The Psychology and Sociology of Fraud: Integrating the Behavioral Sciences Component Into Fraud and Forensic Accounting Curricula

Abstract

INTRODUCTION The 2008 Report to the Nation issued by the Association of Certified Fraud Examiners indicated that U.S. organizations lose almost 7 percent of their revenue to fraud, and that the Gross Domestic Product (GDP)-based annual fraud estimate for the United States alone was $994 billion (ACFE, 2008). Of course, we all now recognize that the scourge of fraud is a global phenomenon that extends far beyond the borders of the U.S. However, the study of white collar crime has hitherto been relatively sparse because ‘‘few areas of criminological investigation are plagued [with such] intractable controversies [including] conceptual ambiguities, distinctions, and taxonomies’’ (Shover 1998). Nevertheless, future business professionals, and especially accounting majors, must have a keen understanding of the new 21st century era of governance and accountability spawned by the post-Enron/WorldCom environment. In this regard, colleges and universities must do their part by encouraging business, criminology, and law faculty to carry out much-needed research in this important area and teach courses in fraud and forensic accounting (FFA). Because any organization can be plagued by fraud, organizations should strive to understand the behavioral root causes of fraud—who commits fraud and why—and thus, proactively manage their fraud risk exposure. Indeed, these are the fundamental premises underlying the model FFA curriculum developed by and implemented at West Virginia University (2007). In this paper, I will make the case for looking seriously to the behavioral sciences—