ACC 646 Milestone 01-Overview
Why would people perpetrate malfeasance? No one will ever know the solution to this question.
Was/were the person(s) in immediate need? Was it for the adrenaline and thrills? Or was it just
that a fantastic opportunity presented itself? As a fraudster expert, these are some of things that
spring to mind. Although fraud has been for a long time, one might argue that the risks it poses
to us now are worse than ever before. The "Fraud Triangle" refers to three essential components
of fraud: opportunity, justification, and pressure or incentive. “ The Fraud Triangle's three main
components are Chance, Pressure (also known as an inducement or motive), and Self
justification (also known as reason or excuse).
Each of the three components would have to be fulfilled for deception to succeed. It is crucial to
understand how deception might be committed. Large organizations in particular should care
regarding it since by understanding deception and its essential components, various practices
may be put in place to lessen the likelihood of deceit. Deception cannot be completely prevented,
yet it is possible to lessen the likelihood that it will occur. Customers can also benefit from this
kind of understanding as they will be better able to determine if a situation may or may not lead
to fraud. It may also give rise to fresh suggestions for averting suspected deception in the future.
A variety of ideas put out regarding the origins of a person or people to conduct a felony, if
misrepresentation is involved, accept or reject.
The ideas of sensible option, societal optimism, ecological empiricist, and cognitive positivist are
only a few of those considered. These ideas are finally utilized to assess how the deception was
perpetrated and to assist distinguish the form(s) of offenders to hunt for. These four theories
basically contend that individuals who commit offenses typically get a rational justification for
doing so, whether it be but since civilization convinced them to do so, because they have
inherited criminal tendencies from their family members, or because they are suffering from a
mental illness. schizophrenic, bi-polar disease, psychopathic personality disorder, antisocial
personality disorder, depression, and neuroticism, among others. When crimes are committed, an
investigator might concentrate on a certain group of people to look into, especially if they fall
under one of the aforementioned four hypotheses. A person who is covered by the theories of
crime enables an investigator to utilize the deception pyramid to spot certain warning signs.
For instance, the creation of SPVs (Special Purpose Vehicles), the unexpected retirement, or the
fact that legal counsel urged auditors to destroy data were some warning flags with the Enron
crisis that occurred. The chance finally lay in the SPVs, which had been developed to conceal the
losses they had been suffering financially. The firm was able to significantly inflate its income
thanks to the SPVs' ability to conceal financial losses, which the leadership found to be
encouraging given that the income had been overstated by just over $500 million. The incentive
part of the deception pyramid is represented by this inflation. One may claim that the CEO's
hasty departure in 2001 was brought on by the learning of corrupt behavior.
Or perhaps the number of individuals who took part in this widespread deception suggests that
some were perhaps forced to commit it out of fear. It would explain why auditors were told to
remove evidence by legal counsel. We must also remember that it is the auditor's duty to get
strong evidence that there are no major misstatements in the financial statements (as a whole),
whether due to fraud or mistake. Due to rules and applicable laws that might make it difficult to
spot fraud in progress, this presents some challenges. For instance, if anything is found to be out
of conformance, the auditors must decide if it is his or her duty to notify the appropriate party of
the detected or anticipated violation.
