Rationalization of financial statement fraud in government: An Austrian perspective

  • Stalebrink O
  • Sacco J
  • 103

    Readers

    Mendeley users who have this article in their library.
  • 8

    Citations

    Citations of this article.

Abstract

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. © 2006 Elsevier Ltd. All rights reserved.

Author-supplied keywords

  • Accounting fraud
  • Austrian
  • Entrepreneurship
  • Governmental accounting
  • Information asymmetry
  • Markets
  • Regulations

Get free article suggestions today

Mendeley saves you time finding and organizing research

Sign up here
Already have an account ?Sign in

Find this document

Authors

  • Odd J. Stalebrink

  • John F. Sacco

Cite this document

Choose a citation style from the tabs below

Save time finding and organizing research with Mendeley

Sign up for free