior leaders who have successfully implemented strategies to detect and

prevent occupational fraud. To support the validity and reliability of the answers, I used

methodological triangulation by examining the organization's documents and website.

The document review consisted of the following: board of directors minutes, standard

operating procedures, financial accounting procedures, and training records. The review

of the organization’s website revealed its vision, mission, and values and showed the

listing of the board of directors.

Four themes emerged from the data analysis. These themes included

accountability, communication, empowerment, and trust. The findings showed methods

senior leaders in a nonprofit organization used to detect and prevent occupational fraud.

Member checking was used to validate the findings with the participants in this study.

Section 3 includes the presentation of the study’s findings, a detailed discussion on the

application to professional practice, the implication for positive social change,

recommendations for action, and further research. In addition, I have included my

reflections on the doctoral journey and provided a conclusion to the study.

Presentation of the Findings

The overarching research question for this qualitative single-case study was, What

strategies do some nonprofit leaders use to detect and prevent occupational fraud? The

participant's consent form was acknowledged before the interview. I asked each senior

leader the same question to understand better the strategies some nonprofit leaders used

to detect and prevent occupational fraud. Furthermore, asking the same questions could

minimize researcher bias. Member checking was used to ensure the validity of the

findings. Data analysis was conducted until no new codes, themes, or patterns could be

found. The themes that emerged from analyzing the data are accountability,

communication, empowerment, and trust (see Table 1). From the study's findings, some

nonprofit leaders might employ the techniques to detect and prevent occupational fraud

and associated financial losses.

Table 1

Frequency of Themes From Data Analysis

Theme

No. of occurrences

% of occurrences

1. Accountability

42.86

2. Communication

33.33

3. Trust

14.29

4. Empowerment

9.52

Theme 1: Accountability

Establishing an organizational policy requiring two signatures on checks is one

technique to reduce the likelihood of fraud. The owner and board chairperson might be

the individuals designated to sign checks. Each participant mentioned that the

organization’s checks are signed by the chief executive officer (CEO) and the board

president. Nonprofit leaders may further safeguard the organization from fraud by

requiring purchases over a particular amount to be approved. P2 stated,

The executive director, or board president, is responsible for purchasing items.

We require that a form be filled out, a list be created, and a credit card be signed

out. When the card is returned, the receipt is attached to the list. This process

ensures efficient and accurate transactions.

P1 said, “Credit card transactions are traced through receipts, and tangible items are

purchased alongside budgeted items. It is crucial to verify the accuracy of these tasks to

ensure proper management and accountability.” When asked about financial reporting, P3

stated,

To ensure financial stability, we do quarterly audits and daily checks and balances

that monitor revenue and expenses. Every year, an independent auditor does a

surprise audit of us. The controls go back to checks and balances. We conduct an

audit regularly. The deposits and revenue are verified weekly. Someone outside

the everyday operation does the verification.

A review of the participant’s financial accounting policy revealed that the CEO

keeps the books with the oversight of the treasurer. The policy also included a statement

that an accounting firm reconciles the books every month and at the end of the year.

These statements align with Khadra and Delen (2020) assertion that having an external

review of financials provides independence of governance and may uncover abnormal

activities in the financial records. Hakami and Rahmat (2019) stated that having a

continuous audit is an effective measure under the opportunity element of the fraud

triangle as a preventive strategy to reduce fraud. When asked about internal control

strategies to detect and prevent occupational fraud, P2 said:

The company ensures the safety of its premises by keeping locks on items and

only allowing authorized individuals to access them. If something is missing, the

company takes inventory at the end of the week and reports the issue to the

appropriate department. This system ensures that the company maintains security

and prevents potential threats.

The internal control strategies implemented by the study’s participants promote the

conceptual framework of the fraud triangle by eliminating the opportunity, pressure, and

rationalization of employees to commit fraud. Accountability is vital in the nonprofit

sector as it encourages transparency and credibility to stakeholders (Ortega-Rodríguez et

al., 2020).

