Public Audit Research Articles

Credulous on accountability at LaaRiba community: A tasawuf critical reflection

Research aims: Accountability is a form and mechanism of responsibility that applies to all activities at the level of individuals, organizations and the social world. This study aims, first, to explore the meanings and values that underlie the collective awareness of members and administrators of the LaaRibaa Community in actualizing accountability in financial reporting; second, providing a critical reflection on the awareness and practices of accountability within the LaaRibaa community.Design/Methodology/Approach: This study applies Milles and Huberman's qualitative approach, modified with critical reflection through tasawuf concepts by Haji Abdul Malik Karim Amrullah (HAMKA). Data were collected through interviews with committees and members as well as observations on the documents. Data analysis includes the following steps: (1) data reduction, (2) data presentation, and (3) verification using the HAMKA’s tasawuf concept as an analytical tool.Research findings: The results show that the LaaRiba community's financial accountability model is influenced by many values. Al-Qur'an and hadith as fundamental values; trustworthiness and sincerity as substantial values; and please Allah (ﷻ) as the ultimate goal of managers and community members. However, this principle of trustworthiness and sincerity is practiced credulously, both from their position as public auditors and from the perspective of HAMKA's tasawuf concepts which are ihlas (sincerity) and amanah (trustworthy) (Islamic accountability).Theoretical contribution/Originity: This study found an inconsistency in the attitudes of community members or managers, on their daily occupation of being public auditors, they were very strict on the principles of accountability, but not accordingly when they act as community members or managers. This result strengthens previous findings which show a weak commitment to accountability in Islamic social institutions.Practitioner/Policy implication: To the managers of the LaaRiba community, there are three aspects that need to be fixed immediately. First, the legality of the community, so that there is legal certainty. Second, the position of the waqf contract needs to be reviewed so that it does not violate its purpose. Third, the accountability of financial reports needs to be improved in accordance with generally accepted accounting principles in Islamic social institutions

The Impact of Auditor Liability System on Audit Quality

The complexity of business operations and the likelihood that accounting information may be distorted are both rising along with the market economy's quick expansion, which raises the stakes for auditing work. In the process of independent auditing, the purpose of the auditor responsibility system is to control the auditor's numerous audit relationships. To a certain extent, this system can prevent audit risk and lower the likelihood of audit failure, improving audit quality. This paper examines the issues and causes of certified public accountants' audit failure in the auditing process, examines the current issues with the auditor responsibility system, and makes recommendations for enhancing audit quality in light of the administrative penalty decision made by the China Securities Regulatory Commission (CSRC) on ShineWing China Accounting Firm and the two signatory certified public accountants in 2022. suggestions for raising the quality of the audit.

Similarity-based deduplication and secure auditing in IoT decentralized storage

Data storage is becoming more difficult due to the network technology’s rapid development, especially with the significant advancement in Internet of Things (IoT). To solve this problem, various cloud storage-based deduplication schemes have been extensively studied to alleviate the storage burden of local IoT devices. However, recent evidence has revealed the deficiencies of these centralized data management schemes related to poor adaptability and lack of resistance to the single point of failure. Most existing deduplication approaches only perform deduplication on the same data, lacking consideration of the IoT data similarity characteristics. Also, these approaches keep only one copy of all data stored on the cloud server, making them valid only if the cloud storage provider is fully trustable, and the applicability of the solution is significantly reduced. What is important, outsourcing storage takes away control of data from their owners, security audits thus should also be considered in secure data storage research. To tackle these issues, we propose a similarity-based deduplication and secure auditing in the IoT decentralized storage scheme. Specifically, our scheme utilizes a novel similarity-based deduplication method based on the multi-server storage model to achieve efficient space saving while protecting data security. Furthermore, the proposed scheme ensures the integrity and availability of data by introducing similarity-based proofs of data ownership and similarity-based data integrity auditing. On this basis, our scheme further adopts a similarity-based secure auditing mechanism to achieve decentralized public auditing without the third-party auditor, in which the audit results of outsourced data are shared on blockchain to avoid repetitive audit tasks. We verify the correctness and effectiveness of our proposed scheme through rigorous theoretical analysis and extensive experimental results.

