Understanding the fraud theories and advancing with integrity model

Published date25 August 2021
Date25 August 2021
Subject MatterAccounting & finance,Financial risk/company failure,Financial crime
AuthorShefali Saluja,Arun Aggarwal,Amit Mittal
Understanding the fraud theories
and advancing with
integrity model
Shefali Saluja,Arun Aggarwal and Amit Mittal
Chitkara Business School, Chitkara University, Punjab, India
Purpose The fraud landscape talks aboutthe existence of fraudulent activities and can be assessed with
the help of fraud literature.Taking this into consideration, this paper qualitatively revisitsthe famous fraud
triangle theory developedby Donald R. Cressey (1950) which is the most traditional theory to detect a fraud.
This paper aims to discuss various fraud models that have been extensions to fraud triangle theory and
reviews the factors that drive a corporate fraud. This study is divided into two phases. The rst phases
discuss the various theories which have been developed to detect and prevent corporate frauds in
organisations,and in the second phase the authors recognize integrityas a new extension to the basic fraud
theory. The integrity modelhas been introduced as fraud squarecontributing to the developmentof fraud
theory. Integrity plays a very important role in detecting corporate frauds, and this paper will act as a
theoretical benchmark for future references. The implication of this study would help future researchers,
academicians and practitionersto understand the fourth element of the fraud theory and would help improve
the professionalstandards of organisations and regulators.
Design/methodology/approach This paper revisits the literature in detail and reviews the most
acknowledged models to explain why people commit frauds”–the fraud triangle, fraud scale, the fraud
diamond, the ABC model, the MICE model and the SCORE model. The authorscontend that the traditional
models need to be modernized to acclimate to the current developments in the rapidly increasing fraud
incidents, both in occurrence and seriousness. Additionally, this paper builds on theoretical background to
generate new model so as to improve theunderstanding behind the major factors which lead to commitment
of frauds.
Findings The authors identify a major elementintegrity in the research. As per ACFE 2020, There
are more than 3.3 billion people in the global workforce, half of them takes illegal use of gains from the
organisation and some are discipled with integrity who does not cause any harm to the organisation.To
prevent fraud,integrity plays a very important role in organisations (Bakri et al.,2017). It has been found that
individuals withless integrity are basically specied to a greater level of mismanagement.The organisations
that have worked with integrity will improve performance at work and will always promote the best
employeesto work with less supervision.
Originality/value This paper develops the integrity model to contribute to the development of fraud
theory by identifyingthe key factors that play a major role in whether fraudwill actually occur and acting as
a theoreticalbenchmark for all future reference.
Keywords Fraud, Integrity, Opportunity, Rationalization, Fraud triangle, Corporate frauds
Paper type Conceptual paper
Association of Fraud Examiners was founded by Joseph T. Wells in 1988 and is a professional
organisation for fraud examiners. The organisation produces fraud information, tools and
The authors would like to acknowledge the Editorial team and reviewers who help us to improve the
overall quality of the paper.
Journalof Financial Crime
Vol.29 No. 4, 2022
pp. 1318-1328
© Emerald Publishing Limited
DOI 10.1108/JFC-07-2021-0163
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