While calculations play an obvious role in any fraud investigation by an auditor, much more is needed for a successful outcome. It is vital to understand the context in which the fraud was committed from the perspective of the person committing the fraud; the motive to defraud may be more than financial.
Equally important are the factors at play in the fraudster’s life at the time the fraud began. What events or problems—divorce, gambling habits, or other addictions, for example—may have created the financial need that prompted the crime? Also, what kind of personality does the fraudster have? A deeper understanding of these factors may help explain the motives—particularly the timing and magnitude—of the problem.
Several personality types have emerged as key to identifying a fraudster. Roddy Allen (2003) described four personality types of fraudsters in his article “The Human Face of Fraud:”
- The Bully: Makes unusual and significant demands of those who work for him or her, cultivates fear rather than respect, rarely provides praise, will not accept criticism or direction, widely known to be difficult by his or her superiors and consequently avoids being subject to the same rules and procedures as others.
- The Egotist: On the surface driven to succeed at all costs, self-absorbed, self-confident and narcissistic, secretly craves the approval and admiration of others and is motivated by an overriding fear of failure.
- The Control Freak: As the name suggests, very controlling, refuses to complete his or her work in any other way, gets upset when procedures are not followed to the letter, overly protective or secretive of certain aspects of his or her work and perceives certain tasks as being solely his or her domain of responsibility.
- The Mouse: Mostly silent, not well-known to fellow employees, does not socialize with coworkers, fellow workers know little about this person or his or her family, keeps a very low profile and avoids conflict, but often seems to be almost a model employee in many respects.
For your initial post to this discussion, find an article or story about someone under investigation for fraud. Based on the information, complete the following:
- Give a brief overview of the story, including names and events.
- Identify into which of the four personality types this person seems to fall.
- Explain why you believe the fraudster falls into the personality type you selected. Provide examples from the story.