Supportive leadership and job satisfaction at the European Court of Auditors

This article draws on theories of person–organisation fit and leadership behaviour to explore how supportive leadership is related to communication practices, collaborative working practices and performance management practices and how these three practices, in turn, relate to public servants’ job satisfaction. A model of supportive leadership's direct and indirect effects on employees’ job satisfaction is empirically tested using responses to a survey administered to the European Court of Auditors (ECA) staff. The findings show that communication and collaborative working practices mediate the relationship between supportive leadership and job satisfaction. Supportive leadership positively relates to performance management practices, but these practices have no significant association with job satisfaction. While addressing a theoretical void in the field, this study also makes an empirical contribution by unveiling how a professional European public audit institution manages its human resources and the means it uses. Points for practitioners Elaborating on the relationship between leadership behaviour and person–organisation fit in the context of a supranational public entity helps to explain what motivates public servants. The relationship between supportive leadership and public servants’ job satisfaction is mediated by two organisational practices: communication and collaborative working practices. Transparent performance management practices do not mediate the relationship between supportive leadership and job satisfaction. Public sector organisations with professional staff can centre their human resource management around effective communication and collaborative working practices to ensure greater employee satisfaction in the workplace.

A study on the key drivers of national construction project audit risk and evolvement mechanism

PurposeChina has recently introduced a new audit law that aims to increase the scope of audit supervision and raise the standards for preventing risks in auditing national public projects. This paper presents a systematic research study on the causes of audit risks in national public projects and discusses the process by which these causes contribute to the emergence of such risks. Furthermore, the paper investigates the core risk sources in various types of national construction project audit. This paper aims to provide theoretical support for auditors of national construction projects in risk avoidance when conducting audits.Design/methodology/approachIn this study, the authors carefully selected five national public audit projects from China and performed a comprehensive analysis of 85 relevant audit documentation. The textual analysis was conducted using Nvivo12 software, and the grounded theory approach was adopted for generalization purposes.FindingsBased on the research results, the findings suggest that there are five key causes contributing to the audit risk of national construction projects: professional competence, risk awareness, management capacity, level of attention and deliberate fraud. The most critical factor identified is management capability, with 59.93% of the data supporting this view. This conclusion was based on an analysis of state-owned enterprises, administrative organs and public institutions. Building upon this, a framework titled “the mechanism of audit risk factors with management capability as the core” was constructed.Originality/valueThis paper employs qualitative analysis methods to examine national construction projects in China, contributing new literature to the theoretical study of audit risk management. The article also provides practical recommendations for auditors on how to mitigate audit risks and improve the quality of audit services in national project governance.

SEA: Secure and Efficient Public Auditing for Edge-Assisted IoT Aggregated Data Sharing

SEA: Secure and Efficient Public Auditing for Edge-Assisted IoT Aggregated Data Sharing

Changing the boundaries of public sector auditing

PurposeThis paper aims at reflecting on the changing boundaries of public sector auditing. In particular the paper focusses on the opportunities and challenges for performance auditing, for sustainable development auditing and digitalised public sector auditing.Design/methodology/approachBuilding from the papers in this special issue, the authors draw on the literature on current development of public sector auditing (such as public sector auditing performance auditing, sustainable development auditing and digitalised public sector auditing) and propose a future research agenda.FindingsThe “changing boundaries” of public sector auditing may influence the difficulty for public sector organisations to manage the uncertainties and risks not only associated to corruption but also the public governance development (collaborative, digital and emergency governance). The authors speculate on the role that the “changing boundaries” of public sector auditing can play.Originality/valueThe paper contributes by setting new research avenues for future studies on public sector auditing in a post-new public management context.

FACTOR-FACTOR THAT INFLUENCING INDEPENDENCE OF PUBLIC-SECTOR AUDITOR: A LITERATURE REVIEW

The study of public sector audit is a relatively large, complex, unexplored and under-recognized field. Therefore, researchers call for more studies on public sector audit, especially in the context of developing countries. This article gives review of academic study pertaining to public-sector auditors’ independence and factors affecting public-sector auditors’ independence. This literature review is implemented based on published papers in 20th century in prestigious journals related to public sector audit. Firstly, we review and explain definition of independence clearly. Secondly, we organize our review around three main threats to public-sector auditors’ independence, namely, (a) political manifestos, (b) auditor tenure, and (c) relationship with auditee. For each of the threats, this study discusses the effects of each threat on the public-sector auditors’ independence. Additionally, we conclude that proofs together with recent changes, provides for future study on public-sector auditor’s independence.

