Nonprofit finance, accounting, and tax news. Other tidbits of interest to the charity community.
As you can see from the previous posts, all three sides of the fraud triangle work together. A person has to have an opportunity to do something wrong combined with some sort of serious pressure along with a mindset to say that something that previously would have been wrong is now actually reasonable.
Lacking one side would stop the fraud. (more…)
When a person is rationalizing a situation to convince themselves that it is really okay to do something wrong, they are telling themselves “rational lies”. Okay, it’s an old joke. But “rational lies” tells the story in one phrase.
A theological description of rationalization can be found in Jeremiah 17:9, (more…)
Entertaining internet security and scam prevention story for you! Here is a fellow who made a mistake in everything he did all day long. Broke about every safety rule you can think of. Fun story of how to avoid getting scammed.
Everyone knows the days of working for one or two companies for your entire career are gone and will never return. That is even more true in the audit world. As a result, every one of us needs to take ownership of our personal brand (our reputation, our presence in social media, our career) and manage it. (more…)
The series of posts on the concept of fraud triangle have been pulled together into one page. This will allow you to read the series in chronological order, which should make it easier to follow the topic. You can find that page below the title bar, at the “fruad triangle” spot which is to the right of “about Ulvog CPA”.
We live in an age of overwhelming complexity. Things will not get simpler, the change will only accelerate.
Do I really need to explain that the complexity of everything is overwhelming? Consider merely the new 990, increasing regulation of every area of running a ministry or business, and the exponential growth of fantastic technology tools.
We need to decide whether we are going to adapt or not. It is actually possible to opt out of the growing complexity. Consider the cost though. If our ministries do not adapt they may die. More likely they will shrivel, then shrink into irrelevance. At a personal level, we need to adapt or get left behind.
I choose to adapt. I may be struggling and bumbling in my efforts, but I will move forward. How about you?
The final component needed to complete the fraud triangle is rationalization. This is the ability to persuade yourself that something you otherwise know is wrong is really OK. A lot of mental gymnastics are obviously needed to do so, but that is the point. If a person goes through those gymnastics, than what was wrong before is now acceptable. How can that happen? (more…)
Amongst the many dangers is that some motivations would be hidden from view in the workplace. Some of them, such as drinking or narcotics, would eventually show side effects in the workplace. Those factors could create visibility that would raise questions which in turn could in turn possibly result in discovery of the fraud. If that is the motivation, the plan could self-destruct fairly quickly.
It is very sad to read about the tragedies that take place. Immediately after posting the previous discussion of the motivation side of the fraud triangle, went to a blog I frequent. Have now added it to the blogroll on the right. Here is the article . It clearly illustrates the motivation factor. (more…)
Motivation is typically described as the pressure or incentive to commit fraud. When great pressure is brought to bear, people will do things you would have never thought possible. We used to illustrate this with someone who has a drinking problem or a gambling problem. Those illustrations of pressure don’t paint a good enough picture because you can’t drink enough (and still function) to create pressure to steal enough money to cause a severe problem. Let’s expand the picture. Long before someone with a drug problem deteriorates to the point of non-functioning, they can appear to function normally on the outside but have a need for so much money that the only way they could possibly feed their addiction is to steal from the ministry. (more…)
Remember that SSARS 19 makes a lot of changes to the review and compilation procedures. In terms of the reports, the entire report is changing – the wording is completely different.
Update – SSARS 19 had been replaced by SSARS 21. All the reports have been revised. You can check out these posts at my other blog, Attestation Update: