Keywords
motive
opportunity
self-justification
element indicators
economic crimes
How to Cite
Abstract
The concept of the ‘Fraud Triangle’ is not an innovation to identify fraudulent transactions and in the auditing and to detect criminals acts of an economic nature in the practice of foreign countries. This concept is recommended for use in the European Union countries, including Latvia. Analyzing the ‘Fraud Triangle’ model, the authors did not determine inconsistencies of this concept with Latvian legislation prohibiting its use for the detection of economic crimes.
Based on the scientific studies and practical recommendations of professional organizations, the authors identified indicators of the elements of the ‘Fraud Triangle’ and approach to their determination, suitable for investigating a criminal act and a person who is capable a committing it. Analyzing the identified indicators and ways to identify them, as well as based on the complexity and transnationality of economic crimes, the authors showed that investigation of such crimes requires a comprehensive approach of at least two specialties – a lawyer and an economist.
The authors recommend expanding the scope of application of the ‘Fraud Triangle’ concept and starting its practical application to detect economic crimes in Latvia, as well as continuing to study this concept in the scientific filed.
References
Vilks A. (2001). Ekonomiska noziedzība ir visu pretsabiedrisko procesu cēlonis. Jurista vārds, No 9 (202).
EUROPOL, Economic Crime / 2019. URL: https://www.europol.europa.eu/crime-areas-and-trends/crime-areas/economic-crime.
The Criminal Law / Saeima, 1998. Latvijas vēstnesis No 199 (200). URL: https://likumi.lv/ta/en/en/id/88966
Kalnmeiers Ē. Pārskats par prokuratūras 2018. gada rezultātiem / 2019. URL: http://www.prokuratura.lv/lv/noderigi/gada-parskati.
Liodorova J., Voronova I. (2018). Integral System of Fraudulent Bankruptcy Valuation. Social Sciences Bulletin.Vol.2 (27). pp. 42–60.
AСFE, Report to the Nations on Occupational Fraud and Abuse / 2018. URL: https://s3-us-west-2.amazonaws.com/acfepublic/2018-report-to-the-nations.pdf.
Becker G. S., Landes W. M. (1974). Crime and Punishment: An Economic approach. Essays in the Economics of Crime and Punishment, Cambridge: the National Bureau of Economic Research, pp. 1–54.
Cressey D. D. (1973). Other people’s money: a study in the social psychology of embezzlement / reprinted by P. Smith. Montclair:Free Press, Glencoe, Ill, 191 p
Free C. (2015). Looking through the fraud triangle: a review and call for new directions. Meditari Accountancy Research. Vol. 23 No 2. Р. 175–196.
Morales J., Gendron Y., Guénin-Paracini H. (2014). The construction of the risky individual and vigilant organization: a genealogy of the fraud triangle. Accounting, Organizations and Society. Vol. 39, No 3, pp. 170–194.
Wells J. T. (2011). Corporate Fraud Handbook: Prevention and Detection, 4th ed. Hoboken: John Wiley & Sons Publishing. 432 p.
Eiropas komisijas Reģionālās politikas Ģenerāldirektorāts, Informatīvs paziņojums par krāpšanas pazīmēm attiecībā uz ERAF, ESF un Kohēzijas fondiem, 2009. URL: https://www.esfondi.lv/upload/00-vadlinijas/EK_Inform.zin._krapsana_ERAF,ESF,KF.pdf.
Huang S. Y., Lin C., Chiu A., Yen D. C.(2016). Fraud detection using fraud triangle risk factors. Springer Science + Business Media. Р. 1343–1356.
Kramer B. (2015). Trust, but verify: fraud in small businesses. Journal of Small Business and Enterprise Development.Vol. 22, No 1, pp. 4–21.
Zaki N. M. (2017).The appopriateness of fraud triangle and diamond models in assessimg the likelihood of fraudulent financial statements – an empirical study in firms listed in the Egyptian stock exchange. International Journal of Social Science and Economic Research. Vol. 2 (2), pp. 2403–2433.
SAS No 99: Consideration of Fraud. American Institute of Certified Public Accountants (AICPA), 2002.
ACA No 240. The Auditor's Responsibility to Consider Fraud in an Audit of a Financial Report. Australian Government, 2006.
ISA No 240. The Auditor's Responsibilities to Relating to Fraud in Audit of Financial Statements. International Federation of Accountants, 2009.
Smith G., Crumbley D. (2012). How divergent are pedagogical views toward the fraud/forensic accounting curriculum? Global Perspectives on Accounting Education,2009. Vol. 6, No 1, Р. 1–24.
Znotina I. Deloitte Latvija, Korporatīvas krāpšanas novēršana un izmeklēšana. Starptautiskā conference «Justice 2012 – Juridiskie aspekti biznesā». Rīga. URL: arhiv.rmsforum.lv/upload_file/Justice%202012/Ilze%20Znotiņa.ppt.
Šikore L. (2014). KNAB, Krāpšana un tās sākotnējo pazīmju identificēšana. URL: https://iai.lv/wp-content/uploads/1.5-Lienite-Sikore-Krapsanas-riski-publiska-sektora-un-ES-fondos.pdf
KNAB. Korupcijas izpausmes formas un riski publisko iepirkumu procedūras / I. Nolle. 2016. URL: https://www.lps.lv/uploads/docs_module/3_Korupcijas%20izpausmes%20formas%20un%20riski%20publisko%20iepirkumu%20proced%C5%ABr%C4%81s.pdf.
European Comission European Anti-Fraud Office, Fraud in Public Procurement: A Collection of Red Flags and Berst Practices, 2017: https://www.esfondi.lv/upload/00-vadlinijas/fraudinpublicprocurement.pdf.
Knabe S. (2007). Fraud-Risk Assessment., dissertation: University of Latvia,
Alfejeva J. (2011). Apdrošināšanas krāpšanas krimināltiesiskie un kriminoloģiskie aspekti., dissertation: Riga Stradinš University.
Council Framework Decision No 2009/299/JHA / The Council of the European Union. Pfficial Journal of the European Union, 2009. No L 81/24: https://eur-lex.europa.eu/eli/dec_ ramw/2009/299/oj.