of authority often ignore the traditional organization chart. This context suggests that fraud
researchers need to identify and study informal structures and interactions (e.g., collusive
constructs). Informal systems can support the development of new groups and institutions while
also obstructing institutional change and reform. Such systems arise to address shortcomings in the
formal system and can overtake the formal structure over time. Wedel argues that informal systems
may be particularly important in understanding companies operating in countries undergoing
economic transition (e.g., Eastern Europe, China). The role of informal networks with regard to
fraud and financial crimes is likely a promising line of research, especially with regard to frauds like
financial reporting fraud that generally involve collusion by multiple individuals within an
organization, recognizing that fraud involving collusion with an organization tends to have greater
financial consequence than fraud perpetrated by one individual (ACFE 2012).