Explain The Factors That Could Influence To Employ
Explain The Factors That Could Influence To Employ
It is commonly accepted that the presence of the three elements of the Fraud Triangle
increases the risk of employee fraud. First is perceived pressure. The employee is
somehow motivated to commit a fraud. Economic factors such as personal financial
distress, greed, feeling job dissatisfaction, living beyond ones means, or other similar
addictive behaviors may provide motivation. In this case, Mr Praveet is facing financial
pressures due to his lavish lifestyle that he owns a luxury apartments and cars. The
company faces trading losses when he manages the fund. There were many of large value
trades were completed on the same day and time resulting losses to he company. The
auditor discover that he commits the fraud through cross-deal method in which he
brought and sold loss-yielding trades simultaneously through two brokers. He then erased
all the relevant trade folders before resigned.
Next, is opportunity. Opportunity is when someone believes that they have a favorable or
promising combination of circumstances to commit an undetectable fraud. The factors
that could increase this opportunities are lack of circumvention of internal control that
prevent or detect fraud, apathy, ignorance and lack of audit trail. In this case, Mr Praveet
has the opportunity to commit fraud because of the family relationship that he had with
Mr Rajesh. Besides, this company has lack of segregation of duties . Mr Praveet is the
only person that has complete authority to invest the money and maintain record-keeping.
There should be multiple employees involved in different phases of a transaction to
prevent the fraud from occurring.