The Fraud Triangle

The Fraud Triangle is a theory that explains what three things need to exist for fraud to occur. You can use this information to analyse situations and lower your risks for fraud.

Here are some examples: 

A∠ Pressure / Incentive - Someone having personal financial hardship can potentially be under pressure to find money. This can sometimes lead to fraud and maybe they're in a position where it is possible for them too easily skim money off of company in one way or another.

B∠ Opportunity - Someone who has a job that no one else in the company knows how to do, or they have too much approval rights and set up vendors and pay them.

C∠ Rationalization - When the person committing the fraud really believes that money is due to them because the company isn't paying them what they deserve.

Q & A:

1) Do you think one of these points is more important than the other? 
2) What other situations can you think of that lead to fraud?

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Robert Ruhno

Director of Social Media
Accounts Payable Professionals group

What steps are you taking to protect your AP Department from fraud?

Here is a list of ideas to start with:


1) AP recovery audits
2) Duplicate invoice reports
3) External audits
4) Internal audit
5) Positive Pay
6) Separation of duties
7) Taxpayer ID Number matching
8) Vendor master setup
9) W-9 requirement

Also, I recommend reading:

"The Art of the Steal: How to Protect Yourself and Your Business from Fraud, America's #1 Crime" by Frank W. Abagnale.
There is lots of great information about how to protect yourself and your business from check fraud and other scams.

A/P Hall of Shame | Accounts payable clerk arrested for embezzlement

Accounts payable clerk arrested for embezzling $545,000 from Bloomfield, NJ Auto dealership Lynnes Nissan. Karen Marie Sosa of Belleville was sentenced to 7 years in prison.

Link to Article #1
Link to Article #2
http://fraudtalk.blogspot.com/2010/12/former-new-jersey-bookkeeper-sentenced.html