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
- The largest Fraud Tree branch, covering schemes in which an employee steals or misuses the organisation's assets. Subcategories include cash schemes (skimming,...
- 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
- An examination of an organisation's financial records and systems conducted specifically to gather evidence for legal proceedings. Distinguished from a regular audit...
- Fraud Diamond
- Wolfe and Hermanson's 2004 extension of the fraud triangle that adds capability as a fourth condition. The model holds that pressure, opportunity,...
- 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 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...
- 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,...