Put My Experience To Work For You

Former Assistant District Attorney
Former Assistant U.S. Attorney

A company’s work environment may contribute to the fraud triangle

On Behalf of | Nov 25, 2020 | Federal Crimes

A great deal of responsibility falls on the shoulders of Mississippi business owners. Not only do you have to ensure that your company continues to operate properly, but you also have to ensure that your employees act in ways that represent the company in a positive way. If not, employees could begin to bend the rules in ways that lead to serious repercussions for them and the company as a whole.

In particular, it is possible for your company to come under investigation for fraudulent activities if an employee or multiple employees participate in questionable activities. In some cases, these employees may even blame their actions on the work environment, so you may want to learn more about the fraud triangle and how it could encourage fraud in your workplace.

What does the fraud triangle involve?

The fraud triangle is a tool that helps to explain why people may commit fraudulent activities. The three parts of the triangle include opportunity, incentive and rationalization. Now, you may wonder how the workplace could encourage any of these elements, and the following examples may help clarify:

  • Higher-ups in the company do not hold a high standard when it comes to being honest or ethical in their business dealings, which may set an example for those lower positions that they do not have to have to act with integrity either.
  • Lack of supervision or recordkeeping could open up opportunities for workers to commit fraud.
  • Offering incentives, particularly incentives based on sales, revenue or other financial metrics, could encourage workers to take questionable actions in hopes of reaching goals.
  • Mistreatment of employees could also lead to employees rationalizing their reasons for committing fraud, such as by saying the company deserves the trouble because of how it treated employees.
  • If higher-ups potentially carried out questionable behaviors, those in lower positions may rationalize that it is fine for them to do it, too.

Work environment can play a significant role in whether your company ends up under investigation for fraud or other similar crimes, and you could end up in a difficult predicament due to the actions of your workers.

What if you face an investigation?

If your company does come under investigation, you are in a serious situation. Fortunately, at the first sign of investigators probing into your company’s affairs, you could start taking defensive measures. Those measures could include discussing the matter with an experienced attorney who could assess the situation, help you determine your best defense options and guide you through the proceedings that may following.