When collusion meets the fraud triangle: a case study approach
| DOI | https://doi.org/10.1108/JFC-05-2021-0111 |
| Published date | 14 July 2021 |
| Date | 14 July 2021 |
| Pages | 805-815 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial crime |
| Author | Núria Villaescusa,Oriol Amat |
When collusion meets the fraud
triangle: a case study approach
Núria Villaescusa
Universitat Internacional de Catalunya, Barcelona, Spain, and
Oriol Amat
UPF BarcelonaSchool of Management, PompeuFabra University, Barcelona,Spain
Abstract
Purpose –The purpose of this paper is to explore how the different elements of the fraud triangle are
presentin a case of convicted accounting fraud in collusion.
Design/methodology/approach –This is a case studyresearch.
Findings –The authors find that when a fraud is carried out in collaboration of several internal and
external members of the company, the view of the fraud triangle as an explanation of the fraud from a
heuristic point of viewis a very limited perspective of the fraud as an opportunityhas been designed ad hoc
for the fraud commission.
Originality/value –Although there is a vast research on accounting fraud, collusion fraud is still an
unexploredarea. This study gives light on how a real case of fraud is perpetrated.
Keywords Fraud triangle, Case study, Collusion, Accounting fraud
Paper type Case study
1. Introduction
Since the 1950s, the academic world has been concerned about accountingfraud. But it is in
the last two decades that the topic has become particularly relevant, especially since the
financial scandals of the early 2000s, Enron, Worldcom and Tyco in the USA, Parmalat in
Italy, Martinsa-Fadesa, Gowex and Pescanova in Spain, to name a few examples. Numerous
researchefforts have focused on finding indicators as well as deterrencemechanisms of fraud
(Hogan et al.,2008 and Trompeter et al.,2012,for compilations of the existingliterature).
One of the most widely used models to explain accounting fraud in business, both
individual and corporate, has been the so-called “fraud triangle.”The fraud trianglewas the
result of the research carried out by Donald Cressey in early 1950s, an American
criminologist and sociologist, and set out in his book Other People’sMoney.Thisresearch
aimed to find the common elements of embezzlement. He interviewed some convicted
“financial”criminals to find out whatthey all had in common. The result waswhat we know
today as the fraud triangle; his theory states that all financial crime has three common
elements: theunshareable pressure to whichthe perpetrator is subjected by hisenvironment,
the opportunity he has to perpetrate the crime and the subsequent rationalization of his
behavior. Althoughthis theory was initially developed to explain the factors that motivated
an individual to commit embezzlement, researchers and regulators have expanded the
meaning of the fraudtriangle to incorporate manipulated and ultimately fraudulent financial
statements(Trompeter et al.,2012).
Following the accounting scandals of the early 2000s, when audit firmswereseriously
questioned, auditing standards were modified to specifically incorporate procedures related to
assessing the possibility of fraud in the company. Thus, in the International Auditing Standard
Collusion
meets the
fraud triangle
805
Journalof Financial Crime
Vol.29 No. 3, 2022
pp. 805-815
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-05-2021-0111
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