Banking-related Fraud Prevention

Capability Component of Fraud
About fraud and dishonest practices, Wolfe and Hermanson
(2004) describe individual’s capability as personal traits and
abilities that play a major role in deciding the conditions under
which fraud may occur even with the presence of the other three
elements. The other three elements being referred to are incentive/
pressure, opportunity, and attitude/rationalization as theorized by
Cressey (1953; 1950) in the theory of fraud triangle. According to
a 2014 global fraud survey by the Association of certied fraud
examiners, the banking, and nancial services, government and
public administration, and manufacturing industries continue
to lead in relation to the number of fraud cases reported in the
year. The report states that people holding executive positions in
the sector accounted for 19% of the fraud cases with a median
loss of $500,000. In contrast, employees accounted for 42% of
fraud cases with a median loss of $75,000 (ACFE, 2014. p. 4).
The literature reveals that the number of frauds cases involving
executive members was low compared to the frauds perpetrated
by low-level employees, the value of the fraud was far higher, a
situation that is attributed to the positions held by the perpetrators
of the scam. Prior literature shows that the fraud committed by
the executive normally involves collusion with employees in the
organization and evasion of antifraud controls (Cascarino, 2013;
Sengur, 2012).
According to Popoola (2014. p. 72), the Cressey’s elements of
fraud and Wolfe and Hermanson’s fraud diamond allude to the
conditions under which fraud may occur. Under the antifraud
profession’s response to prevention and deterrent, the probability
that a fraud may occur is synonymous with the establishment
of controls based on individual characteristics of measures,
constructs, and combinations of hazard (Dorminey et al., 2012).
Succinctly put, the capability is an essential part of what is known
as “perpetrators” and thus, a signicant ally to this study.