Public Sector Audit Research Articles

Assessing the Information Content of the Auditor General’s Report in Voluntary Tax Compliance Decisions in Ghana from the Experts’ Perspective

The utility value of auditing public sector accounts is widely reported in the advanced and developing economies including Sub-Sahara Africa economies. Such reports claim that public sector financial audit influences transparency, probity, financial discipline, accountability, and voluntary tax compliances decisions. This study tests this widely acclaimed view by assessing the information content of the Auditor General’s (AG) report in voluntary tax compliance decisions in Ghana, a Sub-Sahara Africa nation. The assessment used a panel of 12 experts in a 2-round seeded decision email Delphi methodology. The panel of experts reached weak consensus that the AG’s report is an objective and a useful tool for assessing voluntary tax compliance behaviors and taxpayers’ decisions on the job retention of an indicted corrupt public official in the country; in assessing public institutions’ performance; fiscal deficits; the fight against corruption; and policy formulation and planning. Therefore, the AG’s report can be a powerful tool for resolving the incomplete information and the information risks of the Ghanaian taxpayer. It can also be useful for protecting the public purse, for preventing waste, fraud, embezzlement, and corruption in the management of Ghana’s public purse. This result is consistent with findings in Europe, Nigeria, Ethiopia, and Uganda that public sector audit influences voluntary tax compliance decisions. So, the AG’s report has information content in voluntary tax compliance decisions in Ghana. Consequently, Ghana and the other Sub-Sahara Africa nations can use public sector financial audit as a useful and objective tool to improve voluntary tax compliance attitudes in their various economies because it can positively influence the availability of funds for public programs and services. This is particularly important in this COVID19 era when funding sources are scarce. Since the level of consensus among the panelists was somehow weak, further iterations are required to determine the stability of the responses. The study extends literature methodologically by using the email Delphi study to assess the information content of the AG’s report on voluntary tax compliance behaviors in Ghana.

A Smart City- Tensions Between Space of Flows and Space of Places

The main objective of this paper is to zexplore the impact of public sector auditing in fighting corruption and promoting the development agenda in Zimbabwe. The paper explores the extent to which public sector auditing may be used to fight the corruption surge in the public sector. The existing literature on corruption focused more on economic and political perspectives. There is limited literature that explains in depth how elements of the public sector auditing may contribute to a reduction in corruption. The study was based on the positivism research philosophy and explanatory research design. Probability sampling technique was used to develop the sample of the study. A total of 500 respondents were used in the study. The findings of the study indicated that the four elements of public sector auditing process are indeed necessary to fight corruption in the public sector. The study noted that to reduce corruption in the public sector, it was important to ensure and develop auditors integrity, develop and put up strong and effective control systems, promote auditor’s independence and ensure the development of relevant auditors competency. This shows that paper has provided another accounting perspective to the fight against corruption. In view of these findings, the study recommended that Government invest more resources in the development of auditors for the public sector in all the Ministries. There is need for targeted human capital development in the area of public sector auditing which must incorporate auditors integrity, auditing competences, control systems and enhancement of auditors independence in the public sector. This study recommends that future studies may need to examine the value of each of the four elements in the process of fighting corruption.

The Funding Models and Efficiency Discourse in Higher Education

After 30 years of transformation, the government of Kazakhstan has created own higher education system shaped by various social-economic and political factors. Nowadays the higher education system operates with stable institutions despite its challenging environment. There is no doubt that global trends in education also have an impact on the country’s policies. At the same time, the public finance system of Kazakhstan had also faced several major reforms. For instance, the term “Public Sector Audit” or “State Audit” was introduced by the new Law in 2015 which completely changed the approach of the Public Sector Institutions. The focus has become so called “efficiency” instead of “financial control”. In this regard, this paper identifies critical dimensions of effectiveness in higher education of developed countries based on technical articles and empirical research. The article reveals the features of the education funding models in OECD countries and efficiency measuring grounds of higher education.

Who is responsible for developing the non-core skills of entry-level public sector trainee auditors: the case of the Auditor-General South Africa

Within the context of rising levels of corruption, financial mismanagement, fraud, and irregular, fruitless and wasteful expenditure in the South African public sector, as well as high profile audit failures, this paper investigates the employment readiness of recent auditing graduates, with particular emphasis on their non-core skills proficiency. The observations are based on a survey of respondents involved in appointing and training aspiring chartered accountants at the Auditor-General South Africa (AGSA). Aspirant auditors graduating from South African Institute of Chartered Accountants (SAICA) accredited universities lacked the necessary non-core skills entry-level trainee auditors at expected levels of proficiency, necessitating additional training interventions. However, universities should not be solely responsible for developing all the skills of competent public sector auditors. Instead, an integrated and collaborative effort by the key stakeholders in the auditing profession is required. These parties include universities, audit firms and professional bodies, the students themselves, as well as other parties such as regulators. Despite extant studies examining the employment readiness of auditing graduates, this is one of the first that specifically focuses on the phenomenon within the public sector.

