Psychologists and sociologist always use analogy of the following three fraud theories for the factor of the occurrence of frauds:-
a) “Tip of the Iceberg”
The fraud refers to an iceberg where the surface may not reflect its actual size of hidden iceberg. Hence, fraud cases actually reported are much less than unreported cases like the iceberg. Actually, the most dangerous and enormous area is the hidden side of the iceberg. The number of fraud cases which are not reported are very significant compared to the reported cases which are still considered quite low, like a surface of the iceberg (Kindly refer to the below Illustration No. 1).
Is it mission impossible to melt down or unfreeze the hidden of the iceberg? Is it mission impossible to prohibit human to go to nature of the iceberg as dangerous area? Lastly, is it mission impossible to reveal, combat, detect or prevent fraud in our life?
b) “Potato chip”
Potato chips always taste delicious and like to be eaten by everybody at anywhere or anytime (Kindly refer to the below Illustration No. 2). The potato chips theory is a simulation on the fraudsters’ addiction to continue committing fraud and eventually become his/her habit and sometimes hobbies to feel the satisfaction themselves. It might be started with the fraudulent activities for fun or since they were children’s age and finally with the surprise, sophisticate and standard fraud.
c) “Rotten Apple”
Rotten apple refers to the theory of a bad apple among others good apple (Kindly refer to the below Illustration No. 3). As an example, a staff has been caught the first time of doing fraud. The person might only obtain a warning letter or got scolded from his/her employer. It shows us that the fraud has been committed by a bad individual among many good ones. In addition, this theory could be happened with a company which always encourage and establish a fraud awareness programme and good internal control. With the occurrence of fraud, their reputation will be tarnished and the company might incur losses. Definitely, the fraud was occurred due to the unchecked items which are not previously revealed by the auditor.
Is it mission impossible to remove rotten apple inside the nice basket/box at a large warehouse? Or is it mission impossible to avoid a good apple from become a rotten apple? Lastly, is it mission impossible to reveal, combat, detect or prevent fraud in our life?
To answer and find the solution to the fraud theories previously mentioned, we need to scrutinize and think initially a concept of “mind over matter”[1]. Fraud is not definitely a mission impossible action by fraudsters that are unable to be prevented, detected or corrected by us. But, we need to understand first what, why and how the frauds occur in our daily life. Let’s make sure our mission impossible always complete and successful to prevent, detect and combat any fraud.
[1]Wikepedia – Mind over matter specifically refers to controlling pain that one may or may not be experiencing, such as holding one's hand under extremely hot water and feeling no pain. Also, "self-help" personalities such as Tony Robbins claim that, through the power of concentration and "positive thinking", people can walk on hot coals without getting burned. This claim is made despite the fact that there are solid, scientific explanations for firewalking. "Mind over matter" was also Mao Zedong's idea that rural peasants could be "proletarianized" so they could lead the revolution and China could move from feudalism to socialism. It departs from Leninism in that the revolutionaries are peasants, instead of the urban proletariat.
