The Effects of Client Machiavellian Traits and Fraud Motivation on Fraud Risk Assessments

Abstract

The extant fraud literature indicates the Dark Triad personality trait of Machiavellianism can indicate behavioral warning signs, signal the motivation of a potential fraudster, and be used in a predictive approach to fraud assessments (Brody, Melendy, and Perri, 2012; Hermanson, Ramamoorti, and Richard, 2017). In a 2 X 2 experiment, this study examines the effects of client manager Machiavellian traits and fraud motivation on fraud risk assessments. We find that participants’ fraud risk assessments are higher when client traits are consistent with high Machiavellianism. We did not find a significant fraud motivation effect. The results indicate evidence of additional attitude/rationalization risk factors for consideration under the fraud triangle and the effects on judgment when assessing fraud risk. We provide insights on the ability of auditors to recognize high/low pressure/motivation situations within the context of a case study. Finally, the study provides evidence for documentation in consideration of fraud factors.