The quest for legitimacy: The European Court of Auditors’ work on fraud

AbstractThis research aims to contribute to the debate on fraud on public funds and the work that public auditors perform on this important topic, providing a useful analysis for government officials concerned about accountability, good governance, and transparency. This article presents a retrospective analysis of the European Court of Auditors’ (ECA) role in combating and preventing fraud. Using innovative research tools such as the Valence Aware Dictionary and sEntiment Reasoner lexicon and other quantitative and qualitative research methods, evidence is found that ECA fraud audits reach a more negative tone in their conclusions than in the rest of the audits and that their audit recommendations on fraud are accepted to a lesser degree than the rest. Although in recent years the ECA has taken a more active role regarding fraud and stirring the public debate on this topic, its work is still hampered by its non‐jurisdictional statute. The results obtained contribute to the literature on fraud in the public sector by bringing empirical evidence on public sector fraud audit with data of an under‐researched and unique Supreme Audit Institution. This article opens up new avenues for future research and has practical implications for practitioners by offering them insights on their role on the issue, thus helping them to address some areas more prone to be affected by fraud.

Public Auditing of Log Integrity for Shared Cloud Storage Systems via Blockchain

Public Auditing of Log Integrity for Shared Cloud Storage Systems via Blockchain

A population-level post-screening treatment cost framework to help inform vision screening choices for children under the age of seven

ABSTRACT Purpose/Background Visual acuity (VA) screening in children primarily detects low VA and amblyopia between 3 and 6 years of age. Photoscreening is a low-cost, lower-expertise alternative which can be carried out on younger children and looks instead for refractive amblyopia risk factors so that early glasses may prevent or mitigate the conditions. The long-term benefits and costs of providing many children with glasses in an attempt to avoid development of amblyopia for some of them needs clarification. This paper presents a framework for modeling potential post-referral costs of different screening models once referred children reach specialist services. Methods The EUSCREEN Screening Cost-Effectiveness Model was used together with published literature to estimate referral rates and case mix of referrals from different screening modalities (photoscreening and VA screening at 2, 3–4 years and 4–5 years). UK 2019–20 published National Health Service (NHS) costings were used across all scenarios to model the comparative post-referral costs to the point of discharge from specialist services. Potential costs were compared between a) orthoptist, b) state funded ophthalmologist and c) private ophthalmologist care. Results Earlier VA screening and photoscreening yield higher numbers of referrals because of lower sensitivity and specificity for disease, and a different case mix, compared to later VA screening. Photoscreening referrals are a mixture of reduced VA caused by amblyopia and refractive error, and children with amblyopia risk factors, most of which are treated with glasses. Costs relate mainly to the secondary care providers and the number of visits per child. Treatment by an ophthalmologist of a referral at 2 years of age can be more than x10 more expensive than an orthoptist service receiving referrals at 5 years, but outcomes can still be good from referrals aged 5. Conclusions All children should be screened for amblyopia and low vision before the age of 6. Very early detection of amblyopia refractive risk factors may prevent or mitigate amblyopia for some affected children, but population-level outcomes from a single high-quality VA screening at 4–5 years can also be very good. Total patient-journey costs incurred by earlier detection and treatment are much higher than if screening is carried out later because younger children need more professional input before discharge, so early screening is less cost-effective in the long term. Population coverage, local healthcare models, local case-mix, public health awareness, training, data monitoring and audit are critical factors to consider when planning, evaluating, or changing any screening programme.

