Public Audit Institutions Research Articles

Public Auditing in the Delegated Sphere – Implications for Governance

Contemporary public services are regularly delivered by a broad range of decentralized providers across the public, private, and non-profit sectors. In these fragmented settings of ‘delegated’ governance, central administrative overview and accountability have become increasingly elusive objectives. Public audit institutions, on the other hand, occupy a unique position at the nexus of central administrative units and decentralized service providers. Our work addresses the often-underestimated role that public auditing plays in such organizational arrangements by unpacking how administrative units respond to audits that identify performance and coordination issues in the delivery of public services. Empirically, we examine survey data from organizations audited by the City of Vienna Court of Audit. We find that audits indeed make administrative units (re-)act – but also talk and listen to service providers. Thus, audits strengthen central administrative accountability and lead to (re-)engagement and improved relationship management in settings of delegated governance.

Actorhood of the European Court of Auditors: a visual analysis

PurposeThis paper explores how public audit institutions establish themselves as distinct actors on the public stage through communication practices. By focussing on the journey of the European Court of Auditors (ECA), this paper addresses the following research question: how does a transnational audit institution construct its actorhood through visual communication practices?Design/methodology/approachUsing the theoretical framework of actorhood theory and inspired by the visual accounting methodology, this study explores the ECA actorhood journey through the visual analysis of front pages of its official journal (ECA Journal) from its inception in 2009 up to 2019. The visual analysis is conducted through content analysis and a two-step cluster analysis.FindingsBy showing how combinations of different visual artefacts have evolved over time, this study highlights the ways transnational public audit institutions, such as the ECA, construct their actorhood and position themselves on the public stage. It further reveals the underlying legitimacy mechanisms through which organisations such as the ECA position themselves in the public eye.Originality/valueThis study sheds light on the depiction of individuals and their contexts in interaction with each other and how this interaction reveals the development of the actorhood journey of the ECA over time.

On the Application of Information Audit for the State Public Audit

The paper analyzes methodological approaches to the implementation of information audit by public audit institutions. The aim of the research is to analyze instruments of the traditional information audit developed as a part of information management theory and to make propositions on its basis on the creation of methodology of information audit as a form of public audit. It is based on general scientific methods, including comparative analyzes. The article substantiates the necessity for public audit institutions to conduct information audit due to the key value of information and information resources for the legality and efficiency of the public resources' management. The authors analyze basic approaches to the definition of the traditional information audit and its instruments. Based on this the authors made a conclusion that such general approach could be used for the purposes of public audit with necessary amendments due to specific aims of this type of public financial control, legal status of public audit institutions and position of auditees in the public management system. The study defines basic stages of the information audit conducted by public audit institutions and unique characteristics of its aims due to their interrelations with the tasks of audits and analytical research performed by such bodies. The paper also proposes basic instruments for the data collection as well as a general approach to interaction between auditors conducting information audit, auditees and other stakeholders.The practical results of the research are relevant for the introduction of information audit instruments into the practice of public audit institutions and for the development of applicable methodological documents.

Social media adoption by Audit Institutions. A comparative analysis of Europe and the United States

Several authors and international organizations have recommended that public sector Audit Institutions use social media (SM) to communicate with and engage stakeholders, but the adoption and use of these tools by Audit Institutions has remained unexplored. This paper analyzes the presence of Audit Institutions in Web 2.0 and SM tools, in the EU and US, at regional and central government level, in order to answer the following research questions: What is the level of adoption of Web 2.0 and SM tools among Audit Institutions? Can any patterns of adoption be identified? What factors are related to the adoption of Web 2.0 and SM tools? What is the main objective of the content published? What is the number of followers and the level of citizen awareness? Results show that the adoption of Web 2.0 and SM tools by Audit Institutions is at an initial stage. There are differences in adoption between Supreme and Regional Audit Institutions, among the different public administration styles, and depending on the population size and level of use of SM and previous levels of transparency at country level. This results in predictable patterns of adoption consistent with path dependencies derived from the institutional context and citizen demands. The number of followers and citizens' awareness is generally low and the contents published rarely aim at encouraging stakeholder participation. Based on these findings, theoretical and practical implications are highlighted.

