Ni Wayan Rustiarini, Sutrisno Sutrisno, Nurkholis Nurkholis, Wuryan Andayani
Purpose: This study aims to examine the effects of fraud triangle (pressure, opportunity and rationalization) on individual fraudulent behavior in Indonesian public procurement. Empirical research in this area is relatively sparse. Design/methodology/approach: Data were collected using laboratory experiments. Findings: The results revealed that fraudulent behavior is higher when an individual has high pressure and high opportunity. These factors play an important role in determining individual rationalization. Most of participants used “displacing responsibility” to rationalize their actions. This study also demonstrated that negative affect mediates the relationship between fraudulent behavior and rationalization. Research limitations/implications: First, fraudulent behavior research cannot be separated from social desirability bias. Second, the experiments only involved individual decision-making, not in groups. Finally, this study did not examine the effectiveness of rationalization in reducing negative affect. Practical implications: Over the years, the government has only focused on the identification of pressure and reduction of opportunities, but ignored individual psychological reasons. Considering that procurement fraud is always increasing, the government must more focus on individual reasons to design an effective prevention and detection system. Social implications: There are various conflicts of interest in public procurement budgeting. These conflicts can distort resource allocation and causes budget leakage. As a result, the government is incapacitated to achieve social and economic goals of the community. Originality/value: There is limited research about fraud in public procurement budgeting, especially in developing countries. In addition, the fraud triangle research, which focuses on rationalization is still limited. © 2019, Emerald Publishing Limited.
Student at Department of Accounting, Brawijaya University, Malang, Indonesia; Department of Accounting, Brawijaya University, Malang, Indonesia; Department of Accounting, Mahasaraswati Denpasar, Denpasar, Indonesia
Research at a Glance
Register to unlock
Topics & SDG Alignment
Register to unlock
Collaboration
Register to unlock
Author Profile (Selected)
Register to unlock
References Overview
Register to unlock
Journal & Source
Register to unlock
Metadata & Integrity
Register to unlock