Red Flag Effectiveness in Public Sector Audit Using Fraud Pentagon Theory

Auditors in carrying out fraud detection do not always get a bright spot, because the perpetrators have many ways to commit fraud and various underlying motivations. This reason strengthens government auditors, and it is important to understand or recognize indicators or red flags in determining fraud risk assessments. The aim of this article is to gather empirical evidence on how public sector auditors perceive fraud detection. Partial Least Square analysis is the method used. The number of samples in this study was 96 government auditors consisting of 48 BPKP auditors and 48 BPK auditors. The findings demonstrate that gender, duration of employment, and education and training of auditors at BPKB have an impact on the effectiveness of red flags, whereas auditors at BPK have a different impact, with job position, education, and training having an impact on red flag effectiveness. The results of this study give attention to BPKP and BPK to provide opportunities for auditors to participate in continuing education and participate in training that supports auditors in carrying out their work, especially related to training in the use of IT to detect fraud. The perception theory can explain the usefulness of red flags in detecting fraud, according to the findings of this study. This means that in determining the ability to use red flags, it is influenced by individual characteristics (gender, position, length of employment), and the capacity of auditors (education and training).

Pengaruh Pengalaman Kerja, Independensi, Obyektifitas, Integritas, dan Kompetensi terhadap Kualitas Audit pada BPKP Kantor Perwakilan Wilayah Jawa Timur

This study aims to examine the effect of work experience, independence, objectivity, integrity, and competence on the quality of audits produced by public sector auditors at BPKP East Java Regional Representative Office. This study uses quantitative methods with research instruments using questionnaires. The population of this study are public sector auditors who become Civil Servants (PNS) at BPKP East Java Regional Representative Office. Determination of the sample with the criteria that the auditor has attended the Auditor Functional Position Education and Training (JFA). Analysis of research data using multiple linear regression. The results showed that the independence, integrity, competence of public sector auditors had no effect on audit quality. While the variables of Work Experience, Objectivity affect the quality of audits produced by public sector auditors at BPKP East Java Regional Representative Office.

Supreme audit institutions in Europe: synergies, institutional transparency, gender equality and sustainability engagement

PurposeSupreme audit institutions (SAIs) examine and supervise the activity of public institutions. The study aims at contributing to the existing literature on public sector audit by providing a classification of 29 European SAIs – 28 national SAIs and the European Court of Auditors (ECA) – based on a broad range of attributes varying from the SAIs' environment to its structure, activity, resources or transparency.Design/methodology/approachThe authors apply quantitative methodology for clustering by means of multidimensional scaling and regressive ordinary least square (OLS) and logistic models.FindingsThe authors' results show that SAIs from veteran EU member states (MSs) are more similar amongst them and the same applies to SAIs from Nordic countries, Baltic countries, Western Mediterranean countries and Eastern countries. The authors also perform additional analysis focussing on currently relevant issues such as gender equality, age, environment or the sustainable development goals (SDGs), concluding that the younger the institutions' staff, the more transparent the institutions are. The authors also find that more transparent SAIs report on environmental audits, more prone to cover the SDGs in their audits.Research limitations/implicationsThe research is limited in purpose and scope because data cover only Europe. Given the limited number of observations (29), it does not have prospective purposes but only explanatory ones. The authors' findings are interesting for researchers because they offer original insights on public audit in Europe and cover matters of current interest such as environment, transparency or gender equality.Practical implicationsThe research is also of interest for public auditors because it offers them information that may help them improve their activity and find institutional synergies, as the dataset is available to public auditors.Social implicationsFrom a social view point, the paper shows that public auditors perform work on topics of interest for the citizens.Originality/valueThe dataset compiled for the research offers extensive data and a wide variety of attributes defining European SAIs and may offer future opportunities for research from different perspectives.

Інституційний аудит як інструмент підвищення інституційної спроможності органів виконавчої влади

Розглянуто систему аудитів у публічному секторі та визначено роль інституційного аудиту в підвищенні інституційної спроможності органів виконавчої влади та формуванні засад доброго врядування. Виокремлено напрямки посилення інституційної спроможності органів виконавчої влади. Визначено об’єкт, результати та потенційні вигоди процесу оцінювання інституційної спроможності як складової інституційного аудиту. З метою підвищення ефективності інституційного аудиту запропоновано залучати громадські об’єднання до інституційного аудиту відповідних органів виконавчої влади чи їх структурних підрозділів.

