The fraud triangle originated from Donald Cressey's hypothesis:
Trusted persons become trust violators when they conceive of themselves
as having a financial problem which is non-shareable, are aware this
problem can be secretly resolved by violation of the position of financial
trust, and are able to apply to their own conduct in that situation
verbalizations which enable them to adjust their conceptions of themselves
as trusted persons with their conceptions of themselves as users of the
entrusted funds or property. 1
https://www.acfe.com/fraud-triangle.aspx
https://ir-library.ku.ac.ke/handle/123456789/19894
There has been much attention on explaining causes of
fraud based around the “Fraud triangle,” the original
theory developed by Donald Cressey in 1953 who
modified it many times, most recently in the early 1970s.
The theory originated from sociology literature and was
adopted as an empirically valid explanation of fraud
describing three necessary conditions for crimes to
occur: pressure (a non-shareable problem), opportunity
(lack of internal controls), and rationalization (the
ability to justify one’s actions). Cressey’s theory focused
on the individual and identified improving
organizational internal control measures as the
deterrent for preventing fraud.
The basic assumption of Cressey’s Fraud triangle is that
for people to commit fraud, the three “elements” of the
triangle need to be present. For example, pressure (such
as gambling and other addiction
https://link.springer.com/referenceworkentry/10.1007%2F978-3-319-23514-1_216-1
The theoretical perspective concerns for this study from
the fraud triangle theory, which originated from
sociology literature and was adopted as an empirically
valid explanation of fraud describing three necessary
conditions for crimes to occur: pressure; a non shareable
problem, opportunity; lack of internal controls, and
rationalization; the ability to justify one’s actions. its
founder, Donald Cressey in (1953),who modified it many
times, most recently in the early 1970s. Cresseys’s
theory focused on the individual and identified
improving organizational internal control measures
as the deterrent for preventing fraud.
Moreover, the success of an organization based on their performance that how well an
organization achieves its objectives (Randeree and Al Youha, 2009). Organizational
performance means the effectiveness of an organization in the achievement of their
desired goals (Henri, 2004). Meanwhile, organizational performance is a factor that
measures how well an organization attains its desired goals (Hamon, 2004;
Venkatraman and Ramanujam, 1987). Moreover, organizational performance playing a
vital role in the existence of any kind of organizations such as profit-making
organizations and non-profit making organizations (Abu-Jarad et al. 2010).
https://journal-jger.springeropen.com/articles/10.1186/s40497-019-0155-5#ref-CR56
https://researchpaperadvisor.com/lets-get-started/write-the-purpose-statement/
1.2 Statement of the Problem
There is a declining trend of average profits for domestic commercial banks, while their
foreign liabilities are increasing, compared to foreign commercial banks, (Bank of
Uganda, 2011). However, over the period 2000-2011, the average interest expenses to
equity is 0.154 for foreign commercial banks while domestic commercial bank had a
lower ratio of 0.145. During the period 2000-2011, operating expenses to total assets
for domestic commercial banks is greater 0.114 compared to 0.068 for foreign
commercial banks. In the same period 2000 to 2011, the Net Interest Margin to total
assets is 0.1131 for domestic commercial banks while foreign commercial banks had
0.0487. The average Return on Equity (ROE) indicates that domestic commercial banks
had 24.7% compared to 28.5% for foreign commercial banks. This suggests that
foreign commercial banks perform better than domestic commercial banks in Uganda.
By the end of 2011, domestic commercial banks had only 17.5% of the market share
which is extremely low, when compared to 82.5% for foreign commercial banks in
Uganda. Consequently, the relatively poor performance of domestic commercial banks
in Uganda needed to be investigated.
The performance of commercial banks in East Africa has been growing a little in the last
decades, but there is a poor performance, For example, in Uganda the performance of
commercial banks indicates, There is a declining trend of average profits for domestic
commercial banks, while their foreign liabilities are increasing, compared to foreign
commercial banks, (Bank of Uganda, 2011). The average Return on Equity (ROE)
indicates that domestic commercial banks had 24.7% compared to 28.5% for foreign
commercial banks. This suggests that foreign commercial banks perform better than
domestic commercial banks in Uganda. By the end of 2011, domestic commercial banks
had only 17.5% of the market share which is extremely low, when compared to 82.5%
for foreign commercial banks in Uganda. Consequently, the relatively poor performance
of domestic commercial banks in Uganda needed to be investigated Also, in
Somaliland, there is a low performance of commercial banks that have not yet formal
when compared to other commercial banks in the region.
1/14,2014…………………. Nsambu Kijjambu Frederick page 2…………. Cape Town,
Proceedings of 25th International Business Research Conference.
Internal control is tracked back to “The Earliest Times – The Babylonian and Egyptian
Eras” (Lee, 1971, p.151). There is evidence of application of internal control also found
in Roman and Greek empires, Dark Ages, Middle Ages and in Sixteenth and
Seventeenth Century. (Lee, 1971, pp. 151-157). According to Hackett and Mobley
(1976, p.2) between 1500 and 1850, internal control was used through the
development of double-entry ac-counting. This continued to be used only as control
system for cash transactions until 1905.
Hackett and Mobley (1976) noted that there was concrete evidence that internal
control existed in the Mesopotamian civilization as early as 3600 B.C.
According to Hackett and Mobley between 1500 and 1850, internal control was
used through the development of double-entry ac-counting. This continued to be
used only as control system for cash transactions until 1905. 25 Industrial
Revolution and ever-growing size of corporations made its mark especially in the
period between 1905 and 1933. Then it became evident that the extent of
auditing and testing being done in accounting systems needed to be based on
“evaluation of the effec-tiveness of the system of internal control”
https://digitalcommons.unl.edu/cgi/viewcontent.cgi?article=1032&context=jade
