The fraud triangle helps explain the motivation behind why an employee would commit fraud/steal from their workplace. Three components make up the fraud triangle: opportunity, pressure, and rationalization. When all of these components exist, there is a high likelihood that fraud will be committed. Similarly, this can signal that fraud has already occurred or maybe ongoing. Seldom are frauds committed spur of the moment. Typically, they are deliberately planned and executed. Sides of the … [Read more...] about What is the Fraud Triangle?
Collusion the accounting definition
Collusion is when two or more people or businesses get together and plan to benefit themselves financially or politically. Types of collusion Collusion can come in a variety of forms: Two or more employees work together to circumvent the segregation of duties and commit fraud.Due to management override abilities or authority, an employee may unknowingly be assisting in a fraud scheme.One employee feeds information to one or more non-employees to receive a kick-back.Two or more … [Read more...] about Collusion the accounting definition
What is Segregation of Duties and why are they important?
The segregation of duties is the distribution of tasks performed by individuals in a business place. Why is the segregation of duties necessary? By splitting tasks amongst several individuals, you reduce the risk of fraud. One side of the fraud triangle is opportunity. Placing proper segregation of duties in place limits an individuals' chance to commit fraud. Segregation of duties takes one task and divides the task into two or more phases, jobs, or components. No one individual should … [Read more...] about What is Segregation of Duties and why are they important?