TED-Ed: How people rationalize fraud - Kelly Richmond Pope

Fraud is a widespread issue, costing organizations trillions annually. The fraud triangle, developed by Donald Cressey, identifies pressure, opportunity, and rationalization as key factors. Common frauds include time sheet and tax fraud. High-profile cases like Parmalat and Rita Crundwell highlight the severe impacts of fraud, affecting jobs and public funds. Fraud is not victimless; it harms real people and society.

What are the three components of the fraud triangle?

• Pressure, Opportunity, Rationalization

• Need, Access, Excuse

• Desire, Means, Justification

• Greed, Opportunity, Justification

Which of the following is NOT an example of minor fraud?

• Fudging time sheets

• Over-billing insurance companies

• Fabricating a $4 billion bank account

• Failing to report cash earnings

What was the main reason Parmalat's fraud went unnoticed for so long?

• It was a publicly controlled company

• Corporate governance and regulator supervision were difficult

• The company had no financial losses

• The fraud was too small to be detected

How did Rita Crundwell manage to embezzle over $53 million?

• By failing to report cash earnings

• By over-billing insurance companies

• By diverting city funds to a private account

• By creating fake financial statements

What is a common misconception about fraud?

• It only affects large corporations

• It is a victimless crime

• It is always detected quickly

• It only involves large sums of money