Testing the fraud triangle: a systematic review

Author:Emily M. Homer
Position:Department of Criminal Justice, University of Louisville, Louisville, Kentucky, USA

Purpose The purpose of this study is to examine the existing literature on the fraud triangle. The fraud triangle framework, popularized by Donald Cressey and W. Steve Albrecht, has been used to explain financial crimes since the 1940s. The theory includes that workplace financial crime and fraud occurs only when an offender has sufficient opportunity, pressure and rationalization to... (see full summary)

Testing the fraud triangle: a
systematic review
Emily M. Homer
Department of Criminal Justice, University of Louisville, Louisville, Kentucky, USA
Purpose The purpose of this study is to examine the existingliterature on the fraud triangle. The fraud
triangleframework, popularized by Donald Cressey and W. Steve Albrecht,has been used to explain nancial
crimes since the 1940s. The theoryincludes that workplace nancial crime and fraud occurs only when an
offender has sufcient opportunity,pressure and rationalization to commit the crime.The fraud triangle has
been empirically applied to the array of criminal behaviors and specicnancial crimes and offenders
internationallyto determine if all three elements are necessaryfor the crimes to occur.
Design/methodology/approach This systematic review summarized33 empirical studies that have
applied all three componentsof the fraud triangle to study nancially criminal behavior committed by both
corporations and individuals. The review included published and non-published papers and manuscripts
from a variety of sourcesinternationally.
Findings Of the 33 studies included,32 found support for at least one element of the fraud triangle and 27
found support for all three elements.Overall, these studies have shown that the fraud triangle has generally
receivedsupport across different subjects, industries and countries.
Research limitations/implications This research only examinedpapers using the fraud triangle
Originality/value This paper systematically reviewed different types of studies internationally,
concludingthat the fraud triangle is largely valid internationallyas an explanation for nancial crimes.
Keywords Financial crime, Systematic review, Fraud triangle, Corporate crime, White collar crime
Paper type Research paper
The study of white collar crime originated in the USA with Edwin Sutherland in the 1940s.
Sutherland dened white collar crimes as those that are committed by people who hold
powerful and prestigious occupations by virtue of the opportunities that their positions
provide. To expose the public to the misdeedsof corporations, Sutherland (1983) published
an archival review examining thecriminal and civil histories of 70 companies. Sutherlands
student, Donald Cressey, extended his mentors work by examining crimes committed
against companies by examining the guilty employees point of view. Cresseys work is a
seminal text explaining why employees who have been placed in positions in which they
have access to nancial meansuse that access to victimize their employers.
Largely using interviews with convicted persons, Cressey (1973) created a hypothesis
explaining why some people in positions of nancial trust committed crimes against their
employers and why others did not. He also sought to explain why the same person might
commit a crime in one situation but not in another. In his book, Cressey presented a
summary of his interviews and the hypothesis he had developed after speaking with 503
The author would like to extend her gratitude to Benjamin W. Fisher for his valuable feedback and
assistance with the preparation of this study.
Funding: No external funding was received for this study.
Journalof Financial Crime
Vol.27 No. 1, 2020
pp. 172-187
© Emerald Publishing Limited
DOI 10.1108/JFC-12-2018-0136
The current issue and full text archive of this journal is available on Emerald Insight at:
state and federal inmates across three states. The hypothesis that Cressey identied is as
[...] trusted persons have become trust violators when they conceive of themselves as having a
nancial problem which is non-sharable, are aware that this problem can be secretly resolved by
violation of the position of nancial trust, and are able to apply to their own conduct in that
situation verbalizations which enable them to adjust their conceptions of themselves as trusted
persons with their conceptions of themselves as users of the entrusted funds or property (Cressey,
1973) (emphasis added).
The three italicized segments from this hypothesis (often abbreviated as pressure,
opportunity and rationalization)became the major focus of future research. The hypothesis
emphasized that all three components must be present for a crime to occur. Although
Cressey believed that he had found the hypothesis explaining all the examples of trust
violations he had uncovered, he recognized that an example might be found that did not
contain all three elements of the hypothesis, and thus, prove him wrong. Therefore, he
believed that his hypothesisshould be studied further.
In 1979, the auditing company KPMG hired a group of researchers with experience in
criminology, accounting and psychology to study workplace fraud and how to detect it.
After conducting their own research, the group also concluded that fraud occurred when
three components came together: situational pressures, opportunities to commit fraud and
personal integrity (character). The KPMG research team recognized that the three
requirements they identiedare very similar to the three requirements previously identied
by Cressey, with the exception of not requiring the nancial problem to be unsharable. One
of the members of this team, W. SteveAlbrecht, continued research on these principles after
the study, eventually referring to the three-part explanation as to the fraud triangle.
Albrecht would later become the rst president of the Association of Certied Fraud
Examiners (ACFE). Partiallybecause of Albrechtsinuence, the ACFE has chiey used the
fraud triangle to help corporate accountantsand auditors identify instances of occupational
fraud (Albrecht,1991,2014, July/August; Albrecht et al.,1982).
It appears to be a common misconception in the literaturethat Cresseys hypothesis is the
fraud triangle or that he conceptualized it in a triangle form. In his article explaining the
origins of the term fraud triangle,Albrecht (2014, July/August) wrote that he began
referring to the theory as the fraud triangleafter receiving a suggestion from a class
participant that the three components of the fraud hypothesisare similar to the re triangle
(which purports that re is created from a combination of heat, fuel and oxygen). In reality,
both explanations from Cressey and the KPMG team appear to have been developed
independently, despite their similarities. In one article, Albrecht (2014, July/August) wrote
that Cressey could be calledthe father of the elements of the fraud triangle.
With the growth of the fraud triangle as a fraud explanation aimed toward auditorsand
accountants, research examining the origins of nancial crimes largely crossed from the
sociology literature, where it wasused to explain the criminal behavior of trust violators, to
the accounting and auditing literature. The majority of the current research on the topic
remains in the accounting and auditing literature. As it has grown in popularity as an
explanation for nancial crime, the fraud triangle has become the basis of several national
and internationalauditing and accounting policies (Lin et al.,2015;Soltani, 2014).
In accordance with Cresseys originalthoughts that his hypothesis might need updating,
scholars in various elds have reexamined his theory. This has led to several suggestions
for revisions. For example,some sources proposed expansion of the fraud triangle to include
four elements (Cieslewicz, 2012;Yusof, 2016), ve elements (Tugas, 2012) or six elements
(Soltani, 2014)reecting features of the organization itself.Some researchers have examined
Testing the
fraud triangle

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