Understanding the Financial Fraud

Abstract

This chapter aims to elaborate on the theory of fraud by enhancing the existing theories that force people to commit fraud. The chapter reviews the most commonly used and widely accepted models for explaining why people commit fraud: the fraud triangle, the fraud diamond, the fraud scale, and the MICE model. The author argues that these models need to be updated to adapt to the current developments and the ever-growing fraud incidents, both in frequency and severity. The chapter identifies a major element, ego/entitlement, which plays a crucial role in compelling people to commit fraud and builds on the theoretical background to conclude in the formation of the SCORE model, which is graphically depicted in the fraud pentagon. It goes further by adding the factor of collusion for its better application in cases of white-collar crimes.