Theme 2: Communication

According to the study’s participants, overcoming obstacles to putting policies in

place to identify and stop occupational fraud may be accomplished through

communication. Studies have shown that communicating the consequences of

professional deception is essential (Nawawi & Salin, 2018; Ruankaew, 2019). For

instance, many organizations utilize codes of conduct to establish minimal behavior

standards, demonstrate an ethical corporate environment, and inform staff members that

unethical behavior is unacceptable (Kagias et al., 2021; Mwangi & Ndegwa, 2020). As a

result, managers are becoming more effective by minimizing opportunities and

rationalizations (Kagias et al., 2021). Opportunity and rationalization are two components

of the conceptual framework of the fraud triangle.

Each participant agreed that having an employee/volunteer handbook would make

clear expectations for staff members and volunteers. This statement is supported by the

participant’s policy on personnel management, noting that documentation of receipt of

the policies and procedures manual for each staff member is in the personnel files.

Sharing appropriate and relevant information across the organization is ensured through

effective communication.

All participants agreed that open communication is crucial in helping staff

members comprehend new procedures the organization has implemented and giving them

a platform to express concerns. When asked about communication channels for reporting

fraudulent activities, P1 stated, "Verbal and nonverbal communication can be used to

report inappropriate actions, such as noncompliance with standard procedures, to the

supervisor, with multiple instances requiring a written report.

P2 said, “The company has established a hotline for reporting issues to the

executive director. If the executive director is unavailable, they can report an issue to the

board president.” P2 also mentioned, “We have always maintained an open-door policy,

allowing people to report legitimate and nongossip-related matters.” P3 noted, “They can

use the hotline to call without providing the name of the perpetrators, and they can be

anonymous if they prefer.” A hotline for all stakeholders could effectively prevent and

detect fraudulent activities (Mouamer et al., 2020). Oelrich (2021) confirmed that

whistle-blowing is vital to obtain information about fraud, theft, and misconduct.

Establishing anonymous mechanisms to report or communicate fraudulent activities

aligns with (Peltier-Rivest, 2018b). Peltier-Rivest (2018b) noted that stakeholders should

have easy access to various channels for expressing their concerns and reporting

abnormal activities. P1’s response to Interview Question 4 ("How are strategies to detect

and prevent occupational fraud discussed in the organization?") was the following: “To

prevent professional misconduct, it is crucial to understand and address employee issues

and ensure proper SOPs [standard operating procedures] are in place. Additionally,

backup video recordings can be used to prevent such incidents.” P2 responded, “Board

discusses strategies to prevent excessive spending or areas that are not functioning as

efficiently, such as insufficient checking balances, during four meetings. This helps

maintain a balance in the organization.”

A follow-up question was asked inquiring how often they communicate with staff.

P1 noted: “On Monday mornings, everyone gathers to discuss the previous work week

and results. If something is lacking, it's addressed. An annual meeting ensures everyone

is on the same page, both financially and nonfinancially.” P2 stated, “The usual time for

discussing any necessary matters is during the weekly 10-min meeting. P3 stated, “We

have employee meetings and staff meetings, and we also have manager's meetings

weekly. We have meetings with all employees to get them involved in the plans and goals

of the company and discuss our problems.” Leaders can understand their employees

through effective communication. Errington et al. (2020) asserted that communicating

regularly with employees on policies provides a clear understanding of expectations and

may deter potential fraudsters. According to P1, including staff members in decision-

making through communication would increase their sense of value since it fosters

inclusivity.

Utami et al. (2020) acknowledged that the internal control system should be

communicated to all employees. A weakness in internal control creates an opportunity for

fraud (Kagias et al., 2020). Hashim et al. (2020) suggested having regular conversations

on rationalization with employees to reduce the incidence of fraud. Homer (2020)

supported the conceptual framework by asserting that opportunity is the most important

of the three aspects of the fraud triangle theory, with rationalization being the most

prevalent because it is an internal process regarded as unobservable. Effective

communication helps limit the fraud triangle's opportunity and rationalization elements.

