-
uaud
ninParis,la Te
particular technology, the fraud triangle, which was initially
developed in the aftermath of
CFOs cant be expected to peer into the souls of everyemployee or
business partner, of course, but they do
surrounding thed clearly worthyhe desire fprevent it,
zations need to keep a closer eye on the soul omembers and,
given that fraud ensues from lack of cit follows that the best way
to keep it from spreading is tofoster control and cultivate specic
skills in its detection. Inthis article, we examine how the notion
of organizationalfraud has been conceptualized through a particular
tech-nology: the fraud triangle.
http://dx.doi.org/10.1016/j.aos.2014.01.0060361-3682/ 2014
Elsevier Ltd. All rights reserved.
Corresponding author. Tel.: +33 149232029.E-mail addresses:
[email protected] (J. Morales), yves.gendron
@fsa.ulaval.ca (Y. Gendron),
[email protected](H. Gunin-Paracini).
Accounting, Organizations and Society xxx (2014) xxxxxx
Contents lists available at ScienceDirect
Accounting, Organiza
journal homepage: www.eby nancial gain, pressure to perform or a
threat to theirpower, money or status; you need susceptible
victims;and you need an absence of controls to prevent or haltthe
scam. (The Observer, December 21, 2008)
assumptions often present in discoursesfraud triangle: an
individual activity anof condemnation, fraud is motivated by tsonal
gain, either in wealth or power. ToPlease cite this article in
press as: Morales, J., et al. The construction of the risky
individual and vigilant organization: A genealogfraud triangle.
Accounting, Organizations and Society (2014),
http://dx.doi.org/10.1016/j.aos.2014.01.006or per-organi-f
theirontrol,Many people could, given the right set of
circumstances,be capable of fraud. Experts in this area talk about
thefraud triangle, whose three legs are: the opportunityto act
dishonestly, an incentive or pressure to do so,and rationalization
by the fraudster of their actions. Inother words, you need an
offender motivated either
and the capacity to rationalize. When those elementsunite, fraud
often erupts. (CFO Magazine, April 1, 2009)
These two quotations attest to the use in both the main-stream
and specialized press of a particular expression,the fraud
triangle, in reference to the activity of explain-ing, detecting or
preventing fraud. They also illustrate keyIntroductionthe creation
of the fraud examination discipline. We examine the genealogy of
the fraudtriangle and follow various chains of translations
underlying its construction. One of themain translation
trajectories we uncover presents individuals as vectors of moral
riskinessneeding to be vigilantly monitored and controlled by the
organization. The organization isconceived of as a prime site in
which fraud is to be addressed not annihilated but signif-icantly
reduced as long as sufcient care is devoted to establishing layers
of vigilance. Assuch, the fraud triangle redenes social, political
and economic relations through a webof translations that both
celebrate and normalize the use of organizational surveillance
sys-tems to control risk ensuing from the individuals (alleged)
frail morality. In the process,other visions of fraud, focused on
the broader role of society, political agendas and power-ful
economic institutions in engendering and preventing fraud, escape
from view.
2014 Elsevier Ltd. All rights reserved.
need to be more cognizant than ever of the three sidesof the
classic fraud triangle: pressure, opportunity,This article examines
how a vision of organizational fraud has been constructed around
aThe construction of the risky individorganization: A genealogy of
the fra
Jrmy Morales a,, Yves Gendron b, Henri Gua ESCP Europe, CPO
Department, 79 avenue de la Rpublique, 75543 Cedex 11b Facult des
sciences de ladministration, Pavillon Palasis-Prince, 2325, rue
de
a b s t r a c tl and vigilanttriangle
-Paracini b
Francerrasse, Universit Laval, Qubec City, Qubec G1V 0A6,
Canada
tions and Society
lsev ier .com/ locate/aosy of the
-
2 J. Morales et al. / Accounting, Organizations and Society xxx
(2014) xxxxxxBroadly speaking, our research connects to the power
ofsystems of thought in shaping peoples interpretiveschemes along a
particular angle, in inuencing social de-bates, and in delineating
the boundaries of professionaljurisdictions. As illustrated in the
quotations above, thefraud triangle promotes a vision where certain
eventsand types of behavior are referred to and shaped as
fraud-ulent and abnormal. The triangle also aids in the
construc-tion and legitimation of a eld of intervention
aroundorganizational deviance problems. We aim to understandhow the
fraud triangle has been articulated through spe-cic conceptualizing
angles.
For several decades, both academic and professionalliterature
has taken great interest in the notion of fraudor, more generally,
the dark side of organizations(Vaughan, 1999). Many scholars and
practitioners havesought to better understand the causes of
organizationaldeviance and assess different methods for detecting
andpreventing it. Keen interest in the matter gave rise tothe
emergence and propagation of a eld of knowledgespawned by the
meeting of two disciplines that had beenrelatively distinct
previously: accounting and criminol-ogy. We will show that the
foundation of this hybrideld of knowledge, fraud examination, was
built lar-gely on a particular image, that of the fraud
triangle.Tracing the genealogy of the fraud triangle,
therefore,leads us to examine the creation of the eld of
fraudexamination.
Importantly, our primary interest is not in how thefraud
triangle is technically used to detect fraud, but inhow its
conceptualization and the underlying constitutionof a eld of
knowledge have been structured around spe-cic angles. Following
translations made in the academicand professional literature, this
study highlights that a spe-cic vision of fraud characterizes how
the triangle has beenconceptualized and conveyed through formal
discourse.Thus, we contribute to an emerging eld of inquiry on
hy-brid processes of knowing, spanning across the boundariesof
organizations, professions and groups of experts (Miller,Karunmki,
& OLeary, 2008), showing not only how ideasmove across
disciplines, but also how a corpus that aspiresto be both new and
distinct from existing bodies of knowl-edge may take root.
In our genealogy, we will trace the different transla-tions,
developments and claims that have surrounded thespread of the
triangle and possibly impacted the construc-tion of a new area of
competence and its legitimizationaround the notion of fraud. Our
empirical task, therefore,is to follow and reconstruct the chain of
translations (La-tour, 1987) surrounding the fraud triangle. Every
transla-tion entails a certain modication of the original
concept(Gendron & Baker, 2005). Further, the term
translationcomprises the unexpected twists and deformations thatmay
occur in the spread of ideas. While ofcial historiesof elds of
knowledge often ignore these elements ofunpredictability (Kuhn,
1970), they are nevertheless com-monplace. Translation also implies
continuous work inextending the web of meanings surrounding a given
con-cept. Thus, in our case, the fraud triangle does not have
asingle, xed meaning; it is subject to continuous
reinter-pretation. Even the core elements of the triangle
changedPlease cite this article in press as: Morales, J., et al.
The construction offraud triangle. Accounting, Organizations and
Society (2014), http://dx.dosignicantly when they were imported
into the nascentfraud examination discipline.
The translations we follow point to a distinctive way
ofunderstanding the subject studied by organizational devi-ance
professionals a subject that is no longer limited tothe behavior of
individuals in and around an organization,but that now also extends
to their character. Hence in addi-tion to the notion of translation
developed by Latour(1987), we will make use of some of Foucaults
writingson the normalization and constitution of the subject
(Fou-cault, 1994, 2001, 2004), and in particular, his analysis
ofthe intersection between psychiatry and criminology (Fou-cault,
1981). The spread of the fraud triangle has translatedinto the
development of a discourse promoting the evalu-ation, monitoring
and normalization of the character oforganizational members. This
is because, together withorganizational control mechanisms,
individuals moralityis presented as key to understand fraud risk
factors. Be-yond usual auditing devices focused on conformity
con-trols, the fraud triangle thus introduces morality
andimmorality as a target for fraud ghting.
Before going further, we want to stress that our geneal-ogy is
not aimed primarily at evaluating how the fraud tri-angle and its
different articulations resonate withsurrounding and broader
discourses (e.g., Miller & OLeary,1987), but rather to follow
chains of translations andexamine the fraud conceptualizations they
sustain. Also,while we distinguish translations along three main
periods(roughly dened i.e., moving upstream; translations real-ized
within the fraud examination community; movingdownstream), in our
analysis we do not seek to highlightspecic variations within each
of them. Our interest is tounveil what we view as the most
important translationsduring each phase.
A key goal of our study is to trace the normativeassumptions
that underlie the association between fraudand morality. We will
show that they form the basis of adiscourse, not only about fraud
detection and deterrence,but also about normality and deviance
within organiza-tions. Dening an act as a transgression or fraud is
ambig-uous (Berger, 2011). This is because fraud denitions relateto
sociopolitical processes of labeling and are matters ofdisagreement
and conict in society (Becker, 1963). Yet,the triangle is presented
as a technical device that aimsto prevent acts deemed to be
naturally unacceptable. Thisenterprise is clearly normative:
through an ostensibly neu-tral technicality a specic point of view
on organizationaldeviance is promoted. However, this is a
normalizing view-point that conceives of fraud as a public issue
caused byindividuals frail morality needing to be addressed by
theorganization. In other words, the conceptualizations
andrenements of the fraud triangle are based on implicit
sep-arations between normality and abnormality, yet theboundaries
between normal and abnormal are not dis-cussed as if the latter
were natural and universallyaccepted.
We thus show how the fraud triangle traces links be-tween
accounting, auditing and risk management on theone hand, and
assumptions about normality and organiza-tional deviance on the
other. In particular, our analysispoints to the fraud triangle
extending the eld of organiza-the risky individual and vigilant
organization: A genealogy of thei.org/10.1016/j.aos.2014.01.006
-
2004).
