Business and professional ethics

Business and Professional Ethics

The fraud triangle is an old and basic concept that is usually used to detect the occurrence of fraud or deter it from taking place. The paper is a case study of an employee and its main focus will be application of the fraud triangle in detecting the fraud or deterring such a fraud from happening again in the organization.

When a fraud occurs there are three elements that typically present; opportunity, motivation and rationalization. The first and crucial element of committing fraud is opportunity. Many business without knowing create an opportunity for dishonest employees to commit fraud through the exercising of weak control such as lack of supervision and lack of duties segregation. For instance the task of preparing signing and recording cheques should not be given to one employee. Such a scenario can create an opportunity for committing fraud as an individual can easily write a cheque for themselves without anyone noticing.in this case study Daren Jones had the opportunity of committing the fraud. This is because he was the one in charge of opening mail, making cash deposits posting payments and invoices to the subsidiary accounts that are held by customers. He is also the one who verifies the deposit slips and gives them to the general ledger accountant. Therefore Darren Jones had an opportunity to commit the fraud as he was the one that was directly involved in depositing money to the customer accounts and preparing the deposit slips.

Motivation which can also be termed as pressure is the reason why the employee performs the fraud. This can be a real financial need or other types of needs such as debts, high medical bills and so on. When we look at the case study w can say that the motivation that Darren Jones had when he committed the fraud was the fact that he had found himself in difficult financial circumstances. He came to the realization that if he did not commit the fraud then he would have had to file for bankruptcy. This is when he made the decision of taking money from the cash deposits and covering up his tracks through falsifying the posts to customer accounts.

The last element is rationalization which involves the person who ahs committed the fraud trying to justify their action.in this case Dareen Jones convinced himself that if his supervisors knew of his predicaments they would give him the loan without hesitating. He also promised himself that he would pay the funds back as soon as he was in a position to do so .there are also times where he thought to himself that he deserved the additional funds since he had worked so hard for AE&P for many years without being given a pay rise or a promotion that he deserved.

As a manager I would be keen to ensure that such a fraud does not happen again. First of all I will ensure that there is no opportunity whatsoever that can allow an employee to carry out a fraud .this I will achieve through the division of some duties such as ensuring that one employee does not open the mail, make the cash deposits and post the payments to subsidiary accounts. I will divide these tasks among different employees. Another thing is that I will ensure that I constantly supervise the employees especially those who are involved in making deposits, writing cheques and so on.