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Cressey opined that the nonsharable nature of the financial need was solely the perception of the individual involved and did not necessarily require any objective basis in fact. Thus the gambler who regularly loses more than he can afford
THEORIES OF OCCUPATIONAL FRAUD
might have either a sharable or nonsharable problem, depending on how he perceives it. Cressey then divided nonsharable problems into six subcategories:3
1. Violation of ascribed obligations. Simply put, this is the accumulation of debts, legitimate or otherwise, that the individual believes are incompatible with their social role(s) as husband, father, employee, friend, and so on, and, therefore, cannot be shared without embarrassment or loss of social standing.
2. Personal failure. While some issues in this category might be macroeconomic in nature (e.g., a recession), others are microeconomic and more intensely personal (e.g., poor investment decisions).
3. Business reversals. While similar to the personal failure category, Cressey here saw patterns of people willing to violate trusts to try to save a dying business.
4. Physical isolation. Some persons, faced with financial pressures, simply have, or perceive that they have, no one to turn to for help.
5. Status gaining. Some persons aspire to a certain station in life and want to associate with certain types of people. If their finances will not support these aspirations, they may view this as a nonsharable problem.
6. Employer-employee relations. Revenge is perhaps the dominant motive in these instances, where an employee believes he or she has been slighted and has no open or legitimate recourse to remedy the harm.
Dr. W. Steve Albrecht, trained as a Certified Public Accountant (CPA), is a researcher into occupational fraud and abuse and a person Wells credits with giving him some of the concepts necessary to start the Association of Certified Fraud Examiners.4 Working with other researchers, and funded by a grant from the Institute of Internal Auditors Research Foundation, Albrecht studied 212 frauds committed in the early 1980s, employing extensive questionnaires directed to internal auditors familiar with the incidents. One portion of the research concentrated on the motivations for the frauds in question, and yielded some likely characteristics: gambling and personal debts; a desire for personal gain coupled with dissatisfaction with compensation; chumminess with customers; a motivation to “beat the system;” and a fast and loose attitude toward rules.5
Wells notes the similarity of many of these motivators to what Cressey referred to as nonsharable financial problems, and concluded that Albrecht had found three primary elements to be present in the fraud causation: (1) a situational pressure (normally financial), (2) an opportunity to commit the fraud, and (3) a rationalization for committing the act.6 He notes that Albrecht and his colleagues found that “occupational fraud perpetrators are hard to profile and that fraud is difficult to predict.” He further notes, as of the date of his book, 1997, that “Albrecht’s research does not address—and no current research has been done to determine—if nonoffenders have many of the same characteristics.”7
The final study Wells cites is that of Richard C. Hollinger of Purdue University and John P. Clark of the University of Missouri, which was a federally funded study of 10,000 American workers. They, unlike Cressey and Albrecht, “concluded that employees steal primarily as a result of workplace conditions, and that the true costs of the problem are vastly understated”8 Hollinger-Clark did conclude, however, that five separate but interrelated sets of factors were significant in understanding occupational fraud. The first of these was external economic pressures, much like the unsharable financial problem that Cressey had hypothesized. The second hypothesis was that contemporary employees, especially younger ones (the study was published in 1983) were not as honest and hardworking as those of prior generations. The third premise was that any employee can be tempted to steal.9 The fourth hypothesis was that most employee theft was to some degree a result of job dissatisfaction. The fifth hypothesis was that theft occurs because of the broadly shared formal and informal structure, norms if you will, of the organization.10
Wells notes that Hollinger and Clark made several attempts to draw inferences from the data they had collected. They compared income levels with incidences of fraud and found no meaningful co-relations, other than one between a person’s concern about financial condition and the likelihood of resultant theft. This emphasis was repeated when respondents were asked to rank eight personal issues, such as health, educational issues, financial posture, and so on. They found that those who ranked finances as the first or second most important issue had higher incidences of theft as employees. They did note that there appeared to be few relationships as strong as that of youth and propensity to theft, hypothesizing that younger employees had less tenure and, therefore, less commitment to the victim organization.