Auditors' perspectives on financial fraud in Pakistan – audacity and the need for legitimacy

IF 3.2 Q1 BUSINESS, FINANCE
M. Rashid, N. Khan, Umair Riaz, Bruce Burton
{"title":"Auditors' perspectives on financial fraud in Pakistan – audacity and the need for legitimacy","authors":"M. Rashid, N. Khan, Umair Riaz, Bruce Burton","doi":"10.1108/jaee-04-2021-0135","DOIUrl":null,"url":null,"abstract":"PurposeFinancial shenanigans are the omissions or actions undertaken with the purpose of misrepresenting an organisation's financial statements. Many examples now exist of such behaviour emerging in the context of a desire to deceive the users of financial reports. In this context, research has illustrated how investors can find themselves impacted by such behaviour, with incorrect decision-making around investment decisions being a major issue. However, auditors' perspectives, of obvious importance in such scenarios, given these individuals' role in attesting to the veracity of financial disclosures, have not been investigated. The aim of this study is to address this gap by seeking the experiences of auditors in the developing nation of Pakistan, an environment in which the significant impact of financial improprieties is well-documented.Design/methodology/approachInterviews with 50 Pakistani-based auditors were conducted to gather perceptions about the nature and prevalence of financial shenanigans. The questions posed were structured to address issues relating to both the drivers of and methods used to operationalise financial malfeasance.FindingsThe views expressed by the participants suggest that this type of malpractice is common, with a variety of forms employed and a level of audacity and shamelessness is striking. The results indicate the absence of the three institutional pillars conventionally associated with motivating organisational attempts to legitimise behaviour and maintain social contracts. When considered alongside recent findings that the audit profession in Pakistan may not always play an effective monitoring role, we argue that the evidence suggests the existence of motivations for legitimising strategies are not yet fully understood.Research limitations/implicationsThis contention helps address recent calls for investigation of issues around legitimising tendencies where theoretical understanding is incomplete. A full understanding of the embedded practices will provide capital providers with the opportunity to make more informed decisions regarding their investments in Pakistani firms by highlighting the financial shenanigans involved, including the sheer audacity apparently associated with the observed behaviour.Originality/valueEarnings management and auditing have not been studied widely in Pakistan despite the abundant and persistent nature of corporate scandals across the nation for many decades. Whilst implementation (and enforcement) of some accounting and auditing standards have taken place recently, the financial collapses continue, and understanding regarding the on-going fraud is urgently needed. The extent and shameless nature of the perceived behaviour are striking, suggesting that those closest to financial reporting in Pakistan see fraudulent financial reporting as being close to, if not yet fully representative of, normal practice.","PeriodicalId":45702,"journal":{"name":"Journal of Accounting in Emerging Economies","volume":" ","pages":""},"PeriodicalIF":3.2000,"publicationDate":"2022-04-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"4","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Accounting in Emerging Economies","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1108/jaee-04-2021-0135","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 4