Handbook: Prevention and Detection, Wells founded theAssociation
of Certied Fraud Examiners (ACFE). The bookis part of the ACFEs
examination preparation toolkit. Ithelped guide our documentary
research upstream fromthe triangle and shed light on some of its
origins. We also
J. Morales et al. / Accounting, Organizations and Society xxx
(2014) xxxxxx 3Also, our analysis of the triangles main translation
tra-jectories points to a climate of suspicion promoting a eldof
practical intervention within the organization, which ismade
responsible for establishing vigilant systems of con-trol aimed at
preventing and detecting lapses in organiza-tional members
morality. Therefore, we studyconceptualizations of organizational
deviance, as epito-mized in the discourse of the fraud triangle, to
show howthey relate to normalizing stances encouraging
organiza-tions to take responsibility for controlling individual
char-acter. Other visions of fraud, focused on the broader role
ofsociety, political agendas and powerful economic institu-tions in
engendering and preventing fraud, are systemati-cally downplayed
and overlooked. In the process, theorganization is constructed as a
prime site in which fraudcan be reined in not annihilated but
signicantly reducedas long as sufcient care is devoted to
establishing a bat-tery of vigilant controls. Conditions are then
arguably inplace for social order, and the dominant interests it
sus-tains, to reproduce.
In the following section we present our research meth-ods. Next,
we move upstream in the chains of translationsthat have led to the
construction of the fraud triangle. Fol-lowing that, we present the
main architects of the triangleand describe the translations they
made as well as thestrategies they followed to present the triangle
as a legiti-mate way of thinking and intervening in
organizationaldeviance. Then, we move downstream in the chains
oftranslations to follow some of the successive shifts that
oc-curred as the network of support around the fraud trianglewas
being extended. In particular, we show that thesedownstream chains
promote a climate of suspicion thatenrolls the organization as a
key site of fraud control. Inthe discussion section, we emphasize
one of the maininterpretive statements ensuing from our analysis,
namely,that organizational fraud is conceived of as a dual
failure,one in individual morality and the other in the
organiza-tions endeavors to control for individual probity.
Lastly,the conclusion articulates some of the main
implicationsresulting from our work.
Research methods
Our genealogy of the fraud triangle is carried outthrough
documentary study. Our study is especially predi-cated on a pivotal
practitioner book, which articulates con-nections between the
nascent eld of fraud examinationand the discipline of criminology:
Occupational Fraud andAbuse, by Joseph Wells (1997). In addition to
republishingthis book three times under the title Corporate
Fraudtional surveillance beyond individuals behavior to includethe
assessment of risks stemming from individual subjec-tivity. Thus,
the fraud triangle reects and participates inthe construction of
one of the main social forces of ourmodern age: the redenition of
social, political and eco-nomic relations around systems that
position the subjectas a vector of riskiness and danger (Foucault,
1981) andset up and generalize surveillance and the assessment
ofrisks stemming from individual subjectivity (Foucault,Please cite
this article in press as: Morales, J., et al. The construction
offraud triangle. Accounting, Organizations and Society (2014),
http://dx.dolooked into the ways in which the fraud triangle and
someof its translations are articulated in ACFE literature.
Down-stream, we studied how the triangle and some of its
deriv-atives are discussed in a range of journalistic, academic
andprofessional documents. All told, our documentary analysiscovers
a broad range of successive translations, from theemergence of
white-collar criminology to recent shiftsand renements in the
notion of the fraud triangle. Ouranalysis is articulated into three
distinct parts whichcan be viewed as three moments of
translations.
Our analytical journey begins with the examination of astrand of
criminological research devoted to white-collarcrime, which Wells
(1997) presents as one of the concep-tual bases of fraud
examination knowledge. Although werecognize that the initiators of
the white-collar crimemovement built their ideas on previous
knowledge andnetworks (Latour, 1987), the chains of translations
couldhave been retraced ad innitum and we had to choose areasonable
starting point. In particular, we discuss severaldebates among
criminologists that we link to competingvisions of fraud.
Yet these debates were largely overshadowed when thefraud
triangle was conceptualized in the nascent eld offraud examination
the criminological foundations offraud examination being presented
as an indisputableand generalizable knowledge area. We are
particularlyinterested in examining how the ACFE built a body
ofknowledge around fraud examination, and what sort ofvision of
fraud it conveys. In addition to Wells (1997)book, we analyze a
number of documents connected tothe ACFE, including Albrecht and
Albrechts (2004) bookentitled Fraud Examination & Prevention,
whose rst authorwas ACFEs rst president.
In order to investigate, downstream and in greaterdepth, the
spinning off of the fraud triangle beyond theACFE, we made an
inventory of publications on the subjectusing bibliometric tools.
We searched for the term fraudtriangle without any journal
specication in the followingdatabases: Business Source Complete,
ScienceDirect, Emer-ald and Jstor. Through this process we identied
99 arti-cles. Of these, we considered 54 relevant for our
study.1
By retracing bibliographies, we obtained ten additional
arti-cles that mention the three dimensions of the triangle
with-out specically using the term fraud triangle or used theterm
but were not referenced in our selected databases.We should note
that these articles were published primarilyin academic journals,
but also in a number of professionaland hybrid journals. We read
and analyzed all 64 articles.For each document, we listed (when
relevant) the theoreti-cal framework(s) used, the denition of fraud
(and related
1 We eliminated articles that only mentioned the term fraud
trianglewithout really presenting the model and without indicating
its dimensions.We also eliminated articles which were only returned
by the databasebecause they cited another article whose title
includes the term fraudtriangle.the risky individual and vigilant
organization: A genealogy of thei.org/10.1016/j.aos.2014.01.006
-
but rather in processes of socialization and cultural
trans-mission that allowed certain individuals to learn
criminaltechniques and, at the same time, led them to align
theirworldview with that of their profession internalizingits
customs, codes and practices.2 In 1939, he was ap-pointed president
of the American Sociological Associationand during his rst
presidential address he coined theterm white collar crime, dened as
the violation ofdelegated trust within an organization (Sutherland,
1940).A few years later, he put forward a systematic analysis ofit,
stating that:
These violations of law by persons in the upper socio-economic
class are, for convenience, called white collar
4 J. Morales et al. / Accounting, Organizations and Society xxx
(2014) xxxxxxMoving upstream in the chain of translations:
Thearticulation of an individualizing vision of fraud
A signicant component in the development of a net-work of
support surrounding the fraud triangle is the foun-dation of a new
eld of knowledge and intervention; thatof fraud examination as
defended and promoted by theACFE. Through our genealogical work, we
rst analyzehow criminology was initially translated into fraud
exam-ination. In this respect, Wells (1997) begins his book
bypresenting fraud specialization as grounded in criminolog-ical
knowledge. He brings together the writings of EdwinSutherland (pp.
810) and Donald Cressey (pp. 1022) totie the eld of fraud
examination to previous academicstudies in criminology. Presenting
the fraud triangle(Wells, 1997, p. 11) comprising pressure,
opportunityand rationalization as having stemmed from Cresseysnal
hypothesis gives it rhetorical strength. However, asshown below,
Wells makes signicant translations whenarticulating this
relationship and promotes a specic visionof fraud that differs from
the one advocated by these twoscholars. Generally speaking, we aim
to show that theimportation of criminology into the nascent fraud
exami-nation discipline is characterized by a signicant
transla-tion bias that dismissed or downplayed segments
ofcriminological knowledge that viewed crime from socio-logical or
systemic angles.
In the book which made him famous, Sutherland (1937)endeavors to
show that the causes of criminality shouldnot be sought in the
psychological traits of the individual,references), the causes of
fraud, the solutions to fraud, themethodology, the way the triangle
is used (presence of allthe dimensions, dimensions changed or
added, translationof each dimension), the specic eld(s) of
application men-tioned (e.g., employee fraud, misstatement,
corruption, etc.),and the main argument. Four main translation
trajectoriesemerged as signicant: focus on internal control,
emphasison morality, assertion of suspicion, and promotion of
organi-zational surveillance. We followed these four themes
down-stream chains of translation. Further, as auditing
standardswere often quoted in these articles to provide denitionsof
fraud, we analyzed the translations comprised in SAS 99and ISA 240.
Although these standards do not mobilize theexpression fraud
triangle, both reproduce the threedimensions mentioned by Wells as
constituting the triangle.
Finally, we examined several key documents in the
riskmanagement, professionally-based literature. We limitedour
analysis to documents issued by major accountingorganizations, such
as the American Institute of CertiedPublic Accountants (AICPA), the
Chartered Institute ofManagement Accountants (CIMA), the Center for
AuditQuality (CAQ) and the Big Four. Accountants have
beenparticularly involved in promoting their expertise in
riskmanagement, appropriating and redening the concept ofrisk and
its management along a variety of angles (Spira& Page, 2003).
We identied the documents we analyzed,which are referenced below,
either by questioning theInternet (using sentences such as managing
fraud risk)or examining the organizations website.Please cite this
article in press as: Morales, J., et al. The construction offraud
triangle. Accounting, Organizations and Society (2014),
http://dx.docrimes. This concept is not intended to be denitive,but
merely to call attention to crimes which are notordinarily included
within the scope of criminology.White collar crime may be dened
approximately as acrime committed by a person of respectability and
highsocial status in the course of his occupation. (Suther-land,
1983, p. 7)
Sutherland (1983) showed that criminology greatlyunderestimated
(or even obscured) the violations of lawperpetrated by persons of
the upper socioeconomic class.3
His hypothesis, now commonly referred to as
differentialassociation theory, highlighted socialization and
learningprocesses not pathological psychological traits as
centralexplanations of criminal behavior. In adopting this
stance,Sutherland discredited widely-held theories of his day
thatattributed criminal behavior to poverty and its
associatedpathologies (Shapiro, 1990, p. 346), what
Braithwaite(1985, p. 2) calls the traditional theories of crime
whichblamed poverty, broken homes, and disturbed personali-ties.
