Why Do People Commit Occupational Fraud?

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One of the toughest things for a business owner to do is hire employees, you are trusting your “baby” to someone you don’t even know personally in most cases.

So, why in the world would someone even consider stealing from the very person who feeds them or whose dream you are helping to support?  It’s a question that every single person is asked who has committed occupational fraud. 

The fraud triangle keeps it super simple. When people have personal pressure, they can mentally rationalize why they deserve whatever it is they are stealing and they have the opportunity. That is the perfect recipe for a disaster and the perfect stage for the crime to be committed.

I have been involved in a case, first hand, where absolute strangers come into a business and are assigned a financial-related responsibility, only to steal small amounts of funds from the company. One is inclined to ask:

  • Are they doing drugs?
  • Do they have personal debt?
  • Are they in a mentally abusive relationship?
  • Are they bouncing from company to company in order to obtain financial “success”? 

These questions are easy to ask, but difficult to answer. Whatever the answer is, the perpetrator typically does not have any “skin in the game.”

They are not related to the business owner, they don’t have a relationship with anyone at the company. They are simply there and likely in a negative personal situation. As a result, they resort to committing a crime.

But what about a case of occupational fraud whereby the perpetrator is a son, a mother, a brother or some family member that no one ever imagined would commit such a thing? 

I know of a father who entrusted his plumbing business to his son and his wife. Their life seemed great, until the IRS came knocking and the payroll tax money had been stolen by the daughter-in-law so that they could buy a new home. The father was devastated and even worse, he was still on the hook for the tax payments.

The hardest statistic for me to swallow is that 96 percent of the people who commit occupational fraud are first-time offenders. That number is astounding! It means that people who had never considered doing such a thing felt they had to because they either had pressure in their lives, were able to rationalize it and even believed they deserved it or that they had an opportunity due to a lack of internal controls. 

Regardless of why these people commit fraud, we as accounting professionals have a duty to help our clients protect themselves from any of the reasons above. Our clients put their entire lives on the line to provide for their families and for the families of their employees. We owe them a conversation and education about this terrible crime that occurs more often than most people are willing to admit.

Next week: Who is Most Likely to Commit Fraud

About Dawn W. Brolin, CPA, CFE

Dawn W. Brolin

Dawn is a Certified Public Accountant, Certified Fraud Examiner, and CEO of Powerful Accounting, LLC.  Powerful Accounting is a nationally recognized accounting, tax, forensic and fraud, IRS and State Agency audit professionals as well as a QuickBooks consulting firm. Recently, Powerful Accounting has partnered with Anderson, Brolin & Coba CPAs, LLC – a powerhouse tax preparation, consulting and wealth management firm, where Dawn is a partner.  Dawn also founded, Your Turn, LLC, which specializes in application consulting and implementation for small businesses.

Dawn’s list of professional accomplishments is extensive and includes speaking and consulting for prestigious companies such as Intuit, TSheets by Intuit, Finagraph, SmartVault, Skyline Cloud Services, Mike Michalowicz, Tory Johnson, MSNBC, SEEMA, AbacusNext, The Woodard Group, and many more.  Named “Top 25 Most Powerful Women in Accounting” 2012-2017 by CPA Practice Advisor, a “Top 10 Managing Partner Elite – Great Accounting Firm Leader” in 2017 by Accounting Today, and selected as a “Top 40 Under 40” by CPA Technology Magazine in 2009. Dawn continues to pursue excellence with the support of her amazing Team at Powerful Accounting. 

Dawn has been featured on MSNBC “Your Business” and has spoken at Intuit’s QuickBooks Connect, Scaling New Heights, Sleeter Conference, TD Bank North locations, Tory Johnson’s Small Business Spark and Hustle Tour, Live Your Legacy Summit, and many more.  Her commitment to continuing education motivates her to teach regularly to bring new techniques and processes to the accounting community.

Professionals seek out Dawn W. Brolin, CPA, CFE and her educational keynotes, webinars and articles.  They enjoy her energetic and humorous delivery as well as the action ability and depth of her content. 

Video of Dawn W. Brolin, CPA, CFE is available on YouTube: https://youtu.be/0olPvGhfF9M



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