Theme 3: Trust

Cressey's fraud triangle theory outlines the reasons underlying the fraudulent acts

of trusted employees (Yekini et al., 2018). Cressey (1953) stated that when trusted

individuals believe they have a private financial issue that cannot be disclosed to others,

they are considered trust violators. Othman and Ameer (2022) noted that trust violators

know this issue can be resolved privately by violating the position of financial trust.

Literature promotes the understanding of trust and possible offenders (Othman & Ameer,

2022). Owusu et al. (2022) confirmed that trusted individuals can be fraud violators when

faced with financial pressure.

Relationships between principals and agents are founded on trust. The employees

serve as the agents and the owner/manager as the principal. Leaders may discern changes

in attitude and lifestyle by watching and listening to their workforce (ACFE, 2022; Ijere

& Osho., 2020). A lifestyle change might indicate that employees are under pressure to

commit fraud. Additionally, thorough background checks before onboarding aid in

adequately screening staff members. Nawawi and Salin (2018) pointed out that it is

crucial to do background checks on an individual's financial situation and lifestyle to

identify any evidence of fraud. P1 stated,

Conducting background checks on volunteers and employees is crucial for

maintaining trust and monitoring their activities. It is essential to consider both

appearance and history when interviewing them. Individuals with a criminal

record may not continue the same process, but their past actions can impact their

future.

The participants mentioned that the employees and volunteers are monitored

consistently, and their comings and goings are logged in via a sign-in and out sheet. P1

stated in response to Interview Question 1, “Volunteers often work long hours, which are

recorded through paper trails.” P2 noted that

Timesheets are used by employees and volunteers. Some of the volunteers are

from DHR [Department of Human Resources], so we have to track their time in

and out of the organization. The current era is characterized by a significant

increase in electronic activities, where everything is computerized.

The study participants’ sign-in sheets were reviewed for the volunteers since their work

hours must be reported to the State of Alabama Department of Human Resources. The

participants indicated these are effective strategies since employees could jeopardize the

company by dishonest behavior.

A follow-up question was asked about how the employees and staff are

monitored. P1’s response to using video cameras was, “This action will be utilized not

only by employees but also by surrounding areas to prevent nonemployee or employee-

related break-ins.” P3 noted that “organizations and businesses can put cameras in place

to monitor. Understandably, you won't catch everybody; the goal is to prevent it as much

as possible.” Mouamer et al. (2020) confirmed that having a robust monitoring system as

part of internal control may reduce the risk of fraud. Theme 3 is consistent with the

pressure and opportunity side of the fraud triangle (Kalovya, 2020) because the trust

violators perceive an opportunity to commit fraud and believe they can do so without

being discovered (Homer, 2020; Mat et al., 2019). The trust violators may feel pressured

to commit fraud.

Theme 4: Empowerment

The research participants agreed that their organization's usage of granting

ownership and empowering volunteers and staff was a dependable technique since it held

staff members accountable for their activities. Scheetz et al. (2020) wrote that employee

empowerment and engagement are critical to preventing fraud. According to P2,

volunteers and staff who feel appreciated would work harder and may be less inclined to

commit fraud. By making employees responsible for their activities, empowerment

reinforces the fraud triangle’s third element, rationalization, by removing the need to

defend or explain their conduct if they steal from the organization. Leaders should

establish and maintain an ethical culture that incorporates an organization's fundamental

principles and inspires people to do the right thing (Mandal, 2023). Employees should be

empowered to report their concerns and recognize their critical role in reducing fraud

(Ocansey & Ganu, 2017).

Arroyo Pardo et al. (2024) described an acceptable business practice for leaders to

empower employees by asking for and implementing their suggestions into the

organization's fraud prevention plan. In response to Interview Question 5, What barriers

did you encounter when implementing strategies to detect and prevent occupational

fraud? P3 conveyed, “That most rules and guidelines were derived from employee

feedback at different meetings. We strive to convey new policies and processes as they

arise; thus, no barriers were encountered.” The study’s findings align with the assertion

provided by Ciulla and Ciulla (2020) that a distinct set of moral commitments and

understandings between leaders and followers, all based on honesty, are necessary for

true empowerment.

