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Fraud Triangle Theory and Fraud Diamond Theory. Understanding the Convergent and Divergent For Future Research

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  • Rabi’u Abdullahi
  • Noorhayati Mansor

Abstract

Many of the world’s most prominent organizations have experienced large-scale frauds. These frauds have had disturbing effects on our world’s economy in addition to contributing unnecessary suffering and increased unemployment for the low and middle class. With the aim of further understanding the fundamental motivations of fraud, this paper takes an in-depth look at the convergent and divergent of two classical fraud theories which are: (i) fraud triangle theory; and (ii) fraud diamond theory. This comparison is important to assist anti-graft bodies and organizations in formulating a practical strategy to prevent and investigate organizational frauds. The paper takes a conceptual approach by first examining the concept of fraud, then discussing the convergence of the two classical theories, and finally differentiating them. By doing so, the similarities and differences between them are highlighted and appreciated for fraud prevention purposes. The study uses secondary sources of information obtained from journal articles, textbooks and the internet. The discussion of the two theories contributes to the understanding of frauds especially by forensic accountants, auditors, fraud examiners and other antifraud bodies. The study also serves as guidance for further fraud related research.

Suggested Citation

  • Rabi’u Abdullahi & Noorhayati Mansor, 2015. "Fraud Triangle Theory and Fraud Diamond Theory. Understanding the Convergent and Divergent For Future Research," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 5(4), pages 38-45, October.
    • Handle: RePEc:hur:ijaraf:v:5:y:2015:i:4:p:38-45
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    References listed on IDEAS

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    1. Shabnam Fazli Aghghaleh & Zakiah Muhammaddun Mohamed, 2014. "Fraud Risk Factors of Fraud Triangle and the Likelihood of Fraud Occurrence: Evidence from Malaysia," Information Management and Business Review, AMH International, vol. 6(1), pages 1-7.
    2. Rabi’u Abdullahi & Noorhayati Mansor, 2015. "Concomitant Debacle of Fraud Incidences in the Nigeria Public Sector: Understanding the power of Fraud Triangle Theory," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 5(9), pages 241-255, September.
    3. Kirsty Rae & Nava Subramaniam, 2008. "Quality of internal control procedures: Antecedents and moderating effect on organisational justice and employee fraud," Managerial Auditing Journal, Emerald Group Publishing, vol. 23(2), pages 104-124, January.
    4. Patrick Kelly & Carol A. Hartley, 2010. "Casino gambling and workplace fraud: a cautionary tale for managers," Management Research Review, Emerald Group Publishing Limited, vol. 33(3), pages 224-239, March.
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    Cited by:

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    6. Rodgers, Waymond & Al Shammakhi, Badriya N. & Jeaneth, Johansson & Wincent, Joakim & Adams, Kweku, 2020. "DIY Entrepreneurship: a decision-pathway framework for ethical thought structures," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    7. Olukayode Abayomi Sorunke, 2016. "Personal Ethics and Fraudster Motivation: The Missing Link in Fraud Triangle and Fraud Diamond Theories," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 6(2), pages 159-165, February.
    8. Madzivire E.T & Nyamwanza L & Mushonga W & Takachicha M. T & Mulonda D, 2020. "An Investigation on the Effectiveness of Forensic Audit as a Tool for Fraud Detection and Prevention," Journal of Accounting, Business and Finance Research, Scientific Publishing Institute, vol. 10(2), pages 49-67.
    9. Khalil Feghali & Reine Najem & Beverly Dawn Metcalfe, 2022. "Financial Auditing During Crisis: Assessing and Reporting Fraud and Going Concern Risk in Lebanon," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 21(4), pages 575-603, December.
    10. Intiyas Utami & Yosephine Widwining Astiti & Nafsiah Mohamed, 2019. "Fraud Intention and Machiavellianism: An Experimental Study of Fraud Triangle," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(5), pages 269-279, August.
    11. Yao, Shouyu & Zhao, Weijia & Sensoy, Ahmet & Cheng, Feiyang & Goodell, John W., 2021. "The dark side of marital leadership: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 77(C).
    12. Dr. Solomon Abeki, 2023. "Internal Control System and Financial Statement Fraud of Quoted Banks in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(9), pages 1158-1200, September.
    13. Nor Balkish Zakaria & Muhammad Farhan Nordin & Rahimah Mohamed Yunos & Jamaliah Said, 2019. "The Integrity of Local Enforcement Officers: Self Proclaim vs Colleague Perception," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(5), pages 288-300, August.
    14. Alhumoudi Hamad & Alhumoudi Abdullah, 2023. "The Role of Forensic Accountants in Fraud and Corruption Cases and Its Impact on Business Development: The Case of Saudi Arabia," Journal of Forensic Accounting Profession, Sciendo, vol. 3(2), pages 13-36, December.
    15. Abbas, Ahmad, 2017. "Earnings Fraud and Financial Stability," OSF Preprints f5jpx, Center for Open Science.
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    17. Daniel N Mlambo & Mandla A Mubecua & Siphesihle Edmund Mpanza & Victor H Mlambo, 2019. "Corruption and Its Implications for Development and Good Governance: A Perspective from Post-Colonial Africa," Journal of Economics and Behavioral Studies, AMH International, vol. 11(1), pages 39-47.
    18. Bello Umar & Umar Abbas Ibrahim & Peter Eriki, 2020. "Forensic Accounting and Incidence of Fraud Detection: Evidence from Nigeria," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 9(2), pages 72-81, April.
    19. V.U. Imagbe & T.O. Abiloro & G.A. Saheed, 2019. "Fraud Diamond and Financial Crimes in Nigerian Banking Industries," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 9(4), pages 294-303, October.

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