ACCT 344F1WW-S15Week 3 Discussion

In chapter eight of the textbook, the interview with fraudster Walt Pavlo presented many insights into his fraudulent activities. Please apply the fraud triangle in analyzing his motives/reasons, opportunities, and rationalizations. Describe each part and provide examples from his interview.

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Walt Pavlo is a classic case representing the fraud triangle. Donald Cressey developed the fraud triangle and believed the “three components of pressure (motive), opportunity and rationalization must be present for fraud to occur” (Beigelmand & Bartow, 2012).During the 1990s, the telecommunications industry had a high propensity to “cheat” those within the industry and their customers. This culture provided motive and opportunity for employees to commit fraudulent acts. Pressure to commit fraud is typically because of greed (p.33).Generally the individual is having financial problems or feeling pressure at their job. Pavlo was under pressure at MCI by management pushing employees to meet numbers in collecting fees. Pavlo said that “staff is willing to do whatever it takes to meet goals and when goals conflict with reality they will search for solutions including fraud” (p. 176).Pavlo had easy opportunity to commit fraud at MCI. He was in senior management in charge of credit and collections. He knew firsthand how lax the internal controls were. MCI hired many temporary employees who were poorly trained. It was almost a revolving door of employees. These employees did what needed to be done to try and keep their jobs but were not trained in proper procedures, password protection and asked few questions. Personal computers were frequently shared and the billing system was poorly constructed and audited. The department was ripe for fraud. Pavlo was “frustrated with the unethical behavior at MCI and being taken advantage” (p. 177).He was driven to succeed and please management thus it was easy for him to rationalize his fraud. When the money started to come in, Pavlo rationalized that he was deserving of it because of the hard work that he was giving to MCI. For a time, the fraud also gave him a feeling of excitement.

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