The fraud diamond identifies opportunity, incentive, rationalization and capability as the four elements that make fraud possible to happen (Wolfe, David and Dana 38). The four elements clearly play out in the case where Rita Crundwell embezzled funds from the Dixon city’s kitty as follows (Hancox and David 65).
Incentive
Her former colleagues cite a lady devoid of self-esteem and one who sought approval from others. Her buying of horses is seen as a source of approval by others which gave her esteem and fulfilment.
Opportunity
The city of Dixon, Illinois had a weak system that Rita Crundwell easily exploited to her advantage. For example, she was in charge of most of the money matters, from collecting to banking to making payments. The apparent lack of controls in the flow of money at the city of Dixon led her to steal without easy and fast detection.
Rationalization
Rita had clearly convinced herself that the risk was worth. This is seen in her repeat offence having stolen from the city's kitty for well over three decades. This is also evident in the way she first changes the procedures for handling money and authority when she took over as mayor.
Capability
Recommendation
The city should adopt a system of governance that has several layers of controls especially those dealing with revenue collection and appropriation. For example, it should be a requirement that several signatories authorize withdrawal from the city’s bank accounts. Also. The financial controllers should also be elected other than appointed to avoid possible manipulation.
Works cited
Wolfe, David T., and Dana R. Hermanson. "The fraud diamond: Considering the four elements of fraud." The CPA Journal 74.12 (2004): 38.
Hancox, David R. "How a $53 Million Fraud Went Undetected for 22 Years."The CPA Journal 84.5 (2014): 65.
