Three factors that every accounts payable professional should understand.
Why do trusted employees sometimes commit fraud? The answer may lie in a concept known as the Fraud Triangle, developed from the research of criminologist Donald Cressey.
The model identifies three conditions commonly associated with occupational fraud.
1. Pressure or Incentive
Financial difficulties, personal debt, family obligations, or workplace expectations can create pressure. While most people facing these challenges remain honest, pressure can become a motivating factor in fraudulent behavior.
2. Opportunity
Weak internal controls can create opportunities for fraud. In accounts payable, these may include inadequate segregation of duties, unrestricted vendor master file access, or payments processed without independent approval.
Of the three factors, opportunity is the one organizations can most directly control.
3. Rationalization
Individuals may justify dishonest actions with statements such as "I'm only borrowing the money," "I'll pay it back," or "The company owes me."
These rationalizations can make unethical behavior seem acceptable.
What This Means for Accounts Payable
AP departments can reduce fraud opportunities through proper segregation of duties, independent verification of vendor banking changes, regular reconciliations, and consistent approval procedures.
Even long-serving, trusted employees should be subject to the same controls.
The Bottom Line
The Fraud Triangle reminds us that fraud involves human behavior as well as weaknesses in financial processes.
Trust your people, but build controls that protect everyone.
Editorial Note: This article was developed with the assistance of artificial intelligence and edited, reviewed, and approved by Robert Ruhno, Executive Director of the Accounts Payable Professionals Group (APPG).
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Robert Ruhno
Executive Director APPG 
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