The various cases (especially the biographical ones)presented by
Sutherland are enlightening in this regardand show how the people
concerned gradually lose theirattachment to a certain denition of
honesty as they dis-cover that their professional success depends
to a large ex-tent on performing unethical or even illegal acts.
Given theinterpersonal competition that exists in the
workplace,refusing to compromise their initial values may
preventindividuals from being as effective in their occupation
astheir less scrupulous colleagues. The individual then
learns,along with techniques specic to the job, to adopt
certainrationalizations which justify behavior that is
neverthelessillicit (Sutherland, 1983, p. 245).
2 Based on the memoir of a former thief, the author develops the
ideathat theft is not a set of isolated acts but a social
institution, and thatprofessional thieves constitute a community. A
particularly importantnding of this book is to show how, unlike
amateurs, professional thievesmanage to avoid legal sanctions
thanks to the intervention of a xer (seeSutherland, 1937, pp.
6587).
3 This book was very controversial in the United States mainly
becausethe author broke a taboo by demonstrating the magnitude of
the crimesperpetrated by the countrys elites (both in large
corporations and ingovernment) and also because he showed that many
acts which are neverbrought before a criminal court should
nevertheless be considered crimes.Accordingly, the strength of
white-collar criminals is that they are able toinuence legislation
and law enforcement and also that they are most oftenjudged by
administrative commissions and civil or equity jurisdictions,which
may allow white-collar criminals to avoid the stigma associated
withcriminal identity.the risky individual and vigilant
organization: A genealogy of thei.org/10.1016/j.aos.2014.01.006
-
J. Morales et al. / Accounting, Organizations and Society xxx
(2014) xxxxxx 5Sutherland (1983) counters previous studies in
crimi-nology by expanding the denition of fraud to include actsthat
had not been sanctioned by a criminal court (andwhich do not,
therefore, appear in the statistics used bymost criminologists).
His argument is that the denitionof white-collar crime should
include violations of non-criminal law (Berger, 2011, pp. 67). As
Coleman (1985,p. 4) points out, one of Sutherlands objectives was
to dem-onstrate that the violations perpetrated by persons of
theupper socioeconomic class are not treated in the sameway as
others because the powerful have the ability toinuence legislation
and, most importantly, itsenforcement.
Sutherland recognizes violations of law but proposes abroader
denition of violation, especially relating to re-straint of trade,
rebates, infringement, misrepresentationin advertising, and nancial
manipulations. He also in-cludes unfair labor practices
(Sutherland, 1983, p. 14).His denition of nancial manipulations
(dealt with inchapter 10, pp. 153173), for example, is
particularlybroad:
The term nancial manipulation is used here to referto practices
of corporations or of their executives whichinvolve fraud or
violation of trust. These practicesinclude embezzlement,
extortionate salaries andbonuses, and other misapplications of
corporate fundsin the interest of executives or of the holders of
certainsecurities; they include public misrepresentation in theform
of stock market manipulations, fraud in sale ofsecurities, enormous
ination of capital, inadequateand misleading nancial reports, and
other manipula-tions. (Sutherland, 1983, p. 153)
Expanding this subject matter beyond what is statuto-rily dened
as crime by existing criminal law did not gowithout controversies.
This is because dening an act asdeviant, criminal, transgressive or
fraudulent is intrinsi-cally ambiguous (Becker, 1963, 2011).
Indeed, rules differfrom group to group and a person may break the
rules ofone group by the very act of abiding by the rules of
anothergroup. Dening a rule (and hence what constitutes
rule-breaking), therefore, involves a sociopolitical process andits
content is a matter of disagreement and conict to thepoint where
ofcial rules may differ from what the major-ity of people consider
to be appropriate (Becker, 1963, p.15).
This position contradicts a commonly held assumptionabout
rule-breaking as obvious acts of deviancy ensuingfrom the
perpetrators deviant morality:
What laymen want to know about deviants is: why dothey do it?
How can we account for their rule-breaking?What is there about them
that leads them to do forbid-den things? Scientic research has
tried to nd answersto these questions. In doing so it has accepted
the com-mon-sense premise that there is something inherentlydeviant
(qualitatively distinct) about acts that break(or seem to break)
social rules. It has also acceptedthe common-sense assumption that
the deviant actoccurs because some characteristic of the person
whocommits it makes it necessary or inevitable that hePlease cite
this article in press as: Morales, J., et al. The construction
offraud triangle. Accounting, Organizations and Society (2014),
http://dx.doshould. Scientists do not ordinarily question the
labeldeviant when it is applied to particular acts or peoplebut
rather take it as given. In so doing, they accept thevalues of the
group making the judgment. (Becker,1963, pp. 3-4)
According to Becker, the notions of rule-breaking anddeviance
(and therefore fraud) cannot be intrinsically de-ned by character
traits, living conditions (economic sta-tus, lifestyle) or even by
particular acts, because all ofthese denitions would deny the
political and divisive nat-ure of rule-making: deviance is not a
quality of the act theperson commits, but rather a consequence of
the applica-tion by others of rules and sanctions to an
offender(Becker, 1963, p. 9). What is considered as fraud
depends,therefore, on the values and position of the person
speak-ing and it is important to examine his/her assumptionsto
better understand what motivates him/her to expressa certain moral
view.
Overall, it can be argued that disagreement over thenature
(individual or collective) and cause (moral or socio-logical) of
white-collar crime characterizes the eld ofcriminology (Benson
& Simpson, 2009; Berger, 2011; Cole-man, 1985; Colvin et al.,
2002; Poveda, 1994). Accordingly,Berger (2011, p. 27) suggests
distinguishing betweenmacro-sociological, micro-sociological, and
individualisticexplanations of white-collar crime.
Macro-sociological the-ories focus on the broader historical,
economic, and polit-ical factors that impact organizations, while
micro-sociological theories focus on the link between
individualactors and their immediate organizational
circumstances.For their part, individualistic theories focus on the
causesof crime that are located within the individual rather
thanthe social environment. According to this
classication,Sutherland provides micro-sociological explanations
ofwhite-collar crime (Berger, 2011, pp. 3536), whereasCressey
focuses on individualistic explanations (p. 30).Macro-sociological
theory does not appear to have hadany inuence on the crafting of
the fraud triangle (forexamples of macro-sociological theories, see
Coleman,1985; Poveda, 1994).
Cresseys individualistic theory occupies a prominentplace in
ofcial representations of how fraud examinationknowledge was
founded. Although one does not necessar-ily expect practitioners to
adopt a position in an academicdebate, the creation of a formal
body of practitioner knowl-edge may be founded on a particular
representation ofreality and, therefore, favor one orientation to
the detri-ment of others. Certain representational choices have
thusbeen made (explicitly or implicitly) in establishing
theknowledge base that underpins the fraud examiners
juris-dictional claim. However, the ofcial story presents
thesechoices as obvious and uncontroversial, as if they
naturallyensue from some inherent properties of fraudulent actsand
fraudsters, and a long tradition of scientic researchin
criminology. In other words, the foundation of a jurisdic-tional
claim based on a view of fraud inspired by Cresseysresearch
involves a number of assumptions.
Cressey, a doctoral student of Sutherland, studied thepsychology
of the violation of nancial trust using a seriesof interviews
conducted with prison inmates, who hadthe risky individual and
vigilant organization: A genealogy of
thei.org/10.1016/j.aos.2014.01.006
-
been convicted of embezzlement (Cressey, 1953). Hismethods for
selecting people to interview reveal his re-search focus: choosing
from inmates at three US prisons,incarcerated after being convicted
of certain crimes; he se-lected those he considered to have
initially accepted, ingood faith, the position of trust that was
used to perpetratethe crime (Cressey, 1953, p. 20).4 In focusing on
prison in-mates, Cressey eschewed the study of an entire range
ofwhite-collar crimes considered to be the most relevant
bySutherland, whose argument is that the strength of white-collar
perpetrators lies in their ability to avoid criminal con-victions
better than anyone else. In particular, Cressey ig-nored acts of
tax evasion and collective fraud. Moreover,by choosing only people
who, upon examination of their leor after interviewing them, seem
to have initially acceptedthe job in good faith, he favored the
emergence of a dis-
6 J. Morales et al. / Accounting, Organizations and Society xxx
(2014) xxxxxxcourse where the people he met did not consider
themselvesto be professional thieves (see Sutherland, 1937). The
advan-tage of this method is that it results in a relatively
homoge-neous set of cases, ruling out the possibility of variation
byselecting cases he felt were the result of the same type
ofbehavior and developed in a similar way.
Cressey assumed that embezzlement is an act commit-ted for
individual and nancial motives. This position ap-pears quite
clearly in his interpretation of the acts ofmisappropriation
committed by employees against theiremployers (Cressey, 1953, pp.
5766). Among thenumerouscases presented, only one is not motivated
by nancial con-cerns that of an employeewho committed an act
ofmisap-propriation, not because of personal difculties, but
becausehe resented his status in the organization: he felt that
hewas underpaid, overworked and treated unfairly. Yet Cres-sey
persisted in considering this behavior to be motivatedby an
individual problem, which ignores any broader expla-nation, even
though the individual interviewed points to aset of social and
collective motives linked to relations ofauthority that he
considered unequal and unfair.
When considering the spectrum of perspectives in theeld of
academic criminology, Cresseys thinking appearsto be rather
restricted.5 He does not examine every typeof white-collar crime,
but only embezzlement perpetratedby an individual acting alone,
motivated by personal gain,and for which he has betrayed a position
of trust that hehad initially accepted in good faith.6 Examining
his work
4 He obtained the list of people convicted for: embezzlement,
larceny bybailee, condence game, forgery, uttering ctitious checks,
conspiracy,grand theft, theft of government property, falsication
of a bill of ladingused in interstate shipment and theft of goods
in interstate shipment(Cressey, 1953, p. 23).