Applications to Professional Practice

The study's findings may be helpful to present and prospective nonprofit and for-

profit organizations, allowing leaders to use viable strategies to protect their

organization’s assets. This research aimed to explore nonprofit leaders' strategies to

detect and prevent occupational fraud. Semistructured interviews with senior leaders and

a review of documentation related to occupational fraud detection and prevention

methods were undertaken. The information provided by participants and the assessment

of the organization’s documents demonstrated successfully implemented procedures to

detect and prevent occupational fraud.

This research offers four fraud-reduction and detection strategies for practical use

in business: (a) accountability, (b) communication, (c) empowerment, and (d) trust. These

four themes are aligned with Cressey’s fraud triangle elements: (a) pressure, (b)

opportunity, and (c) rationalization. If the leaders are more accountable to the

organization, implementing stronger internal controls may lead to transparency and

increase stakeholder credibility. Employees may not feel pressured to commit fraud if the

organization has monitoring mechanisms. Effective communication on internal controls

and other antifraud measures may lessen the opportunity for fraud to be committed.

Giving the employees a part in the decision-making process could empower them to

report unethical behavior that may cause harm to the organization. Making employees

feel valued could provide a level of trust. Therefore, accountability, communication,

empowerment, and trust could detect and prevent occupational fraud due to pressure,

opportunity, and rationalization.

Implications for Social Change

Nonprofit organizations lead several community initiatives, stimulating growth

and leading to stronger communities. The study's findings may assist leaders of nonprofit

organizations in identifying and preventing occupational fraud by using the strategies

used by participants in this study. Nonprofit organizations may continue to feed, heal,

shelter, educate, and inspire their community while creating jobs through detective and

preventive measures related to occupational fraud. Internal control must be strengthened

to safeguard the organization's resources and enable it to pursue its goals (Kereri, 2019).

Antifraud awareness training should be conducted consistently so employees know about

new or emerging threats.

Occupational fraud threatens the sustainability and survival of non-profit

organizations through a loss of resources (Archambeault & Webber, 2018; Blye &

Luamba, 2021; Hashim et al., 2020). It will be impossible for nonprofit organizations to

stimulate economic growth if they are forced to close their doors by the threat of fraud.

The implication for positive social change is that nonprofit leaders could reduce losses

due to occupational fraud by strengthening their internal controls and fraud awareness

training, which may lead to improved economics, education, health, and social initiatives.

Nonprofit organizations can create jobs to strengthen the economy and provide vital

community services through these initiatives.

Recommendations for Action

Four themes were developed from the findings: accountability, communication,

empowerment, and trust. These themes are related to the participants' strategies to detect

and prevent occupational fraud. A significant recommendation for senior management in

nonprofit organizations is to engage in continuous antifraud training for staff and

volunteers. Employees aware of the controls and consequences are less likely to engage

in fraudulent actions (Mouamer et al., 2020). Leaders should educate and make

employees aware of the expectations of unethical behaviors and the consequences if

caught (Kagias et al., 2021). A further recommendation would be to ensure that every

monetary responsibility is monitored by multiple individuals. The participants can

achieve this recommendation by segregating duties between the board treasurer and the

chief executive officer.

Occupational fraud may be reduced by establishing a whistle-blower hotline,

allowing anybody connected to the organization to report suspicious behaviors or

communicate freely without fear of retribution (Oelrich, 2021). There was discussion of a

hotline, antifraud awareness training, and fraud policy, but no documentation of the

organization’s written policies surfaced. A recommendation is to create whistle-blower,

antifraud, and other policies to address fraud.

Nonprofit organizations are limited in resources (Choto et al., 2020). A

recommendation is to invest in up-to-date technology to combat the different threats that

may harm their organization. Investing in advanced technology may allow nonprofit

leaders to monitor and capture incidents of fraud in real-time. As a researcher, I would

advise nonprofit leaders to strengthen their internal control practices for sustainability

and survival. By implementing these recommended strategies, leaders in nonprofit

organizations may further their efforts to detect and reduce occupational fraud. I will

disseminate the research findings to the study participants and other business leaders. The

findings could be shared in professional journals, seminars, and business conferences.

