Auditors maximising their utility: Economic analysis of the supreme audit institution

Abstract

Despite several studies on the supreme audit institutions (SAIs), the research question of what maximises SAI auditors' utility remains unanswered. Since SAIs are key public suppliers of audit services, it is essential to determine how they perform their duties and obligations to the stakeholders. This paper follows the grounded theory paradigm using qualitative and quantitative methods. This study is pioneering in many ways because the motivation of SAI's auditors is rarely the subject of research. We formulate the model of SAI's utility and determine the SAI auditor's motivators. The study results prove that SAIs seek to impose their system of preferences through audits and derive usefulness from this. From a long-term perspective, this may lead to a negative autonomy of SAI. Additionally, the study reveals that auditors strive to maximise monetary income and perceive employment stability as a motivational factor. However, job stability could lead to lower auditors' engagement during the audits. The study proposes a pay-for-performance system, which does not reduce the auditor's motivation linked with job stability and simultaneously encourages auditors to achieve better job results. This study contributes to a better understanding of the problems associated with interactions of public officials inside the state.