Abstract

PurposeFinancial shenanigans are the omissions or actions undertaken with the purpose of misrepresenting an organisation's financial statements. Many examples now exist of such behaviour emerging in the context of a desire to deceive the users of financial reports. In this context, research has illustrated how investors can find themselves impacted by such behaviour, with incorrect decision-making around investment decisions being a major issue. However, auditors' perspectives, of obvious importance in such scenarios, given these individuals' role in attesting to the veracity of financial disclosures, have not been investigated. The aim of this study is to address this gap by seeking the experiences of auditors in the developing nation of Pakistan, an environment in which the significant impact of financial improprieties is well-documented.Design/methodology/approachInterviews with 50 Pakistani-based auditors were conducted to gather perceptions about the nature and prevalence of financial shenanigans. The questions posed were structured to address issues relating to both the drivers of and methods used to operationalise financial malfeasance.FindingsThe views expressed by the participants suggest that this type of malpractice is common, with a variety of forms employed and a level of audacity and shamelessness is striking. The results indicate the absence of the three institutional pillars conventionally associated with motivating organisational attempts to legitimise behaviour and maintain social contracts. When considered alongside recent findings that the audit profession in Pakistan may not always play an effective monitoring role, we argue that the evidence suggests the existence of motivations for legitimising strategies are not yet fully understood.Research limitations/implicationsThis contention helps address recent calls for investigation of issues around legitimising tendencies where theoretical understanding is incomplete. A full understanding of the embedded practices will provide capital providers with the opportunity to make more informed decisions regarding their investments in Pakistani firms by highlighting the financial shenanigans involved, including the sheer audacity apparently associated with the observed behaviour.Originality/valueEarnings management and auditing have not been studied widely in Pakistan despite the abundant and persistent nature of corporate scandals across the nation for many decades. Whilst implementation (and enforcement) of some accounting and auditing standards have taken place recently, the financial collapses continue, and understanding regarding the on-going fraud is urgently needed. The extent and shameless nature of the perceived behaviour are striking, suggesting that those closest to financial reporting in Pakistan see fraudulent financial reporting as being close to, if not yet fully representative of, normal practice.
审计员对巴基斯坦金融欺诈的看法——大胆和合法性的需要
财务欺诈是为了歪曲组织的财务报表而采取的遗漏或行动。现在存在许多这种行为的例子,是在希望欺骗财务报告使用者的情况下出现的。在这种背景下,研究已经说明了投资者如何发现自己受到这种行为的影响,围绕投资决策的错误决策是一个主要问题。然而,考虑到这些人在证明财务披露的真实性方面的作用,审计人员的观点在这种情况下显然很重要,但尚未得到调查。本研究的目的是通过寻求发展中国家巴基斯坦审计员的经验来解决这一差距,在这种环境中,财务不当行为的重大影响是有目共知的。设计/方法/方法对50名驻巴基斯坦审计员进行了访谈,以收集对财务欺诈的性质和普遍程度的看法。所提出的问题旨在解决与财务渎职行为的驱动因素和操作方法有关的问题。调查结果与会者的意见表明,这种渎职行为很常见,形式多样,无耻程度惊人。研究结果表明,传统上与激励组织努力使行为合法化和维持社会契约相关的三大制度支柱缺失。考虑到最近发现巴基斯坦的审计行业可能并不总是发挥有效的监督作用,我们认为,证据表明存在使战略合法化的动机尚未完全理解。研究局限/意义这一争论有助于解决最近关于理论理解不完整的合法化倾向问题的调查呼吁。充分了解这些隐含的做法,将为资本提供者提供机会,通过突出所涉及的金融骗局,包括与所观察到的行为明显相关的大胆行为,对他们在巴基斯坦公司的投资做出更明智的决策。尽管几十年来,巴基斯坦的企业丑闻层出不穷,而且持续不断,但盈余管理和审计在巴基斯坦并没有得到广泛的研究。虽然一些会计和审计准则的实施(和强制执行)最近已经开始,但金融崩溃仍在继续,迫切需要了解正在发生的欺诈行为。这种被认为的行为的程度和无耻性质令人震惊,这表明,在巴基斯坦,那些最接近财务报告的人认为,欺诈性财务报告即使还不能完全代表正常做法,也接近于正常做法。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
求助全文
约1分钟内获得全文 求助全文
来源期刊
CiteScore
5.80
自引率
13.00%
发文量
38
×
引用
GB/T 7714-2015
复制
MLA
复制
APA
复制
导出至
BibTeX EndNote RefMan NoteFirst NoteExpress
×
提示
您的信息不完整,为了账户安全,请先补充。
现在去补充
×
提示
您因"违规操作"
具体请查看互助需知
我知道了
×
提示
确定
请完成安全验证×
copy
已复制链接
快去分享给好友吧!
我知道了
右上角分享
点击右上角分享
0
联系我们:info@booksci.cn Book学术提供免费学术资源搜索服务,方便国内外学者检索中英文文献。致力于提供最便捷和优质的服务体验。 Copyright © 2023 布克学术 All rights reserved.
京ICP备2023020795号-1
ghs 京公网安备 11010802042870号
Book学术文献互助
Book学术文献互助群
群 号:481959085
Book学术官方微信