Introduction
In the article, “The Fraud Triangle Revisited”, Schuchter and Levi (2013) carry out an explanatory study on the occurrence of financial fraud by adopting the initial framework formulated by the American criminologist by the name Donald Cressy who had interviewed embezzlers. The authors describe the multiple developments concepts that underpin the fraud Triangle, while at the same time re-evaluating the recent theoretical and practical applications of these important tenets that include motivation, opportunity, and rationalization. The researchers then study thirteen company fraudsters based within Austria and Switzerland and offers proposals on some measures that can be implemented within companies in order to reduce the risks of emergence of fraud as a corporate culture. In this research, it is found that in as much as opportunity is not an adequate condition for occurrence of fraud; it is regarded by the respondents as noticeable. In addition, Schuchter and Levi (2013) found that rather than use rationalization, an inner voice inhibits an individual from perpetrating the fraud, or acting in a fraudulent behavior. Further, this inner voice continues to be quieter over time until the individual commits the fraud amongst the 13 respondents from Austria and Switzerland. Accordingly, the two researchers conclude that the elements of the Fraud Triangle as well as the inner voice derive much influence from the corporate culture practicable within particular companies.
Critique
Schuchter and Levi (2013) focus on the integral cause of financial fraud by arguing that it is attributable to factors that include the motive or pressure, opportunity and rationalization, and in most cases the inner voice. They also add a deeper twist to the financial fraud amongst individuals by showing that the corporate culture of a company may be a facilitator of the perpetration of financial fraud by particular employees. In most cases, this will involve being engaged in acts that may be viewed as acceptable within the social grouping or the norms and beliefs of the corporation.
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In summary, Schuchter and Levi (2013) correctly agree with the integral elements of the Fraud Triangle, which explain financial fraud as a dependent on the perceptions that the potential fraudster intends to adopt. They point out that the first element, which is the motivation or pressure to commit the fraud, cannot be shared amongst individuals as, in the state the individual sees himself as capable of pulling out from the present situation to a better one. Second, the individual become aware of the fact that their position is that of trust that bestows upon them an opportunity to develop or exercise skills aimed at defrauding the organization. Third is that the fraudsters give themselves the leeway in terms of neutralizing the discrepancies that may exist between their moral sense and self-concept on one hand, and the inevitable defilement of the trust offered to them, the rationalization aspect.
While the authors seem to question the importance of the Fraud Triangle by arguing that not all the elements of the crime are prerequisites for the commission of fraud or white-collar crime, it is worth noting that it has been shown that they are integral, and other factors are just complementary to this vice. Schuchter and Levi (2013) argue for the substitutability and a multiplicative approach should be applied on top of the three elements, the empirical data that they use to reaffirm their studies are insufficient to show the “inner voice” that they claim to encourage people to commit frauds within companies based on their cultures.
In addition, the arguments by Schuchter and Levi (2013) on the propensity to commit fraud are inconclusive, as they have used a sample of thirteen countries from only two nations, Austria and Switzerland, which are within the Eurozone area. Usually, most companies within these countries would have similar corporate cultures that may make the employees to be involved in corporate white-collar crimes. These results would therefore be inapplicable in different countries or companies that are not in a similar setting as Austria and Switzerland as investigated by the authors.
Further, the elements within the Fraud Triangle are the single-most important guiding principles of the desire by an individual to commit corporate fraud. Contrary to the assertions by Schuchter and Levi (2013), the three elements are still integral in explaining corporate fraud as even with a change in the working climate or corporate culture, fraud still happens. This implies that fraud will still occur as long as the individual is motivated to carry it out, and there are opportunities that he can use rationalization to believe that he will benefit by defrauding the organization, irrespective of the desired corporate culture.
Moving forward and in light of the insights offered by Schuchter and Levi (2013), it would be recommended that future studies use failures decision-making as a parameter that may explain the perpetration of fraud. In such as study, fraud may be explained as having occurred because of the failure to exercise rationality, which makes an individual to behave in a self-deceptive manner, hence facilitating the white-collar crime.
Reference
Schuchter, A., & Levi, M. (2013). The Fraud Triangle Revisited. Security Journal 29 (2), 107–121
