Rationalization of financial statement fraud in government

An Austrian perspective

Odd Jonas Stalebrink, John F. Sacco

Research output: Contribution to journalArticle

11 Citations (Scopus)

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.

Original languageEnglish (US)
Pages (from-to)489-507
Number of pages19
JournalCritical Perspectives on Accounting
Volume18
Issue number4
DOIs
StatePublished - May 1 2007

Fingerprint

rationalization
fraud
entrepreneurship
incentive
economics
creditor
investor
Financial statement fraud
Rationalization
Government
private sector
productivity
Entrepreneurship

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Sociology and Political Science
  • Information Systems and Management

Cite this

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Rationalization of financial statement fraud in government : An Austrian perspective. / Stalebrink, Odd Jonas; Sacco, John F.

In: Critical Perspectives on Accounting, Vol. 18, No. 4, 01.05.2007, p. 489-507.

Research output: Contribution to journalArticle

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