5 For instance, beyond Sutherlands differential association
theory,Merton crafted a strain theory (based on Durkheims concept
of anomy),Cohen (1955) articulates a theory of subcultures, Sykes
and Matza (1957)offer a neutralization theory, Cohen and Felson
(1979) suggest a routineactivity theory (to include characteristics
of the offended), Coleman (1985)offers an elite theory before
advocating for an integrated theory(Coleman, 1987), Braithwaite
(1989) suggests a theory of differentialshaming, Shapiro (1990)
supports an offense-based approach (whenSutherland followed an
offender-based approach), Vaughan (2005) speaksof a normalization
of deviance, and Benson and Simpson (2009) suggestan opportunity
theory. Berger (2011) also mentions rational choicetheory, control
theory and criminogenic market structures theory.
6 All the persons he interviewed were men.Please cite this
article in press as: Morales, J., et al. The construction offraud
triangle. Accounting, Organizations and Society (2014),
http://dx.doin greater detail, at the core of Cresseys thesis, we
nd acombination of three elements that arguably help to explainthe
process by which an individual comes to commit an actof
embezzlement:
Trusted persons become trust violators when they con-ceive of
themselves as having a nancial problemwhichis non-shareable, are
aware that this problem can besecretly resolved by violation of the
position of nancialtrust [perceived opportunity], and are able to
apply totheir own conduct in that situation verbalizationswhich
enable them to adjust their conceptions of them-selves as trusted
persons with their conceptions ofthemselves as users of the
entrusted funds or property[rationalization]. (Cressey, 1953, p.
30)
Of these three conditions, the most evident (to the pointwhere
it may seem tautological) is that of perceived oppor-tunity: if a
person commits an act, then he or she must nec-essarily have
perceived the possibility to do so. Besides,Cressey (1953) gives
opportunity less importance; therelevant chapter is particularly
short (15 pages versus 44for the chapter describing what
constitutes a non-share-able problem and 46 for the one dening
rationalization).In this short chapter, he seeks above all to
demonstratethat one should not consider opportunity as such
butperceived opportunity, meaning that organizational con-trols are
less important than individuals perceptions. Cres-sey provides
additional details on opportunity in thepreface to the 1973
edition:
The general argument ordinarily is that embezzlementcan be
eliminated by tighter accounting controls. Myresponse was, and is,
that modern business necessarilyrequires conditions of trust and
that, therefore,accounting controls rigid enough to eliminate
embez-zlement (which, by denition, involves conversion ofmoney or
goods with which the actor is entrusted) willalso eliminate
business. [. . .] Accountants and otherbusinessmen continue to
write as if the opportunityfor trust violation can and should be
eliminated. [. . .]What is needed is a prevention program clearly
basedon the fact that objective opportunities for embezzle-ment are
necessarily present in modern business orga-nizations. (Cressey,
1973, pp. xii-xiii)
Therefore, Cressey is skeptical about internal controlsability
to eliminate opportunity, and argues that oneshould assume that
objective opportunities always exist.In the chapter on opportunity,
he does address the issue ofhow to reduce opportunity but primarily
seeks to under-stand why people eventually come to perceive their
situa-tion as an opportunity to engage in embezzlement.
Thus,Cressey focuses less on the link between individuals
andorganizational circumstances than on phenomena locatedwithin
individuals.
Of the three elements Cressey describes, the one thathas
received the most criticism is the non-shareable nan-cial problem
(Coleman, 1985). The authors idea is that,even when someone has had
the possibility to embezzlefor several years, he will only do so
because he is facing aproblem that he thinks he cannot share with
anyoneand hence does not seek for others help. Again, however,the
risky individual and vigilant organization: A genealogy of
thei.org/10.1016/j.aos.2014.01.006
-
Cressey is not interested in identifying external factors
thatmay explain why certain problems become non-share-able. Rather,
he argues that misappropriation ensues fromthe individual viewing
his problems as non-shareable.
sional work while grounding it in a formal body of knowl-
J. Morales et al. / Accounting, Organizations and Society xxx
(2014) xxxxxx 7Finally, the third element is the notion of
rationaliza-tion, borrowed from Sutherland, but redened accordingto
a very different view.7 While Sutherland (1937) arguesthat
rationalization helps to explain why professionalthieves proudly
consider themselves as such, Cressey(1953) claims that embezzlers
tend to rationalize theirbehavior in ways that imply that deep
down, they are hon-est. Specically, Cressey contends that, before
committing aviolation, the person convinces himself that the act
will notcompromise his identity as an honest person and that it
con-forms to a certain ethical view of himself. Cressey
providesillustrations of the most common rationalizations and
pointsout that this concept must not be confused with
psycholog-ical justication carried out after the fact (Cressey,
1953, p.viii). According to him, these rationalizations are
producedbefore the crime is committed and they are not used tomake
the act intelligible for others, but rather for oneself(p. 95):
they make the act possible because they make itmorally acceptable.
However, even though this argumentis rather convincing, Cressey
bases his ndings on inter-views carried out with prison inmates,
i.e. after the factand in a situation of justication vis--vis a
stranger. Hisinterpretation of the process of rationalization,
therefore, issubject to criticism.
Overall, Cresseys (1953) ndings do not tell us muchabout
sociological causes of fraudulent violations.Mainly, they focus
attention on the idea that embezzle-ment is committed when an
individual considers that hissituation makes the act of
misappropriation feasible, nec-essary and acceptable. Cressey
focuses on phenomena lo-cated within the individual perceptions,
opinions andjustications that one gives to oneself. In so doing,
his the-orizing is consistent with individualistic explanations
ofcriminal behavior (Berger, 2011, p. 30), overlooking the
mi-cro-sociological (ones immediate social and
organizationalenvironment) as well as macro-sociological
explanations(broader historical, economic, and political factors).
Cres-seys work is thus based on a very particular conceptionof
white-collar crime that marginalizes social environ-ments and
circumstances.
Cressey thus offers a particular view of the
offender:privileging individualist motives of transgression,
hedownplays the role of sociopolitical explanations, creatingan
individualizing vision of white-collar crime which, asshown below,
is nevertheless capable of supplying argu-ments to dene and justify
an area of intervention for cer-tain classes of professionals who
claim jurisdiction overthe problem of organizational fraud (Abbott,
1988). Finally,it is worth noting that Cressey (1953) does not
stress theword fraud in his book; the index indicates only one
pagein which fraudulent checks is found, while embezzle-ment is
found on 24 pages.
7 In fact, Cressey credits several scholars with authorship of
this concept:not only Edwin Sutherland, but also George Herbert
Mead, Herbert Blumer,Alfred Lindesmith and Charles Wright Mills
(see Cressey, 1973, p. viii).Please cite this article in press as:
Morales, J., et al. The construction offraud triangle. Accounting,
Organizations and Society (2014), http://dx.doedge ostensibly
derived from scientic criminology.Signicant translations were made
in the process, espe-cially when articulating a specic denition of
fraud thatresulted in a number of departures or biases from the
ori-ginal criminological work. In what follows, we highlightthe
main translations that Wells and other ACFE propo-nents realized in
attempting to build a network to natural-ize the fraud triangle.
Then, we examine some of the mainrhetorical strategies they used to
secure support.
Translational biases in the initial formulations of the
triangle
Wells played a leading role in formalizing the fraud tri-angle
yet his position within denitional debates is notneutral. As
indicated below, the way in which he translatedcriminological
knowledge involves the creation of a systemof representations
promoting a sense of causality betweenindividual character and
fraud, which needs to be reined inby the organization. In his 1997
book, Wells promotes aconceptualization of fraud grounded in what
is presentedas one of the cornerstones of criminological
thought,namely, the embezzlement hypothesis as originally
con-ceived by Cressey:
One of Sutherlands brightest students at Indiana Uni-versity
during the 1940s was Donald R. Cressey(1919-1987). While much of
Sutherlands research con-centrated on upper world criminality,
Cressey took hisown studies in a different direction. Working on
hisPh.D. in criminology, he decided his dissertation
wouldconcentrate on embezzlers. Accordingly, Cresseyarranged the
necessary permission at prisons in theMidwest and eventually
interviewed about 200 incar-cerated inmates. [. . .] Cressey was
intrigued by embez-zlers, whom he called trust violators. He
wasespecially interested in the circumstances that led themto be
overcome by temptation. [. . .] Upon completion ofhis interviews,
he developed what still remains as theclassic model for the
occupational offender. Hisresearch was published in Other Peoples
Money: A Studyin the Social Psychology of Embezzlement. Cresseys
nalhypothesis was: [see previous section, excerpt fromCressey,
1953, p. 30]. (Wells, 1997, p. 10)
The transition from Sutherland to Cressey is quiteabrupt in
Wells depiction of the historical origins of theelds formal body of
knowledge. He also downplays therole of the social context in
Sutherlands work. Yet in pre-senting Cressey as one of Sutherlands
doctoral students,he invokes a sense of progress and continuity in
the devel-opment of criminological knowledge. Importantly, the
crit-icisms that Cresseys work engendered in the eld ofRealizing
translation through the constitution of aknowledge claim
Although often attributed to Cressey, the term fraudtriangle
does not appear in his writings. In fact, it wasnot coined by a
criminologist at all, but by Joseph Wells,a CPA. However, drawing
on Cressey, Wells and severalother proponents laid claim to a
particular area of profes-the risky individual and vigilant
organization: A genealogy of thei.org/10.1016/j.aos.2014.01.006
-
criminology are not mentioned. Hence the above
initialtranslation, from criminology to fraud examination,
wasfundamentally partial in both senses of the word
(i.e.,incomplete and biased).
