Fraud Diamond
Definition
Wolfe and Hermanson's 2004 extension of the fraud triangle that adds capability as a fourth condition. The model holds that pressure, opportunity, and rationalisation are necessary but not sufficient: the individual must also have the position, knowledge, and personal traits to carry out the fraud.
Related terms
- Non-Shareable Financial Problem
- Cressey's original term for the pressure element. The problem need not be objectively severe; what matters is that the perpetrator perceives it...
- Occupational Fraud
- The ACFE defines occupational fraud as the use of one's occupation for personal enrichment through the deliberate misuse or misapplication of the...
- Arrogance
- In the Pentagon model, the belief that normal rules do not apply to oneself. Arrogance replaces or bypasses rationalisation: the perpetrator does...
- Behavioural Red Flag
- An observable action or pattern that suggests elevated fraud risk by signalling pressure, rationalisation, arrogance, or capability. Examples include living beyond apparent...
- Capability
- In the fraud diamond, the personal attributes that allow an individual to execute a fraud: seniority and authority, knowledge of controls and...
- Control Environment
- The first and foundational component of the COSO framework. It encompasses the board's oversight, management's philosophy and operating style, organisational structure, commitment...
- Fraud Triangle
- A model, developed by criminologist Donald Cressey, proposing that occupational fraud requires three converging conditions: pressure (financial need or incentive), opportunity (a...
- Management Override
- The circumvention of established internal controls by members of senior management. A key fraud risk in any organisation because those who set...
- MICE Model
- A motivational taxonomy derived from counterintelligence practice: Money (financial gain or need), Ideology (loyalty, grievance, or belief), Coercion (external pressure or blackmail),...
- Pentagon Model
- An extension of the fraud diamond by Jonathan Marks (2011) that adds arrogance as a fifth element, describing individuals so confident in...
- Predication
- The reasonable basis that justifies opening a fraud examination. The ACFE holds that no examination should begin without adequate predication, meaning a...
- Rationalisation
- In the context of the fraud triangle, the mental justification a perpetrator uses to excuse fraudulent conduct. In interviewing, rationalisation is used...
Explained in these topics
- The Fraud Diamond and Other Extended Fraud ModelsWolfe and Hermanson's 2004 extension of the fraud triangle that adds capability as a fourth condition. The model holds that pressure, opportunity, and rational...
- The Fraud Triangle: Pressure, Opportunity, and RationalisationAn extension of the fraud triangle proposed by Wolfe and Hermanson (2004) that adds a fourth element, capability, to account for the observation that not all i...
- The Fraud Triangle and Cressey's ModelThe four-element extension of the fraud triangle proposed by Wolfe and Hermanson (2004), adding capability to pressure, opportunity, and rationalization. Capab...