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1. Introduction
Fraud is a widely conceivable concept, but its characteristics are frequently unrecognizable and not until it is too late. There are various definitions of fraud, due to its diverse nature, but for the purpose of this paper, the following widely accepted definition provided by the Institute of Internal Auditors’ International Standards for the Professional Practice of Internal Auditing (Standards) is used:
[…] any illegal act characterized by deceit, concealment, or violation of trust. These acts are not dependent upon the threat of violence or physical force. Frauds are perpetrated by parties and organizations to obtain money, property, or services; to avoid payment or loss of services; or to secure personal or business advantage (The IIA’s, 2017).
The only thing that is constant in fraud is change as it is a dynamic process which is multi-layered and penetrates into corporate procedures while the fraudsters always find new methods to commit fraud and cover their traces. As a result, dealing with fraud is a long, complicated procedure that requires a deep understanding of both the reasons behind its occurrence and the ways by which it can be mitigated. So confronting fraud is like fighting against the Lernean Hydra[1]. And fraud is an international problem which can occur in any organization at any time while fraud incidents are nowadays increasing mainly driven by the global financial crisis and the subsequent economic recession. According to the latest Report to the Nations on Occupational Fraud and Abuse (2016), published by Association of Certified Fraud Examiners (ACFE), the median estimate was that fraud costs organizations 5 per cent of revenues each year. To highlight the magnitude of this estimate, applying this percentage to the 2016 estimated Gross World Product of $75.6 trillion, results in a projected potential total fraud loss of up to $3.8 trillion worldwide[2].
Αs perceived by the aforementioned fraud is a crucial issue which affects all aspects of corporate activity so dealing with it is vital, especially in times of crisis.
The main objective of this paper is twofold: to review the existing theoretical framework regarding the reasons why people commit fraud and to build on the theory to develop a model to better enhance our understanding behind the major factors which lead to the perpetration...