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Why does accounting fraud occur?


Accounting fraud leads to many serious problem, it not only causes problem for the perpetrator, but also everyone around them. Accounting fraud causes problem in the market place and the economy. As a result in most cases, investors' loose large sum of money due to the misrepresentation of financial position and financial result of the company. Also, because of this, there is lack of trust in the market, accounting system, and in the company in which accounting fraud was committed from the investors. Employees in that company are at rest of losing their job because of the scandal. So the question remains, why does accounting fraud occur, knowing that it leads to serious problem? What is it that makes perpetrators compromise with these unethical behavior?


According to the textbook Fraud Examination by Steve Albrecht, fraud are triggered by three elements, the first being rationalization, perceived pressure, and lastly perceived opportunities. As shown in the circle in a triangular shape above. Whether the fraud benefits the perpetrator directly, or indirectly, such as benefiting the perpetrator’s company, the three elements are always present.

Rationalization- perpetrators find some sort of rationalization that makes their unethical behavior seem acceptable.


Perceived Pressure- perpetrators are faced with some kind of pressure, whether it be financial pressure, or executives pressure.


Perceived Opportunities- perpetrators see some sort of opportunity, such as promotion, otherwise they would not do it.




Fraud Examination, by  W. Steve Albrecht, Conan C. Albrecht, and Chad O. Albrecht