Who Commits Fraud and Why: The Profile and Psychology of the Fraudster

What is the fraud perpetrator profile?

male, middle-aged to retired (typically between the ages of 31 and 50), with the company for 5 or more years, never charged or convicted of a criminal offense, well-educated, accountant, upper management, or executive, and acts alone

What can criminal mindset substitute for in the fraud triangle?

pressure

What can arrogance substitute for in the fraud triangle?

rationalization

What are some personal characteristics that are occupational fraud red flags?

unusually high personal debts, severe personal financial losses, living beyond one’s means, extensive involvement in speculative investments, excessive gambling habits, alcohol problems, drug problems, undue family or peer pressure to succeed, feeling of being underpaid, dissatisfaction or frustration with job, close associations with suppliers, close associations with customers, and not taking vacations of more than 2 or 3 days

What are some organizational environment occupational fraud red flags?

a department that lacks complete personnel, a department that does not enforce clear lines of authority and responsibility, a department that does not have proper procedures for authorization of transactions, a department that is not frequently reviewed by internal auditors, lack of independent checks (other than internal auditor), no separation of custody of assets from the accounting for those assets, placing too much trust in key employees, unrealistic productivity expectations, and pays levels not commensurate with the level of responsibility assigned

What does M.I.C.E. stand for?

money laundering, insider training, consumer fraud, and employee theft

What do forensic accountants use M.I.C.E. for?

to systematically classify and investigate various fraudulent activities, ensuring a comprehensive approach to fraud detection and prevention

What are the 2 benefits of M.I.C.E.?

focused investigations and enhanced detection and prevention

How do focused investigations benefit forensic accountants?

by segmenting fraud into these 4 categories, forensic accountants can develop more precise and effective investigation strategies

How does enhanced detection and prevention benefit forensic accountants?

understanding the specific characteristics and methods associated with each category in M.I.C.E. enables forensic accountants to better identify red flags and potential fraud indicators