Recommendations for Further Research

This case study focused on a single nonprofit organization in central Alabama.

The analysis of a single case was the primary drawback of this study because it does not

allow the findings to be transferred to another setting. To further the understanding of

how different leaders in different nonprofit organizations use diverse techniques, I

recommend doing a multiple-case study as a future research project.

The geographic area was limited to the central part of the U.S. state of Alabama,

where I exclusively interacted with senior leaders. Purposely sampling was the technique

used to select the participants. I selected senior leaders who have successfully

implemented strategies to detect and prevent occupational fraud. There were three

participants in this study. I recommend using a charity locator to locate potential

participants in the State of Alabama. Using a locator to search for all nonprofit

organizations in Alabama may yield more participants. Thus, there may have been more

representation from different perspectives on strategies to detect and prevent occupational

fraud.

The participants in this study used effective strategies to detect and prevent

occupational fraud, which could be helpful for other nonprofit organizations.

Occupational fraud is on the rise in nonprofit organizations. Future research is warranted

to understand how occupational fraud negatively impacts nonprofit organizations.

Reflections

This qualitative, single-case study explored nonprofit leaders' strategies to detect

and prevent occupational fraud. Having an excellent support system and mentors was

crucial to my survival during the doctoral program at Walden University. The Doctors of

Determination network group comprised colleagues who assisted one another. Group

members assisted me by exchanging helpful information, managing bureaucracy, and

providing virtual hugs and reassurance. Despite the support from committee members

and the network group, the journey toward a Doctor of Business Administration degree

was lonely. There were times when I wanted to give up, but I leaned heavily on Doctors

of Determination, Walden’s Doctor of Business Administration Journey (DBA)

Facebook and the Doctoral Peer Mentoring groups for support. I am so grateful for the

feedback from those who helped me stay focused and reach the finish line. Although the

road to earning a doctoral degree has been long and difficult, it has been well worth it.

Throughout this process, I ensured that my biases did not influence how I evaluated the

findings and added my perspectives to the research during the data collection and

analysis process.

Furthermore, I observed that the interview approach was critical in reducing bias

and ensuring consistency in the data collection process. It was vital to understand each

participant's perspective through the interview process. Throughout the interview, I

realized how essential it was for participants to talk openly about the techniques they

used to prevent and detect occupational fraud. Some of the strategies that the participants

shared were consistent with other organizations. There was some information that the

participants provided that I resonated with and found enlightening.

Conclusion

Fraud is a threat to any organization (Khadra & Delen, 2020). However, nonprofit

organizations are at more risk than for-profit organizations (Lauck & Brozovsky, 2018).

The purpose of this qualitative single-case study was to explore strategies that nonprofit

leaders use to detect and prevent occupational fraud. Data were obtained from three

participants through semistructured interviews and the organization’s documents. From

the analysis of the data, four themes emerged: (a) accountability, (b) communication, (c)

trust, and (d) empowerment. The research findings provided insights into participants'

strategies to protect their organizations against occupational fraud.

The participants in this study had vital policies and procedures established.

The board of directors' responsibility is to implement, evaluate, and ensure that staff

members and volunteers receive organizational fraud awareness training (Balfour et al.,

2021). To reduce the risks associated with occupational fraud, leaders must implement

rules and procedures, especially those on financial operations (Denman, 2019). The

findings revealed that regularly reviewing and communicating policies and procedures

held the employees accountable for their actions. By communicating with the employees,

the study's participants empowered their employees to report fraudulent activities.

According to the participants, meetings are held weekly, monthly, and annually. From the

findings, the participants incorporated the employee’s feedback into decision-making

processes.

There are constantly new ways that fraudsters could commit occupational fraud.

Therefore, nonprofit leaders should take the initiative to update their processes for

detecting and preventing fraud. Being in a data-driven society, investing in advanced

technology may enable nonprofit leaders to detect and prevent occupational fraud before

it happens. Leaders should understand the concepts of the fraud triangle, pressure,

opportunity, and rationale to detect and prevent occupational fraud.

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