The above excerpt, however, does not mention the termfraud
triangle. We contacted the ACFE by email concern-
8 J. Morales et al. / Accounting, Organizations and Society xxx
(2014) xxxxxxing the origins of this term and received the
following re-sponse from an ACFE representative:
Dr. Cressey developed the three items, but he did notcall it the
Fraud Triangle. Actually, Dr. Wells is the rstperson we know of to
take the three items and put[them] in a triangle format. He was
working on a videofeaturing Dr. Cressey in 1985, and he used a
trianglegraphic in the video to illustrate the 3 factors that
arepresent in most white-collar offenses. He began usingthe
triangle graphic in training programs after thattime. People saw
the graphic and began referring to itas the Fraud Triangle over the
years. So although wehave never undertaken an extensive review of
its use,as far as we know, thats how it came about.8
This quotation is noteworthy in several respects. Frompractical
experience, it is condently maintained that thethree factors are
present in most white-collar offenses.This generalizing attitude
may be linked to a systematicshift from limited empirical cases to
a broader label, asif the original analysis had taken all types of
white-collarcrimes into consideration and could, therefore, be
general-ized to every form of fraud. We found a similar tendencyto
generalize in other ACFE documents, suggesting thatACFE
representatives are highly condent in the knowl-edge base that
allegedly underlies the fraud triangleconcept.9 The latter also
tends to be naturalized in thesedocuments, as indicated by the
capital letters being usedin the last sentence of the excerpt
(Fraud Triangle),implying that the triangle is now understood as
arecognized doctrine, a proven theory or, quite simply,
aninstitution. Thus, the knowledge base claimed by the ACFEis
presented as universal:
Perceived pressure, perceived opportunity, and ratio-nalization
are common to every fraud. Whether thefraud is one that benets the
perpetrators directly, suchas employee fraud, or one that benets
the perpetratorsorganization, such as management fraud, the three
ele-ments are always present. (Albrecht & Albrecht, 2004,
p.20)
The triangle provides the core elements of the fraudexamination
disciplines body of knowledge. Importantly,a vast range of enigmas
and peripheral questions emergewhen application is taken into
account. How is fraud com-mitted? What mechanisms have been or
should be used byorganizations in trying to rein in fraud? How
effective arethese mechanisms? One of the most signicant
questions
8 Email received on May 27, 2011 from a representative of the
ACFE. In2010, Joseph Wells received a Doctorate Honoris Causa from
the YorkCollege of The City University of New York, hence the use
of the title Dr.in the ACFEs email.
9 See Gabbioneta, Greenwood, Mazzola, and Minoja (2013) for a
study offraud practitioners overcondence.Please cite this article
in press as: Morales, J., et al. The construction offraud triangle.
Accounting, Organizations and Society (2014), http://dx.dois what
kind of individual is more likely to commit fraud?In the previous
excerpt, for example, the main distinctionis between employees
assumed to commit frauds againstthe organization and management
assumed to commitfrauds for the organization. Proling knowledge is
enlistedto address this question. Accordingly, the ACFE
developedcategorizations of fraudsters and their acts along
variousdimensions. For example, Wells (1997) mobilizes the re-sults
of a large-scale survey of Certied Fraud Examiners(CFEs), who were
asked to provide information on actualfraud cases. He presents
series of graphs (chapter 1), whichcollectively associate the
imagery of the fraudster to theprole of a married male, for
instance. Predictive abilitiesare emphasized in the text, through
statements such as:One of the most meaningful trends of the survey
is the di-rect and linear correlation between age and median
loss(Wells, 1997, p. 38).
One key emphasis in the Associations body of evolvingknowledge
is to associate fraud with moral issues. By hisdenition, Wells
(1997, pp. 3-6) assumes that fraud consti-tutes a dishonest act
perpetrated by an individual for per-sonal enrichment. In other
words, fraud is being rooted inindividuals frail morality (and not
as an effect of broadersociological and cultural inuences) and as a
problemnecessitating the surveillance of individual ethics by
theorganization:
Fraud is a generic term, and embraces all the multifari-ous
means which human ingenuity can devise, whichare resorted to by one
individual, to get an advantageover another by false
representations. No denite andinvariable rule can be laid down as a
general proposi-tion in dening fraud, as it includes surprise,
trickery,cunning and unfair ways by which another is cheated.The
only boundaries dening it are those which limithuman knavery.
(Albrecht & Albrecht, 2004, p. 5)
This denition is centered on individual acts of moraldeviance.
One of its most striking features is the use ofderogatory and
persecutory language in qualifying theseacts. In a similar way,
Wells moralizing tone infuses theseries of short cases he provides
to demonstrate linkagesbetween certain behavioral patterns and
fraud. Most often,these cases question the morality of specic
individuals,without considering the surrounding network of
institu-tions and social interrelations. For instance, the
practiceof background checks, which Wells actively promotes,
sin-gles out a category of individuals as problematic hires
(seealso ACFE, 2010, p. 81):
The news that the hospital had unknowingly hired aconvicted
felon distressed [the director of internalauditing in charge of
investigating the case of anemployee who regularly overstated the
number ofhours on his time sheets]. He discovered that the
hospi-tals ability to conduct thorough background checks
onprospective employees was restricted by money andaccessibility to
records. [. . .] Harkanell [i.e., the personwho defrauded the
hospital] remained at large for sev-eral months. But luck was on
the hospitals side. Or, per-haps more accurately, stupidity was on
Harkanells. Justas he had done with his time-sheet fraud, he left a
cluethe risky individual and vigilant organization: A genealogy of
thei.org/10.1016/j.aos.2014.01.006
-
behind, this time concerning his whereabouts. (Wells,1997, p.
263)
The overarching lesson from this example seems to be
J. Morales et al. / Accounting, Organizations and Society xxx
(2014) xxxxxx 9that organizations should be reluctant to hire
people witha criminal record, regardless of the circumstances in
whichthey were convicted. This is reinforced in an article
pub-lished in the ACFEs newsletter, in which an actual case
isdeveloped through text and video to promote the view thatmoral
deviants are unlikely to rehabilitate. As stated by theACFE
president: Ive had fraud perpetrators tell me that itbecame an
addiction for them. [. . .] Trust equals opportu-nity and it is
indeed common for a fraudster to perpetratea second fraud when they
get in a position of trust (Patt-erson, 2008).10 From this
perspective, moral deviancy con-stitutes an incurable illness and
the best that can be donein the face of it is to strengthen an
organizations internalcontrols to catch fraudsters and place them
in the hands ofjustice. Our analysis, therefore, points to fraud
being concep-tualized, in the ACFEs community, from an angle that
viewsthe problem of fraud as one of morality lapses upon whichthe
organization inescapably needs to intervene.
Thus, from the triangles perspective, individual moral-ity is
perceived as a chief source of fraud and the organiza-tion is
presented as having prime responsibilities inestablishing a proper
structure to control moral deviancies.In other words, the triangle
provides fraud specialists withan investigative template that
individualizes fraud andholds organizations responsible for
controlling it. As a re-sult, fraud is circumscribed to the realm
of the specic:individuals subjected to pressure and somehow able
torationalize the act should not be left in a position to
commitfraud. From this perspective, it is incumbent on the
organi-zation to ensure that the three legs of the triangle are
prop-erly overseen through a rigorous structure of internalcontrol.
Fraud is thus constituted as a problem at the con-uence of the
individual and the organization; it is certainlynot represented as
a social, political, or historical problem.
The translations developed in the ACFE community rep-resent a
signicant departure from Sutherland and evenfrom Cressey. For
instance, Wells (1997, p. 17) translatesCresseys notions of
position of trust and violation oftrust to emphasize the need for
systematic controls:since [an employee] is in a position of trust
(read: noone is checking) it can be violated. Although Wells(1997,
p. 11) mentions the notion of non-shareable prob-lem briey, this
central aspect of Cresseys hypothesis is re-placed with the notion
of pressure. This notion misses acentral element of Cresseys work
whereby a sequence ofevents is present when a violation of trust is
committedand not present when no transgression is observed
(Cres-sey, 1953, p. 12). Indeed, Cressey resolutely maintains
thatpeople in a position of trust in an organization, who
aresubjected to nancial pressure for several years, do not vio-late
this trust until their nancial problems are felt as
non-shareable.
10 Patterson (2008) provides video recordings of an individual
who, afterserving a sentence for nancial fraud, explains that, like
an alcoholic, he isnow incurable: this individual asks that he no
longer be trusted because heknows that he will once again betray
this trust.Please cite this article in press as: Morales, J., et
al. The construction offraud triangle. Accounting, Organizations
and Society (2014), http://dx.doIn addition, Wells (1997, p. 24)
relates perceivedopportunity to lack of deterrence by management,
as ob-served through decient internal controls. The trianglealso
translates rationalization in a very specic man-ner. Wells (1997,
p. 17) claims that it is part of humannature: once the line is
crossed, the illegal acts becomemore or less continuous. Overall,
in the eyes of the tri-angles proponents, the likelihood of giving
in to pressurecharacterizes certain groups of individuals.
Cresseyshypothesis that fraud is rst and foremost explained
byindividuals perceptions is thus replaced by another
indi-vidualizing stance now focused on personality andmorality.
