Accounting

This paper explore the various aspects of Crazy Eddies fraud operation and how they played a role in the activities of this business. Furthermore, it also talks about how this fraud could have been prevented with respect to the fraud triangle.

The elements of the fraud triangle that we are looking for in this case are i) The motivation to commit the fraud, ii) The rationalization of the fraud that the committer gives to himherself iii) and the opportunity  to commit fraud.

Crazy Eddies fraud was such a viable enterprise because all these three elements of the fraud triangle were in the favor of the Antar family, who owned and managed Crazy Eddie. First of all, the motivation to commit the fraud was their greed and the motivation to gain more and more wealth. As Crazy Eddies sales were not such that it quenched the greed of the Antar family by legal means, they decided to gain the desired wealth by illegal means. Hence they skimmed their profits and showed decreased income in their books. This enabled them to avoid taxes (Wells, 2000).

They were principally motivated with a desire to reduce their income taxes and thats how they rationalized their fraud. There may be lingering guilt in their minds about their fraud but they did not let this get in the way of continuing their fraudulent enterprise. Furthermore, the opportunity was always there because they managed and had full control of the business. They could do whatever they wanted inside their business as there was little or no outside scrutiny in the organization (Herb, 2007).

The fraud could have been prevented by removing one or all of the fraud triangle. For example, from Sam Antars interview we can infer that if we removed the opportunity to commit fraud in this case by increasing the scrutiny to business, the fraud could have been prevented (Crazy eddys fraud,). Similarly, if we decrease the motivation to commit fraud by decreasing, for example, greed in the society frauds such as these can be prevented. The motivators of fraud are an important factor in committing fraud because they are the first step that take people towards that direction. Furthermore, people who commit fraud should not be able to rationalize their fraud, this can be done by communicating in the society by media and other channels that such activities cannot be tolerated. People should clearly know what is illegal and legal, and also that illegal things are morally and ethically wrong and illegal for a reason.