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1. Risk factors research<br />

Reduce fraud risk factors and fraud triangles<br />

Risk Factors<br />

• Living beyond means<br />

• Financial difficulties<br />

• Control issues, unwillingness to share duties<br />

• Unusually close association with vendor/customer<br />

• Wheeler-dealer attitude<br />

• Divorce/family problems<br />

• Irritability, suspiciousness, or defensiveness<br />

• Addiction problems<br />

• Refusal to take vacations<br />

• Past employment-related problems<br />

• Complained about inadequate pay<br />

• Excessive pressure from within organization<br />

• Past legal problems<br />

• Instability in life circumstances<br />

• Excessive family/peer pressure for success<br />

• Complained about lack <strong>of</strong> authority<br />

Add<br />

Fraud Triangle<br />

• Pressure<br />

• Opportunity<br />

• Rationalization<br />

Fraud Committed<br />

• Asset Misappropriations<br />

• Corruption<br />

• Fraudulent Statement<br />

If it cannot reduce<br />

risk factors and<br />

fraud triangles<br />

Corporate<br />

Governance<br />

Risk factors<br />

finding from<br />

research<br />

2. Financial information<br />

and attitude & behavior<br />

surveys<br />

Important rules for<br />

fraud potential for<br />

each risk factor<br />

(data mining)<br />

3. System development<br />

Develop fraud<br />

deterrence model<br />

Develop fraud<br />

deterrence system<br />

Figure 2: Conceptual framework for fraud deterrence system in the organization<br />

Investigation report<br />

Investigation (Forensic<br />

accountant)<br />

Reasons for not<br />

validating<br />

Start<br />

Collect attitude and<br />

behavior survey and<br />

records<br />

Risk assessment process<br />

Evaluation validation<br />

process<br />

Validate<br />

Validation report<br />

Figure 3: Work flow process for fraud deterrence system<br />

www.theinternationaljournal.org > RJSSM: Volume: 01, Number: 10, Feb-2012 Page 91

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