These departures from Cresseys work are justied bythe age of the
original research: The study [Cressey,1953] is nearly half a
century old. There has been consider-able social change in the
interim. And now, many antifraudprofessionals believe there is a
new breed of occupationaloffender one who simply lacks a conscience
sufcientto overcome temptation (Wells, 1997, p. 20). Wells
evenreintroduces genetic causes and argues that, in contrastto
white-collar crimes, what he calls street crimes aregenetically
based (Wells, 1997, p. 9). Wells (1997, p. 24)further modies
Cresseys nal hypothesis to make thefraud triangle consistent with
the fraud scale (see alsoAlbrecht, Romney, & Howe, 1984, p. 21)
where the threedimensions can offset each other, non-shareable
problemsare replaced by situational pressures and
rationalizationsby personal integrity. The fraud triangle has thus
trans-lated Cresseys work into a device to be used in
organiza-tions to measure and intervene on fraud risks
associatedwith deviant morality.
In summary, our analysis indicates that the creation ofa fraud
examination knowledge base entailed substantivetranslations from
the eld of criminology, in that Cres-seys ndings are introduced as
an indisputable and gen-eralizable foundation for the practice of
fraudspecialization to thrive. The initial translation was
meta-phorically built around the fraud triangle, a concept
thatconstitutes the hard core of the discipline while
providingenough room for imagination in developing
ancillarytranslations that extend the scope of the triangle in
termsof technical and application details. From these transla-tions
emerges a broader discourse that denes fraud asa problem that
fundamentally relates to malevolent actsperpetrated by individuals
whose morality is at best frailand at worst nonexistent. Thus, when
fraud examinerstalk about systems, the scope is tightly limited to
theboundaries of the organizations internal control system.In
short, the translations surrounding the fraud trianglepromote a
vision that condently individualizes fraud tothe point where a
stigmatizing judgment sometimes isreadily passed on moral deviants
who succumb to nan-cial pressures and make use of an organizational
opportu-nity in order to remorselessly defraud their
employingorganization. The latter is rendered accountable in
theprocess, being enlisted in establishing a proper
controlstructure around fraudulent risk. As a result, both
individ-ual and organization are likely to share blame
whenfraudulent behavior takes place in a given
organizationalsetting.the risky individual and vigilant
organization: A genealogy of thei.org/10.1016/j.aos.2014.01.006
-
Building a network of support to naturalize the triangle
Our analysis indicates that the ACFE houses the mainarchitects
of the initial fraud triangle concept. After work-ing for the FBI
for about ten years, Wells started a profes-sional service rm in
1982, specializing in frauddetection and prevention. Wells founded
the ACFE a fewyears later, in 1988. The ACFEs mission is to reduce
theincidence of fraud and white-collar crime and to assistthe
Membership in fraud detection and deterrence.11 Asof May 2011, the
Association comprised over 55,000 mem-
examination practices, while its website indicates a
researchunit comprising nine staff members (May 2011), as well as22
faculty members described as some of the mosthighly-rated speakers
in the anti-fraud profession.17 TheACFEs efforts in developing a
formal and practically-ori-ented knowledge base are numerous for
instance throughthe creation of the Institute for Fraud Prevention,
describedas a coalition dedicated to multi-disciplinary research,
edu-
10 J. Morales et al. / Accounting, Organizations and Society xxx
(2014) xxxxxxbers (65,000 in April 2013) with more than 30,000
beingCFEs and the remainder being students and associate
mem-bers.12 Certication implies passing a compulsory examina-tion
and completing two years in a fraud detection orprevention-related
position. CFEs key abilities reportedlyinclude identifying an
organizations vulnerability to fraud,examining records to detect
and trace fraudulent transac-tions, conducting interviews to obtain
information, and giv-ing advice on improving fraud prevention and
deterrence.13
The ACFEs formal body of knowledge comprises a mix
oftheoretical, methodological and deontological elementsrelating to
accounting/auditing, information technology,criminology, ethics,
fraud investigation/schemes, interview-ing skills, and law.14
Apparently, CFEs are held in high re-gard; statements by
representatives of Robert HalfInternational, the U.S. Department of
Defense and the U.S.Government Accountability Ofce attest to
this.15
The ACFE uses an extensive network of resources topromote the
claim that it possesses a formal body ofknowledge derived from
criminology, in the hope of secur-ing its jurisdiction and, at the
same time, legitimizing itsviews on the essence of fraud and how it
should be con-trolled. Every year since 1989, the ACFE has
bestowedthe Cressey Award for a lifetime of achievement in
thedetection and deterrence of fraud on a member who
bestcontributed to the ght against fraud. The Award isnamed in
honor of one of the countrys foremost expertson fraud and a
founding father of the ACFE, Dr. Donald R.Cressey (Association of
Certied Fraud Examiners (ACFE),2013).16 Further, the ACFE organizes
annual conferenceswith each of the latest ones reportedly
attracting over2000 attendees. Roughly every two years, it
publishes anextensive survey report entitled, Report to the
Nation(s),which draws on information from a large sample of CFEsto
provide an approximation of the cost of fraud in the econ-omy and
detailed knowledge on fraud types and perpetra-tors. The ACFE also
publishes the Fraud Magazine, abimonthly publication on
white-collar crime and fraud
11 Read on April 12, 2013 on www.acfe.com/who-we-are.aspx.12
Taken from an e-mail communication with one ACFEs memberservices
representative (May 23, 2011).13 Read on May 25, 2011 on
www.acfe.com/documents/press-kit/acfe-certied-fraud-examiners.pdf.14
Read on April 12, 2013 on www.acfe.com/self-study-cpe.aspx.15 Read
on May 25, 2011 on www.acfe.com/documents/about-acfe.pdf.16 It is
worth noting that Cressey died in 1987, about one year before
thecreation of the ACFE (Wells, 1997, p. 22). According to Wells,
Cresseyexpressed, during a conversation with him, the idea that it
was time for anew type of corporate cop one trained in detecting
and detecting thecrime of the future: fraud (Wells, 1997, p.
22).Please cite this article in press as: Morales, J., et al. The
construction offraud triangle. Accounting, Organizations and
Society (2014), http://dx.docation and prevention of fraud and
corruption.18 The ACFEhas been particularly involved in
disseminating its represen-tations in colleges and universities
through an anti-fraudeducation partnership in which institutions
are encouragedto develop a course on fraud examination, using
extensiveeducational material that the ACFE provides
free-of-charge.In 2010, nearly 400 post-secondary institutions
worldwidereportedly took advantage of this opportunity
(Carozza,2010).
Typically, books, articles and documents produced byWells and
the ACFE are peppered with survey results. Thisgives the impression
that the fraud examination eld iscommitted to building a knowledge
base predicated onmethodologically rigorous and generalizable
knowledge(as opposed to the production of knowledge focused
oncontextualizing). This kind of rhetoric is increasinglyappealing
given the emphasis on generality, mobility, com-parability and
standardization in todays society (Porter,1995; Reed, 1996). The
ACFE has continued and expandedits categorizing endeavors,
producing several Reports to theNation(s).19 In the 2010 Report to
the Nations, informationobtained from a sample of CFEs, who
documented a totalof 1843 cases of occupational fraud, is presented
in numer-ous graphs and gures (ACFE, 2010). One of the most
pecu-liar aspects of the Report is how far claims go to provide
asense of effectiveness regarding some of the anti-fraud
tech-niques advocated by the ACFE. For instance, the
followingexcerpt describes a type of effective intervention:
The ability to report fraud anonymously is key becauseemployees
often fear making reports due to the threatof retaliation from
superiors or negative reactions fromtheir peers. [. . .] One would
expect that the presence ofa fraud hotline would enhance fraud
detection effortsand foster more tips. This turns out to be true.
As seenon page [x], the presence of fraud hotlines correlatedwith
an increase in the number of cases detected by atip. In
organizations that had hotlines, 47% of fraudswere detected by
tips, while in organizations withouthotlines, only 34% of cases
were detected by tips. Thisis important because tips have
repeatedly been shownto be the most effective way to catch fraud.
[. . .] Perhapsmore important, [. . .] organizations that had fraud
hot-lines suffered much smaller fraud losses than organiza-tions
without hotlines. (ACFE, 2010, p. 17)
17 R e a d o n M a y 2 5 , 2 0 1 1 o n www . a c f e . c om / a
b o u t /faculty.asp?copy=faculty.18 Excerpt from www.theifp.org/
May 25, 2011.19 The 2010 Report is the rst in the series whose data
is drawn from fraudcases not constrained to the USA hence the use
of the term nations. Thissuggests that the Association is
increasingly involved on the transnationalscenery, along entities
such as the International Federation of Accountantsand the
International Accounting Standards Board.the risky individual and
vigilant organization: A genealogy of
thei.org/10.1016/j.aos.2014.01.006
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J. Morales et al. / Accounting, Organizations and Society xxx
(2014) xxxxxx 11Knowledge on the effectiveness of control
mechanismsis required for sensible intervention to take place,
therebyputting pressure on organizations to adopt such mecha-nisms
otherwise they may be viewed as negligent. Signif-icant energy is
also devoted to the development of formallists of symptoms and
other tools designed to help recog-nize fraud. Diverse categories
of symptoms have beenidentied: accounting anomalies, extravagant
lifestyles,and a psychologically-predicated category, namely,
unu-sual behaviors:
Research in psychology indicates that when people(especially
rst-time offenders, as many fraud perpetra-tors are) commit a
crime, they are overwhelmed by fearand guilt. These emotions
express themselves in anextremely unpleasant physical response
called stress.Individuals then exhibit unusual and recognizable
cop-ing mechanisms. [. . .] People who are normally nicebecome
intimidating and belligerent. People who arenormally belligerent
suddenly become nice. (Albrecht& Albrecht, 2004, p. 99)
Coping mechanisms include insomnia, unusual irritabil-ity,
inability to relax, inability to look people in the
eyes,defensiveness, sweating and increased smoking (p.
