When Numbers Don’t Add Up

CHAPTER 2

The Fraud Literature

The Fraud Triangle has been extensively applied by both researchers and regulators in order to prevent and detect fraud. Over the years, accounting researchers have updated the Fraud Triangle, resulting in extended models that purport to better understand the nature of fraud.

The three constituents of the Fraud Triangle (Pressure, Opportunity, Rationalization) have been successfully integrated by important regulators and professional bodies in the United States, where it is the bedrock of the

• •Association of Certified Fraud Examiners’ (ACFE) “Fraud Examiners Manual”;
• •the Public Company Accounting Oversight Boards’ (PCAOB) AU Section 316, “Consideration of Fraud in a Financial Statement Audit”;
• •and the American ...