Preliminary findings of occupational fraud research

University of New South Wales and FCX are collaborating in a two-year project to research occupational fraud in Australian business. The project aims to explore several key aspects of occupational fraud by conducting one-on-one interviews with up to 65 perpetrators of white-collar crime in the workplace and up to 35 corporate, government and not-for-profit victims.  The project was inspired by research originally conducted by Dr Donald Cressey of the University of Indiana as far back as 1948 which was published in his seminal book “Other Peoples’ Money” (1953). Access a copy of Other Peoples’ Money:

The UNSW / FCX research hopes to be able to provide insights into:

  • The linkage between poor internal control and occupational fraud incidents;
  • The linkage between poor organisational culture and occupational fraud incidents;
  • How control systems can be strengthened;
  • How current era fraud perpetrators rationalise their conduct;
  • How perpetrator rationalisations relate to the other key variables; and
  • How organisations can neutralise the perpetrator’s ability to rationalise their conduct.

Earlier this year, the project was awarded an Australian Research Council (ARC) Linkage Grant, which will fund the delivery of the project for another two years.

UNSW researchers, Professor Clinton Free and Associate Professor Paul Andon, recently presented their interim findings to an FCX seminar broadcast to McGrathNicol offices in Australia and New Zealand.  The interim findings are based the outcome of 22 interviews conducted to date with offenders serving, or who had recently completed, custodial sentences for occupational fraud.  Professors Free and Andon noted Cressey’s original research that prompted the development of Cressey’s ‘Fraud Triangle’ occupational fraud model. They noted that the Fraud Triangle, comprising the elements ‘Motivation – Opportunity – Rationalisation’ has stood the test of time but that the current research was aimed at determining whether the model was as relevant today as it was at the time of Dr Cressey’s original research. They noted in particular that the current research project was focused on the element of ‘Rationalisation’ and was aimed at validating this element of the fraud triangle.

Preliminary findings suggest ‘Rationalisation’ by an offender may not be as crucial an element in occupational fraud offending as believed by Dr Cressey, in particular, where there is long-term fraudulent behaviour. Whilst the research is at a relatively early stage, initial findings are that rationalisation ‘blurs’ as long-term perpetrators shift their attention to “coping” with their conduct.  The research has identified four separate mechanisms which allow offenders to ‘cope’ with their behaviour (see diagram).

For more information about this research project and other financial crime related search by UNSW go to: