The Fraud Behavior From The Perspectives Of The Fraud Triangle: An Indonesian Case

Abstract

The purpose of this paper is to explore the fraud behavior from the perspective of fraud triangle. Based on the literature review and two samples of the fraud cases, it can be concluded that fraud happens when there are pressure, opportunity, and the rationalization. Sandhu (2016) states that strong ambition, personal financial problem, law problem, family problem includes unsatisfactory with current jobs are indicators that represent the pressure element in the fraud triangle theory. Meanwhile, Sanusi et al. (2015) find that internal control framework relates to opportunity element. Therefore, in the fraud triangle perspective, the opportunity is a loop hole for a fraudmaker in that internal control. The fraudmakers try to maximize their probability in doing the fraud among the existence of the internal control. However, the fraud triangle theory states that although all other two components of the fraud triangle have been existing, if there is not any rationalization in doing the fraud, the fraud will not happen. The two cases that have been explored in the paper confirm the importance of the rationalization as a crucial part of the fraud behavior. The fraudmakers use their justification in order to rationalize their fraud behavior. As the characteristic of the literature review is only focus on the theory and literature, which is limited only to describe the fraud behavior in the theoretical perspective, therefore the future research recommendation is implementing this literature review with the real research, which is exploring the fraud behavior and the rationalization of the fraudmaker by in-depth interview. Another recommendation for the future research is to elaborate the rationalization element of the fraud triangle theory.

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