The impact of external audit on the accountability of the common fund of the Mozambique National Institute of Statistics

PurposeThe purpose of this paper is to evaluate the impact of external audit on the management of the Common Fund of the Mozambique National Institute of Statistics (INE).Design/methodology/approachThis paper followed a case study approach of the INE Common Fund that was based on the qualitative evidence from the content analysis of the external audit reports, annual plans of activities and budget for the past seven years and interviews with middle managers of the INE.FindingsThe research found that external audit has a relatively significant impact on the management of the INE Common Fund. The authors attribute the positive impact to the high concern of management to implement the external audit recommendations, associated with the financial dependence between the agent (the National Institute of Statistics) and the principal (Fund Donors), explained through Laughlin’s Model of Accountability.Practical implicationsThe results indicate that external audit associated with the financial dependence of the agent on the principal has a significant impact on the accountability. Thus, it contributes to assist in the formulation of public policies on external financing to developing countries.Originality/valueMost of the studies on external audit and accountability are from countries with more developed economies than Mozambique’s, without heavy reliance on external financing, and these studies analyse the audits carried out by public audit institutions. This research explores the phenomenon in the context of external financing to the State Budget by governments and international organisations.

Performance Audits Focused on the Principle of Effectiveness: An Overview of Public Audit Agencies

According to international standards, performance audit is an independent and objective process for reviewing the economy, efficiency and effectiveness of a government’s program, organization, and/or activity in order to evaluate public management’s performance. The relevance of the matter prompted the present study, which aims to inquire if, when conducting performance audits, Supreme Audit Institutions analyze a procedure’s effectiveness, that is to say, the impact that determined government spending had on the program’s target population. In order to do so, a questionnaire was applied to auditors of Public Audit Institutions from several countries. As a preliminary result, our research concluded that the majority of auditors conduct economy, efficiency and efficacy analyses, but rarely assess the effectiveness of government spending.

The Role of Supreme Audit Institutions in Promoting and Strengthening Ethics and Integrity in the Public Sector. Possible Models and Tools to Follow

This paper intends to provide an overview of the main concepts and issues concerning ethics infrastructure and associated components integrated into the internal management control, and of the role of SAIs in strengthening ethics and integrity, specific valuation models and tools of ethics and integrity in public entities. It also reflects the good practice and punctual approach of several relevant supreme audit institutions that managed to innovate in the field of analysis and assessment of risks and vulnerabilities specific to ethics and integrity in the public sector. As research methods used in this paper we mention: logical method, analysis and synthesis, as well as the documentary studies, especially developed and promoted by institutions and major organizations worldwide: United Nations - the UN, Organisation for Economic Co-operation and Development - OECD, World Bank, International Organization of Supreme Audit Institutions - INTOSAI, relevant supreme audit institutions, and so on. The novelty of this paper is the highlight on the importance of ethics and integrity of public sector entities, trying to raise the awareness about the need for a functional ethical infrastructure and the illustration of possible approaches, models, and tools that can be used by external public audit institutions in evaluating ethics and integrity.

Performance auditing in Germany concerning environmental issues

PurposeThis paper aims to provide knowledge concerning performance auditing by examining the implementation in Germany. The text shows how the principles of performance auditing are implemented in Germany. The German approach is special because the international standards are not implemented in Germany, and there are neither any existing scientific studies nor any other literature concerning performance audit in Germany.Design/methodology/approachThe study comprises a general discussion of the goals and boundaries of performance auditing with an environmental perspective based on a literature study. The text also describes the theoretical, legal and methodological background of performance audits in Germany. Findings concerning the status quo of performance auditing in Germany are based on an analysis of audits conducted by public audit institutions. The findings were compared with findings from other current international studies.FindingsThe sample of scrutinized audits conducted by the public audit institutions shows clearly that the provisions of the German Federal Budget Code had been fully implemented. In nearly every study, implications of economy, efficiency and effectiveness have been considered. Hence, even without any references to the international standards, the core principles of performance audit are considered in the audits conducted by the public audit institutions in Germany. The main focus in the audits had been placed on the efficiency and effectiveness. It is also very remarkable how far-reaching the findings of the audits in Germany are. Especially, in terms of scrutinized subsidy directives, the public audit institutions are not reducing their recommendations to the implementation of the granting-process but to the directives itself.Research limitations/implicationsThe paper highlights a sample of studies which is limited in terms of quantity because it focused on audits related to environmental protection.Practical implicationsThe study provides knowledge on how audits are conducted by public audit institutions in Germany. In doing so, it is particularly helpful for people dealing with public audits, especially in the government and the audit institutions.Social implicationsThe paper examines the role of public audit institutions that contribute to a more efficient and an effective deployment of public expenditures. The goal is to avoid wasting public means by using it without causing positive effects. This is the basis for a socially just usage of public means.Originality/valueThe paper contributes to a better understanding of performance auditing in general. As there are no documented scientific studies or other papers concerning the implementation of performance audit in Germany, the paper is of high-innovatory value. The findings are very important to the further development of performance audit. In addition, by depicting the role of public audit institutions in Germany, it allows comparisons to the situation in other countries.

Commentary: Where You Sit Is What You See: The Seven Deadly Sins of Performance Auditing. Implications for Monitoring Public Audit Institutions

It has to be observed at the outset that performance auditing has been a contentious issue for much of the three decades it has been pursued in Australia. That said, there is clear evidence of its growth and acceptance in that period. Nevertheless, there are still apparent differences in views and perceptions across the main stakeholders, not least related to the performance and results achieved by the Audit Offices involved. In these respects, Stuart Kells highlights deficiencies that need to be addressed to instill greater confidence in such auditing. In my view, many of these deficiencies (Sins) have been addressed, particularly in the last decade or so, and we may be better employed in focusing more on the achievement of identifiable outcomes as a result of such auditing. Do performance audits actually make a ‘difference’? Such a focus does not ignore questions about how performance audits are selected, conducted and reported, nor their quality and relevance. Rather, a major challenge is to put in place a robust review framework that would markedly add to accountability for implementation of agreed audit outcomes.

The Seven Deadly Sins of Performance Auditing: Implications for Monitoring Public Audit Institutions

Performance auditing is a longstanding feature of democratic government in many countries. It aims to lift the efficiency and effectiveness of public sector organisations, but numerous authors have voiced scepticism about its ability to do so. From three decades of performance auditing literature, this paper distils seven critiques of performance auditing: ‘anti-innovation’, ‘nit-picking’, ‘expectations gap’, ‘lapdog’, ‘headline hunting’, ‘unnecessary systems’ and ‘hollow ritual’. The paper concludes that the critiques are not valid in all cases, but serve to categorise risks to be managed in the design of performance audit programs and associated institutional arrangements. In light of the critiques, the paper proposes desirable elements of frameworks for monitoring and reporting the performance of institutions with performance audit mandates.

Speaking Softly Without Big Sticks: Meta‐Regulation and Public Sector Audit

Australian government has undergone an “audit explosion” in the last twenty years. This article observes, first, that the constitutional function of public sector audit institutions (AIs) gives them a strong cultural commitment to the assessment of the regularity and legality of public expenditure. New functions connected with performance audit and evaluation of nonfinancial performance indicators are liable to be interpreted through the lens of these more traditional concerns. The second observation is that, if we think in terms of “regimes” of financial control, we find that AIs form only part of the overall regulatory regime. This calls into question the coherence and potential for effectiveness of regimes of financial control. However, AIs could also be conceived as “meta‐regulators” with the capacity to steer the self‐regulatory capacities of public sector organizations in respect of financial controls. Auditors may be effective as meta‐regulators through speaking softly, even though they demonstrably lack big sticks.

Struggling for supremacy: the case of UK public audit institutions

Abstract In recent years, there has been concern over the diversity of audit practice in the UK public sector. In response to these concerns the four constituent national audit agencies (the National Audit Office (NAO), Audit Commission, Scottish Accounts Commission and the Northern Ireland Audit office) set up a Public Audit Forum to provide a focus for developmental thinking in relation to public audit. The government also established a review (the Sharman review) to examine audit and accountability arrangements for central government departments. The review has recommended that the NAO be given greater access to companies and other bodies in receipt of substantial amounts of public money and that auditors should be responsible for the external validation of performance information. Behind such consultations and recommendations, however, there are a number of major, ongoing “turf-battles between the public audit agencies themselves and between the agencies and central government. Such battles are deserving of more attention, as they highlight some fundamental weaknesses in the public audit function, especially with respect to its capacity to operate in a manner independent of the government.

The development of auditing standards and the certified public accounting profession in China

The organisational framework for the development of auditing in China evolved from government audit, internal audit and public audit institutions and subsequently provided the focus for services offered by the certified public accounting firms. By the mid 1990s, China’s independent auditing standards were being issued, incorporating the General Independent Auditing Standard, specific auditing standards and practice pronouncements. The standards, while largely modelled on international standards, nevertheless reflected China’s unique transition to a market economy. However, there are a number of issues in the public accounting profession in China that have yet to be resolved, to ensure the application of auditing standards that are in line with international norms. These issues revolve around professional competence, independence, ethical standards and auditing practice. Nevertheless, with an established credible auditing standards framework in place and the ongoing upgrading of educational and training standards of CPAs, the profession in China is heading in the right direction.

Development trends of internal auditing in China

Discusses the role of internal audit in the socialist market economy, the need for supervision of enterprises through internal audit and the way in which various stakeholders benefit. Makes a case for why internal audit uniquely fulfils the supervisory role and should not be substituted by government or public audit institutions. Charts the shift from financial to performance auditing. Enterprises which established internal audit early have achieved a competitive advantage, and internal audit services are increasingly requested rather than imposed, although there remain pockets of resistance. Presents models of the fit of the internal audit department with the rest of the organization and stresses the importance of a firm working relationship with the external auditors.