Functionality of the Three Lines of Defence Model in the Case of Public Financial Audit in the Republic of Moldova

Both, the alignment with the European vector of development, as well as the new challenges and demands made by the public to the public authorities determine the need to take over and adapt some effective mechanisms of public governance in the Republic of Moldova. Among them, the model of the Three Lines of Defence that forms the analytical framework for the integrated approach to internal public financial control and external public audit stands out. This article, applying specific research methods, first of all, the examination of national legislation and international practice, aims to achieve the specifics of the model of the Three Lines of Defence in the public institutions of the Republic of Moldova, identifying the most pronounced constraints and problems in its operation. In order for the monitoring of the activity of public institutions in the Republic of Moldova to be effective, it is necessary to develop and apply an integrated approach to internal control and public external audit.

Pengaruh Ukuran Kantor Akuntan Publik, Audit Tenure dan Spesialisasi Kantor Akuntan Publik Terhadap Kualitas Audit

This study aims to examine the effect of the size of the Public Accounting Firm, audit tenure, and Specialist Public Accounting Firm on audit quality. The sample used in this research is banking companies listed on the Indonesia Stock Exchange (IDX) for the period 2018 to 2020 which can be accessed via the Indonesian Stock Exchange website (www.idx.co.id). This research uses descriptive research with a quantitative approach. The sample selection method in this study used a purposive sampling technique, with a total sample of 119 data obtained from banking companies. This study uses the hypothesis of multiple regression analysis. The results of the study show that (1) KAP size has an effect on audit quality in banking companies listed on the IDX for the 2018-2020 period, whereas (2) Audit tenure has no effect on audit quality in banking companies listed on the IDX for the 2018-2020 period, and (3) KAP specialization affects audit quality in banking companies listed on the IDX for the 2018-2020 period.

The Impact of Healthcare Wage Increases on the Quality of Health Services in Romania

Abstract The collection, allocation and distribution of public resources for the health sector in Romania and beyond is an ongoing challenge and concern for governments. In this regard, this paper aims to answer the following question: how does human resources budget increment contribute to the quality of health services in Romania? The research is based on some specific external public audit methods, which identify risks and vulnerabilities related to the above-mentioned aspects, but also analyzes the resources allocated for this purpose in terms of the 3Es (efficiency, effectiveness, economy). The study aims to synthesize the ideas on this topic over the scientific literature and current legal regulations or under development, strategies, public health policies in Romania.

From Digitization to Artificial Intelligence in External Public Audit

Abstract Digitization is one of the main concerns in contemporary society, this phenomenon being accentuated with the emergence of the COVID-19 pandemic, which forced everyone to use technology under the conditions imposed by the new reality based on social distancing. The paper aims to analyze the use of digitization at the level of supreme audit institutions, the transition to artificial intelligence, as well as its impact on performance management, both in terms of performance at the level of these institutions and in terms of the public sector, in its whole. At the same time, the paper aims to pinpoint a series of tools based on artificial intelligence that could be used in the external public audit and, in particular, with regard to the audit of public procurement, given the importance of the funds allocated to the area of public procurement.

Methods for improving accounting and analytical support of enterprises in order to protect the environment

Purpose. Analysis and identification of peculiarities of man-made pollution (MMP) that are not reflected in the reporting. Development of mathematical methods for their calculation. Classification of environmental costs (EC) in accounting. Development of proposals for improvement of tax reporting tools and norms, enhancement of the impact of tax instruments on the introduction of environmental protection technologies and stimulating enterprise management to use the “environmental obligations” tools. Methodology. Special and general methods of scientific knowledge were used: induction and deduction – to identify the peculiarities of technogenic pollution which are not taken into consideration in the accounting reporting; analytical method – for proposals to improve accounting and analytical support; method of analysis and synthesis – for the development of EC classification; mathematical analysis – to develop the method for calculating the peculiarities of pollution that are not taken into account in the reporting. Findings. It is proposed to strengthen the motivational value of environmental obligations. The need to take into account the synergistic and vector nature of the polluting effects on the environment is pointed out. It is proposed to introduce an information center for accounting of natural capital for analysis and consideration of environmental damage in real time. A classification of costs aimed at achieving environmental goals has been developed and purpose of each of their types is specified. This allows increasing the effectiveness of management accounting. The need to publish management reporting is substantiated to ensure public audit as well as to increase the effectiveness of the management of environmental tasks. Originality. The peculiarities of MMP, which are not reflected in the accounting reports, are established, mathematical methods for their calculation and evaluation are developed. Improvement of tax reporting tools and norms, strengthening of the impact of tax instruments, effective stimulation of enterprise management to use “environmental obligations” tools are proposed. Practical value. Methods for calculating the peculiarities of MMP and proposals for improving accounting and analytical support to increase the efficiency of management and tax activities are introduced.