100).Consequently, fraud investigators are encouraged to bealert to
any behavioral changes surrounding them. Yetthe art of the skilled
examiner is to separate the wheatfrom the chaff, which is
recognized as being challenging(Albrecht & Albrecht, 2004, p.
103) given the impact ofunwarranted investigations on the examiners
reputationand the professional liability potentially involved:
In putting forward your best efforts to detect fraud,youll be
tempted to try too hard sometimes. You willweigh in your mind
whether you should take an unau-thorized look at the suspects bank
account; youll wres-tle with the dilemma of whether to secretly
check thefraudsters credit records. Dont do it. Overreaching
aninvestigation or fraud examination is the quickest wayto ruin it.
Not only will you be unsuccessful in provingyour case, you will
subject yourself to possible criminaland civil penalties. (Wells,
1997, p. 427)
Following the example of nancial auditing (Power,1994), but
perhaps in a more pronounced way, the fraudexpertise discipline
supports a climate of suspicion; it isas if to secure their
jurisdiction, fraud specialists seek to re-mind people,
organizational decision-makers especially, ofthe threat of fraud
being constantly present in their sur-roundings. The concluding
sentence in Wells (1997, p.528) book is particularly revealing in
this respect: Andsince most people dont start their careers to
become liars,cheats, and thieves, it is the fraud examiners job to
ensurethey do not end up that way. That is, there is a potentialfor
everyone to become a fraudster if the surrounding con-ditions,
especially those within the organization, are con-ducive to this
type of behavior. In a similar way:
Past research has shown that anyone can commit fraud.Fraud
perpetrators usually cannot be distinguishedfrom other people by
demographic or psychologicalcharacteristics. Most fraud
perpetrators have prolesPlease cite this article in press as:
Morales, J., et al. The construction offraud triangle. Accounting,
Organizations and Society (2014), http://dx.dothat look like those
of other honest people. (Albrecht& Albrecht, 2004, p. 18)
Such generalizing statements, however, mix with riskproling
statements in ACFEs discourse. Fraud risk is bothwidespread and
related to certain categories of people.Probabilistically, everyone
is tied to some likelihood ofcommitting fraud yet it appears that
the likelihood ishigher for certain proles. As such, the
categorizingschemes institutionalized in the discipline emphasize
thethreat of specic categories of individuals more likely toact in
immoral ways: former prisoners, drug users, gam-blers, etc.
Suspicion is, therefore, especially targeted to-wards certain
categories of individuals, reecting somedeeply-ingrained beliefs
that have historically stigmatizedcertain groups in society
(Goffman, 1963). Further, somedata points to specic categories of
employees as beingmore likely to be involved in fraudulent cases,
while indi-rectly suggesting that fraud risk permeates every
organiza-tion since these categories apply everywhere:
The six most common departments in which fraud per-petrators
worked were accounting, operations, sales,executive/upper
management, customer service andpurchasing. Collectively, these six
departmentsaccounted for 77% of all cases reported to us. As
thechart on the following page illustrates, the distributionof
cases based on the perpetrators department wasremarkably similar to
the distribution in our 2010study. (ACFE, 2012, p. 51)
The general impression that emerges from the materialwe analyzed
is one of doubt and wariness that every em-ployee, citizen or
corporation might harbor wrongdoing.Fraud, as conceptualized
through the lens of the fraudtriangle and its intellectual
ramications, can occur every-where. Yet some individuals are
riskier than others. This iswhy, as the rhetoric goes, fraud can be
everywhere;abnormal gestures or words should be construed
assymptoms of fraud. Along these lines, Wells (1997, p.511) weaves
wider webs of suspicion:
The cases we have seen on the preceding pages were, byand large,
on the extreme edge of abusive conduct byemployees. In short, this
data is merely the tip of theiceberg. How deep and massive that
iceberg is variesfrom one organization to another, depending on a
com-plex set of business and human factors. [. . .] Obviouslythe
more rules within the organization, the moreemployees are likely to
run afoul of them. [. . .] Tom R.Tyler, in his book Why People Obey
the Law concludedoverwhelmingly that individuals obey only laws
theybelieve in. If a rule makes no sense to the employees,they will
make their own.
In the above quotation, Wells employs a series of per-suasive
tactics in arguing that fraud constitutes a massiveorganizational
problem that must be addressed. The meta-phor of the iceberg is
interesting, since it surrounds fraudwith images of vastness and
uncertainty. The clear-cuttone Wells uses is also noteworthy:
employees willundoubtedly tend to break rules that do not makesense
to them, if they have the opportunity to do so. Thisthe risky
individual and vigilant organization: A genealogy of
thei.org/10.1016/j.aos.2014.01.006
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12 J. Morales et al. / Accounting, Organizations and Society xxx
(2014) xxxxxxuncompromising assertion is authoritatively
supportedwith a reference to a book written by an academic
(Tyler,2006) specializing in psychology and law. Consistent
withthis stance, organizations that are passive in terms
ofimplementing specialized approaches and recipes aimedat
controlling the risk of fraud are rmly criticized withthe benet of
hindsight and wisdom:
If there is a lesson to be learned here, it is that
auditfunctions are in place for a reason and should neverbe
overlooked. Unfortunately for the [defrauded] chari-table
organization, they were reminded of this lessonthe hard way.
(Wells, 1997, p. 156)
Not only does the triangle offer a scheme to explainwhy fraud is
committed, but it also provides a basic tem-plate for intervention
thereby rendering the organizationresponsible for establishing a
proper internal control struc-ture. The following metaphorical
analogy explicitly estab-lishes a central linkage between fraud
explanation andintervention:
Fraud resembles re in many ways. For a re to occur,three
elements are necessary (1) oxygen, (2) fuel, and(3) heat. These
three elements make up the re trian-gle, [. . .]. When all three
elements come together, thereis re. Fireghters know that a re can
be extinguishedby eliminating any one of the three elements. [. .
.] Aswith the elements in the re triangle, the three ele-ments in
the fraud triangle are also interactive. Withre, the more ammable
the fuel, the less oxygen andheat it takes to ignite. [. . .] With
fraud, the greater theperceived opportunity or the more intense the
pressure,the less rationalization it takes to motivate someone
tocommit fraud. [. . .] People who try to prevent fraud usu-ally
work on only one of the three elements of the fraudtriangle
opportunity. Because fraud-ghters generallybelieve that
opportunities can be eliminated by havinggood internal controls,
they focus all or most of theirpreventive efforts on implementing
controls and ensur-ing adherence to them. (Albrecht & Albrecht,
2004, pp.20-21)
One of the key implicit messages in the above excerpt isto make
the organization accountable for reining in the riskof fraud. As
any responsible community cannot leave reunattended, any
responsible organization must establisha proper structure of
control around fraud; a failure to doso is bluntly viewed as
carelessness. In this way, fraud spe-cialists promote the obvious
necessity of their expertise,which is presented as making a
difference in dealing withproblems that can have dire consequences
on the negligentorganization. It should not be surprising, then, to
see fraudexamination being highlighted as a growing
careeropportunity:
As the number of frauds and the amounts of fraudlosses increase,
so do the opportunities for successfulcareers in fraud-ghting. In
fact, just recently, U.S. Newsand World Report identied fraud
examination as oneof the fastest growing and most nancially
rewardingcareers. The American Institute of Certied
PublicAccountants recently touted fraud examination/fraudPlease
cite this article in press as: Morales, J., et al. The construction
offraud triangle. Accounting, Organizations and Society (2014),
http://dx.doauditing as one of the six fastest growing andmost
prof-itable opportunities for accountants (Albrecht &
Albr-echt, 2004, pp. 13-14).
Further, the ACFE maintains that to establish a propercontrol
structure, the organization should set up an appro-priate control
environment:
Having an effective control structure is probably thesingle most
important step organizations can take toprevent and detect employee
fraud. [. . .] The controlenvironment is the work atmosphere that
an organiza-tion establishes for its employees. The most
importantelement in an appropriate control environment is
man-agements role and example. There are numerousinstances in which
managements dishonest or inappro-priate behavior was learned and
then modeled byemployees. (Albrecht & Albrecht, 2004, p.
27)
The emphasis on control environment is presented asbeing
experientially supported. The bar is set very highfor top managers,
who should ensure not only thatappropriate control mechanisms are
establishedthroughout the organization, but that they
behaveappropriately at all times. Any temporary deviance fromthe
dominant set of moral prescriptions is viewed ashaving the
potential to engender dire cultural conse-quences, given the
presumed behavioral isomorphismowing from top to bottom in the
organization. Thepoint is that considering control issues seriously
andmeticulously is a key attitude that top managers shouldmanifest
at all times.
One of the key points to retain from our analysis thusfar is
that, by formulating a knowledge claim groundedin what is
represented as uncontroversial, fraud specialistslegitimize and
disseminate a peculiar discourse aboutwhat fraud is, what its
causes are, and who is responsiblefor controlling it. The triangle
is represented as the coreof fraud examination expertise,
surrounded with a constel-lation of applied knowledge renements to
ensure thatfraud examination expertise can be meaningfully used
inconcrete situations. This constellation is always
underdevelopment, consistent with the image of a discipline
thatgenuinely aims for continuous progress in its quest todominate
fraud. It focuses on character traits of perpetra-tors,
probabilities associated with fraud risk, and controlmechanisms to
be implemented within organizations.One of the main emphases is
that the fraud problem can,and should, be controlled by the
organization throughthe implementation of well-tried anti-fraud
techniques although the limitations of fraud control are
sometimesprudently recognized in ACFE rhetoric, perhaps in an
at-tempt not to set the audiences expectations of effective-ness at
an excessively high level:
The dream of many in the accounting community is todevelop new
audit techniques which will quicklyand easily point the nger of
suspicion. To those inno-cent souls, good luck. Regardless of the
ability of com-puters to automate a great deal of drudgery, there
areno new audit techniques, and there havent been anyfor the last
several centuries. (Wells, 1997, p. 526)the risky individual and
vigilant organization: A genealogy of
thei.org/10.1016/j.aos.2014.01.006
-
The chains of translations produced around the fraudtriangle
thus attempt to build a network of support arounda notion of fraud
highlighting the responsibility of individ-ual morality and the
necessity to build vigilant organiza-tions. In the next section, we
examine how this networksubsequently escaped the limits of fraud
examination
J. Morales et al. / Accounting, Organizations and Society xxx
(2014) xxxxxx 13and colonized other elds of intervention.
