Proposed Multidimensional Fraudulence Risk Models: Auditing for Dark Tetrad Individuals and their opposites in organizations

• In Event: Fraud and Financial Reports

Abstract

Abstract

Epstein and Ramamoorti (2016) discussed the possible prevalence of “dark triad” personality within executive ranks and the need to identify them to reduce fraud risk. They argued that the risk models currently in use by forensic auditors were insufficient for dealing with such abnormal personalities. We utilize the more recent research on the “dark tetrad” and HEXACO models which can be audited for using emails, interviews, short personality tests, ethics codes and performance appraisals. We propose a hexagonal model of three dyads underscored by a bipolar dimension ranging from low to high fraud risk. We utilize the Honesty-Humility (H) and Conscientiousness (C) traits from the HEXACO model of personality. These are the traits mainly responsible for morally-relevant behavior as a means of identifying low fraud risk. We contrast this with organizational criminality (subclinical psychopathy and sadism) and relational aggression (RA) as high fraud risk. We propose how performance appraisal and auditing can be integrated to facilitate a culture of low fraud risk organizational citizenship behavior to counter the culture of high fraud risk engendered by the Dark Tetrad and organizational criminality, which fosters white collar crime and corruption. We discuss how our proposed model can foster ideal accounting conditions that minimize fraud.

Authors

• Jana Price Wilhelm, University of Kentucky

• Paul Wilhelm, Sullivan University