Розвиток державного аудиту в Україні

Ukraine, like most countries of the world, constantly faces the problems of corruption, lack of effective governance and lack of transparency in the activities of state structures. State audit is an important tool to identify violations of the law and the risks associated with the negligence of officials and the lack of efficiency of the state administration system. The purpose of the work is to study and analyze the process of development of the state audit system in Ukraine, to identify the factors affecting its effectiveness and to consider the possibilities for further improvement of this system. The object of the study is the system of state audit in Ukraine, which includes the legal framework, state audit bodies and procedures for conducting state audit. The system of public audit in Ukraine has evolved over the past 30 years in accordance with changes in the economic, social and political spheres of the country. The first steps to create a state audit system were taken in 1991, when Ukraine became an independent state.

Enabling Efficient Deduplication and Secure Decentralized Public Auditing for Cloud Storage: A Redactable Blockchain Approach

Public auditing and data deduplication are integral considerations in providing efficient and secure cloud storage services. Nevertheless, the traditional data deduplication models that support public auditing can endure the enormous waste of storage and computation resources induced through data redundancy and repeated audit work by multiple tenants on trusted third-party auditor (TPA). In this work, we introduce blockchain-based secure decentralized public auditing in a decentralized cloud storage with an efficient deduplication model. We employ blockchain to take on the task of centralized TPA, which also mitigates the implications of malicious blockchain miners by using the concept of a decentralized autonomous organization (DAO). Specifically, we employ the idea of redactability for blockchain to handle often neglected security issues that would adversely affect the integrity of stored auditing records on blockchain in decentralized auditing models. However, the proposed model also employs an efficient deduplication scheme to attain adequate storage savings while preserving the users from data loss due to duplicate faking attacks. Moreover, the detailed concrete security analysis demonstrates the computational infeasibility of the proposed model against proof-of-ownership, duplicate faking attack (DFA), collusion attack, storage free-riding attack, data privacy, and forgery attack with high efficiency. Finally, the comprehensive performance analysis shows the scalability and feasibility of the proposed model.

The effects of non-Big 4 mergers on audit efficiency and audit market competition☆

This study examines whether recent mergers between small and midsize accounting firms influence competition by increasing the number of firms that can compete with larger rivals in the U.S. public company audit market. I find that in-market mergers generate efficiencies that are reflected in a post-merger reduction in audit hours but not in reduced audit quality. For both in-market and out-of-market mergers, clients switching to post-merger firms are more likely to be accelerated filers and are significantly larger in terms of several proxies for size and complexity. Lastly, I find that an increase in market-level merger activity is associated with lower profitability of Big 4 firms operating in the same market but only in the smaller client segment. These findings suggest that recent mergers have actually increased competition in some segments of the audit market despite already high concentration and concerns about a lack of sufficient competition.

The Role of External Auditor in the Adoption of Computer-Assisted Audit Techniques with Unified Theory of Acceptance and Use of Technology: An Empirical Study in Public Audit Firms in Jakarta

The research aimed to analyze factors that influence acceptance of Computer Assisted Audit Techniques (CAATs) among external auditors in Public Audit Firms in Jakarta. The Unified Theory of Acceptance and Use of Technology (UTAUT) approach was used for this analysis. Technological advancements had an effect on auditors' ability to adopt audit software. However, it had been found that there was no preparation or openness from auditors, leading to suboptimal utilization of audit implementation software and affected the presentation of audit information. This investigation adopted a quantitative method by distributing close-ended questionnaires to external auditors in audit firms in Jakarta. Data were analyzed using Partial Least Square with SmartPLS Ver 3. The results show that social influence affected behavioral intention of external auditors in Jakarta in adopting and using CAATs. Expectancy performance, effort expectancy, and facilitating conditions do not affect behavioral intention of external auditors in adopting and using CAATs. The research generates contributions that can be further directed toward the development of auditors’ competencies in optimizing technology in audit.