Donald Cressey’s “fraud triangle” theory pegs factors that collectively lead someone to commit occupational fraud. We can apply a similar model to an organization’s role in internal card fraud. Do the following characteristics fit your organization? Possessing all three is a sure sign of a weak control environment, but having even just one can increase the risk of fraud.

Ignorance

A lack of education about Commercial Card controls and fraud prevention/detection techniques can cause an organization to focus on the wrong things and overlook others; for example, establishing overly restrictive card controls (spend limits, MCC blocks), but not addressing separation of duties.

Reluctance

Rooted in organization culture, this trait can be exemplified various ways; for example, a reluctance to:

invest the time to learn and follow best practices
believe that long-time, trusted employees can (and do) commit fraud
consistently enforce program policies and procedures, regardless of job level

Comfort

While comfort is typically a good word, it can be problematic if an organization finds comfort in what it has always done, seeing no reason to change. An “implement and forget it” control strategy is never wise. What has worked in the past may prove to be ineffective now or in the future.

Avoiding the Triangle Trap

Hire the right program manager and utilize their expertise. Annually conduct a risk assessment to identify potential control gaps. Evaluate the effectiveness of your controls through audits. Keep pace with the changing nature of fraud.

Dial back your organization’s level of risk by avoiding traits that weaken the control environment.

“Most fraudsters work for their employers for years before they begin to steal. ”

— 2014 Report to the Nations on Occupational Fraud and Abuse by the Association of Certified Fraud Examiners

More Information

For more information on the three elements of Cressey’s fraud triangle (pressure, opportunity and rationalization), refer to the Association of Certified Fraud Examiners (ACFE). Also access their resource referenced above: 2014 Report to the Nations on Occupational Fraud and Abuse.

Next Blog Post

Reconstructing the crime scene—a case of internal card fraud.

About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more…