Moving downstream in the chain of translations:extending the
network
Intermingling with the AICPA
The fate of any claim, including knowledge claims, liesin others
hands (Latour, 1987). The ACFEs claim to exper-tise, grounded in
the imagery of the triangle, spread be-yond its connes, thus
extending the chain oftranslations to surrounding communities. In
particular,the following auditing standards were inspired by
ACFEswork, although none of them explicitly mentions thefraud
triangle: Statement on Auditing Standards 99,Consideration of Fraud
in a Financial Statement Audit,introduced by the AICPA to replace
SAS 82 after the intro-duction of the Sarbanes-Oxley Act in the
United States(American Institute of Certied Public Accountants
(AIC-PA), 2002); and International Standard on Auditing 240,The
Auditors Responsibilities Relating to Fraud in anAudit of Financial
Statements (IFAC, 2006).20
In these standards, fraud risk factors are grouped inthree
conditions that indicate incentives/pressures to per-petrate fraud,
opportunities to carry out the fraud, or
atti-tudes/rationalizations to justify a fraudulent action(AICPA,
2002, paragraph 31, p. 16; see also IFAC, 2006, par-agraph 24,
section A25, p. 174). As in Wells writings(1997), the non-shareable
nancial problem has disap-peared and been replaced by an incentive
or pressure tocommit fraud, while the notion of rationalization is
linkedwith that of attitude, thus shifting closer to the idea of
indi-vidual morality:
Three conditions generally are present when fraudoccurs. First,
management or other employees have anincentive or are under
pressure, which provides a reasonto commit fraud. Second,
circumstances existforexample, the absence of controls, ineffective
controls,or the ability of management to override
controlsthatprovide an opportunity for a fraud to be
perpetrated.Third, those involved are able to rationalize
committinga fraudulent act. Some individuals possess an
attitude,character, or set of ethical values that allow them
toknowingly and intentionally commit a dishonest act.However, even
otherwise honest individuals can com-mit fraud in an environment
that imposes sufcientpressure on them. The greater the incentive or
pressure,the more likely an individual will be able to
rationalize
20 This is not the only inuence that Cressey had on auditing
practices: healso participated (with Charles Moore) in a study
commissioned by PeatMarwick & Mitchell whose ndings, submitted
in 1980, underscored theimportance of tone at the top (Cressey
& Moore, 1983).Please cite this article in press as: Morales,
J., et al. The construction offraud triangle. Accounting,
Organizations and Society (2014), http://dx.dothe acceptability of
committing fraud. (AICPA, 2002,paragraph 7, p. 8)
Readers may nd this translation of Wells work by theAICPA (and
the International Federation of Accountants IFAC) rather
surprising. To begin with, the transpositionto accounting fraud is
not questioned:
Even if Cresseys ndings for embezzlers were valid,there is
little evidence to support the fraud triangle asa general theory of
nancial crime. The convoluted con-nection between Other Peoples
Money and SAS No. 99suggests that the endorsement of the fraud
triangle bythe AICPA occurred without serious consideration ofother
criminology perspectives. (Donegan & Ganon,2008, p. 3)
Second, in contrast with Cressey (1953) giving lessweight to
opportunity, the notion that is central for boththe AICPA and IFAC
is, indeed, that of opportunity, whosedimensions are close to those
of internal control. Third,replacing the concept of a non-shareable
nancial problemwith those of incentive and pressure means that the
iden-tication of factors that may have led the individual tocommit
fraud, is pushed even further into the background.The notion of
incentive is based on the idea that the fraud-ster has a reason to
commit fraud. Finally, rationalizationis overshadowed by an
attitudinal stance that is prone tocommitting fraud: individuals
with a character or set ofethical values which allow them to
knowingly and inten-tionally commit a dishonest act. This
reintroduction ofmoral traits, anchored relatively permanently in
the iden-tity of individuals, as an explanation for fraudulent
behav-ior is far removed from the spirit of many writings
incriminology, including those of Cressey and Sutherland.
This redenition of the three branches of fraud identi-ed by
Cressey allows us to better understand the defor-mation mechanisms
at work in the translation ofcriminology research, such as it was
redeployed in thefraud examiner and auditing community. The notion
of anon-shareable nancial problem has been replaced withthose of
incentive and pressure, and perception of opportu-nity with a
failure in internal controls. These changes arenot only a matter of
replacing subjective, hard-to-observeelements with procedures in
documentation and measure-ment that have already been mastered and
put in place;they also imply subjecting any effort to understand
thecauses of fraud to the will to manage the related risks.Cresseys
causal view has been abandoned in favor of thenotion of risk.
For example, in their appendices the two standards pro-vide
examples of risk factors for fraud that are very similarto what was
presented in previous standards, but this timethey are organized
systematically according to the threedimensions of the triangle.
They are also separated intotwo parts: the risk factors relating to
misstatements aris-ing from fraudulent nancial reporting (AICPA,
2002, pp.4448; IFAC, 2006, pp. 186189) and the risk factorsrelating
to misstatements arising from misappropriationof assets (AICPA,
2002, pp. 4850; IFAC, 2006, pp. 189191). The former concern
accounting fraud and can beattributed more to the behavior of top
managers, whereasthe risky individual and vigilant organization: A
genealogy of thei.org/10.1016/j.aos.2014.01.006
-
the latter concern individuals or groups of individuals
whodefraud their employer for their own benet; these arewhat
Cressey (1953) calls embezzlement. The incentivesidentied for
accounting fraud relate to the highly compet-itive environment of
the organization, the pressure facedby managers to reach nancial
targets and the nancialstake that executives may have in their
organization.Opportunities relate to the complexity and lack of
trans-parency in the organizations operations and to decien-
their professional jurisdiction, while accounting and audit-ing
professional associations were trying to reassert,through the
triangle, their legitimacy as guardians of trustafter accounting
fraud scandals. Although these groupsarguably had different views
on how and why to use thefraud triangle, they shared an interest in
promoting itand its underlying vision of fraud.
All in all, it appears that the turning point in the early2000s
created a context that was favorable to an increaseduse of the
fraud triangle. As such, our analysis indicatesthat the triangle
has become an important concept inestablishing jurisdiction over
fraud and in making theorganization responsible for the control of
its membersmoral deviancies. Of course, instances of triangle use
arenot limited to mere diffusion; the chains of translations
ex-tended beyond the ACFE community. Now, we trace, inmore detail,
the web of downstream translations, usingthe 64 articles that we
identied (mostly in academic/edu-cational journals but also in a
number of professional andhybrid journals) as specied in our
research methodssection.
Justifying the emphasis on internal control
A number of recent articles incorporate the fraud trian-gle
within the core of their argument. Some articles aim to
14 J. Morales et al. / Accounting, Organizations and Society xxx
(2014) xxxxxxcies in internal controls. Rather tricky to observe,
theattitude of management may be evaluated by examiningits level of
commitment and communication on ethical val-ues, the attention paid
to short term results and its ten-dency to commit to unrealistic
nancial forecasts.21
As stated in the standard, fraud risk factors do not
nec-essarily indicate the existence of fraud; however, they of-ten
are present in circumstances where fraud exists(AICPA, 2002,
paragraph 31, p. 16; see also IFAC, 2006,paragraphs A23A27, p.
161).22 Like the symptoms of a dis-ease, the presence of risk
factors implies that one must beconscious of the possibility of
fraud, even though no causalrelationship can actually be
established between fraud andthe underlying risk factors. Since
risk, by denition, canmaterialize anytime, the standards tend to
promote a cli-mate of suspicion justifying the reinforcement of
organiza-tional surveillance.
Our analysis also indicates connections between theACFE and
auditing standard setters. Indeed, Wells partici-pated in drafting
an exhibit (Management AntifraudPrograms and Controls. Guidance to
Help Prevent, Deter,and Detect Fraud) associated with SAS 99
(AICPA, 2002,pp. 5777) and issued jointly by different
associations,including the ACFE. Further, SAS 99 recommends
callingin fraud examiners identied as key participants in
theantifraud effort to work with the organizations adminis-trators
and auditors (AICPA, 2002, pp. 59; 76). This alliancebetween two
associations must be placed within the con-text of the nancial
scandals of 20012002:
When the AICPA belatedly recognized the need to con-sider why so
many accountants were committing fraudthey turned to the ACFE,
which, in effect, meantembracing Cresseys perspective. Adopting the
programof a group of dedicated fraud ghters was doubtlessly auseful
way to burnish the professions tarnished imagein 2002. The triangle
had the added advantage ofexplaining fraud as the action of a loner
driven by need,taking advantage of a lack of internal control. Thus
thedeterrent to fraud was more internal control, and thesearch for
the culprit could focus on individual offend-ers, not on the
culture that may have encouraged andrewarded their actions.
(Donegan & Ganon, 2008, p. 3)
21 We see here how auditing standard-setting bodies translate
thetriangle into actionable knowledge which gives them power over
reality.Through various problematization and categorization
proce