Rationalization of financial statement fraud in government: An Austrian perspective [An article from: Critical Perspectives on Accounting]

This digital document is a journal article from Critical Perspectives on Accounting, published by Elsevier in 2007. The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.

Description:
This paper develops a conceptual framework that explains how existing opportunities and incentives for committing financial statement fraud in government translate into the rationalization of such fraud. The analytical approach is theoretical. The rationalization of financial statement fraud is analyzed through the lenses of a theory of entrepreneurship rooted in Austrian economics. Entrepreneurship, while generally seen as a positive force for economic productivity, is viewed as a source of deception. The framework illustrates that financial statement fraud has its origins in political, rather than economic incentives, and that it is rationalized by elected rather than non-elected officials. Due to a lower proportion of creditors and investors with vested interests in the framework, it is also concluded that the detection process of financial statement fraud in government tend to exhibit less 'alertness' than in private sector contexts. Specific techniques associated with financial statement fraud therefore tend to persist over relatively long periods of time.