Fraud Triangle
Definition
A model, developed by criminologist Donald Cressey, proposing that occupational fraud requires three converging conditions: pressure (financial need or incentive), opportunity (a control weakness), and rationalisation (a mental justification by the perpetrator).
- Developed by
- Donald Cressey
- Three elements
- Pressure, opportunity, rationalisation
- Field
- Criminology, applied to occupational fraud
- Practical use
- Guides fraud risk assessment and control design
Common questions
Which side of the fraud triangle can an employer actually control?+
Opportunity is the element an organisation can most directly reduce, through segregation of duties, approval limits, and audit trails. Pressure and rationalisation are internal to the individual and much harder to detect or influence from outside.
Has the fraud triangle been challenged as a model?+
Yes. Later researchers, including Wolfe and Hirst's fraud diamond, argue that capability, the perpetrator's actual skill to exploit an opportunity, is a distinct fourth factor that Cressey's original three-part model does not separately account for.
Related terms
- Predication
- The reasonable basis that justifies opening a fraud examination. The ACFE holds that no examination should begin without adequate predication, meaning a...
- Asset Misappropriation
- Schemes in which an employee steals or misuses the employing organisation's resources. The most common fraud category by frequency, encompassing cash theft,...
- Forensic Accounting
- The application of accounting, auditing, and investigative skills to matters likely to be disputed in a legal or regulatory forum. The word...
- Forensic Audit
- A forensic audit is an investigation-focused examination of financial records or systems under defined instructions. The label does not create a universal...
- Fraud Diamond
- The four-element extension of the fraud triangle proposed by Wolfe and Hermanson (2004), adding capability to pressure, opportunity, and rationalization. Capability focuses...
- Fraud Examination
- The process of resolving an allegation of fraud, from initial fact-finding through evidence collection to a conclusion about what happened and who...
- Non-Shareable Financial Problem
- Cressey's original phrase for what is now called pressure or incentive. The problem is non-shareable because the person believes they cannot disclose...
- Occupational Fraud
- Occupational fraud involves deliberate misuse or misapplication of an employing organisation’s resources for personal enrichment through one’s work. The ACFE taxonomy organises...
- 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
- Forensic Auditing: Definition and Scope
- The Fraud Triangle: Pressure, Opportunity, and RationalisationCressey's three-element model of occupational fraud causation: perceived non-shareable financial pressure, perceived opportunity to commit and conceal the act,...