The “Fraud Triangle” Explained Simply™

The fraud triangle is a concept explaining the drivers behind fraud. It consists of the following elements: opportunity, motivation, rationalisation.

Let’s use a simple example to put these into context.

Imagine that you own a very successful coffee shop located on a University campus. Since the business has grown dramatically in the last year, you realize you need some additional help and hire a person in their mid-30s, who has completed a barista course.

Every day at 14:30 you need to leave the shop, so that you can pick up your kids from school (those of you who have kids, know that this is a non-negotiable deadline). After you leave, the shop closes in 2 hours. At that time, the person working for you will count the cash in the till, take it to the local bank branch, deposit it into your account and give you the deposit slip on the next day. This is where opportunity comes in.

How do you know that the total amount cash in the till has been deposited in the bank? You don’t!

One way to prevent that is to have someone, other than your employee, count the cash, write the amount on a piece of paper that will be handed to you and then leave it up to your employee to deposit the cash and give you the deposit slip. This is what is called segregation of duties (… and it’s a topic…