Root influence on public sector audit committee effectiveness: revisiting methodological and theoretical research dimensions

IMPACT This article identifies six root influence themes of South African public sector audit committee effectiveness. With members’ independence, competence, internal auditing, and knowledge of the business being well documented, the themes of the committee’s own leadership and external leadership are under-explored. Aspects added to the current body of knowledge include accepting accountability for decisions, the chair’s extent of power and having the ability to take a stand against management malpractices for internal leadership. Political interference, the standing of the management team and the interaction between management and the committee are identified as external leadership influencers. Decision-makers, audit professionals and regulators should take note of these six root influences in general and destructive leadership behaviour in particular, to ensure that it is appropriately managed.

Information Technology Adoption by Internal Auditors in Public Sector: Antesedents and Consequences

The understanding of Information Technology (IT) adopted by internal government auditors is related to developments in the IT sector in the public sector, such as e-government applications. The purpose of this study is to provide an argument for the motivation for IT adoption when the internal auditors and to identify the factors that influence IT adoption and the influence of IT adoption on the performance of internal auditors in the public sector. This research used quantitative methods and data analysis using Structural Equation Modeling (SEM) with 79 auditors from the Inspectorate within the scope of Central Kalimantan Province. Findings. The results showed that only the perceived benefits variable had a positive and significant effect on IT adoption, while the compatibility variables, top management support, organizational readiness, the external force had a positive but insignificant effect on IT adoption as an antecedent part, while IT adoption had an effect, positive and significant impact on government performance as a consequence of IT adoption. This study provides a practical understanding for government auditors that in carrying out their duties, especially in the new normal order conditions, that the adoption of IT is important to do to produce a good performance.

Exploring past, present and future trends in public sector auditing research: a literature review

PurposePublic sector auditing research has changed rapidly over the past four decades. This paper aims to reveal how the field has developed and identify avenues for future research.Design/methodology/approachThe authors used a structured literature review following Massaro et al. The sample comprises papers on public sector auditing published in accounting and public sector management journals between 1991 and 2020.FindingsThe present analysis highlights that academic research interest in public sector auditing has grown and become more diverse. The authors argue this may reflect a transformation of the public sector in recent decades, owing to the developing institutional logics of public sector reforms, from traditional public administration to new public management and now new public governance.Originality valueThis paper offers a comprehensive review of the public sector auditing literature, discussing different perspectives over time. It also outlines the various public sector reforms introduced over the period of the study. In reviewing the existing literature, the authors highlight the themes for future research and policy settings.

Efficacy of public sector audits in the provision of quality healthcare in Ghana

PurposeThis study examines the efficacy of public sector audits in providing quality healthcare in Ghana. Specifically, to ensure whether there are proper and adequate controls in place to enable providers to offer necessary health services efficiently, effectively and equitably.Design/methodology/approachA structural equation modeling (SEM) is adopted to analyze the link between public sector audit and healthcare delivery through a survey of directors, accountants, auditors and managers in selected public healthcare institutions for a calculated sample size of 123 respondents.FindingsThe study reveals that internal audit, external audit and audit committee have a positive and significant effect on the effectiveness of public sector audits. In turn, the effectiveness of public sector audit has a positive and significant effect on the quality health services. Audit committee is found to have the largest effect on the effectiveness of public sector audits.Originality/valueThis paper extends the literature on the value of public sector audit by providing empirical evidence from a specific context: the public health sector of a developing country in democratic transition with a common law institutional framework. It also provides insights into the financial management of public health systems in developing countries during the ongoing coronavirus disease 2019 (COVID-19) pandemic.

Impression Management in Public Sector Audit Proposals: Language and Fees

We adapt impression management theory to investigate: (1) whether governmental audit proposals include the values of ‘professionalism’ (i.e. independence and competence) and ‘commercialism’ (i.e. client cooperation, auditor trustworthiness, client satisfaction, commercial interests), and, (2) the relations of audit proposal language and contextual influences on proposed audit fees and proposal success. The results suggest that proposals accord with audit firms’ market strategies. Compared to other firms, proposals from small, non-specialist firms use more commercial language, while proposals from governmental specialist firms use more competence language. The results also suggest that the market for US public sector audits includes many low cost, low quality firms; specifically, the modal proposal (41.2%) includes high use of commercialism language and low proposed audit fees. We also find that audit firms propose higher audit fees in US states with a weak governmental internal auditing office, and, that greater use of commercial language correlates with higher rates of proposal success, but only in US states with weak governmental internal auditing functions. The finding of inter-relations between proposal language, the strength of governmental internal audit functions, and proposed fees suggests the value of considering multiple influences on the quality of the public sector financial controls. Acronyms : American Institute of Certified Public Accountants (AICPA) ; Certified Public Accountant (CPA) ; Corporate social responsibility (CSR) ; European Court of Auditors (ECA) ; European Union (EU) ; fixed effects (FE) ; General Accountability Office (GAO) ; Governmental Financial Officers Association (GFOA) ; Independent Regulatory Board for Auditors (IRBA) ; Institute of Internal Auditors (IIA) ; International Accounting Education Standards Board (IAESB) ; International Federation of Accountants (IFAC) ; International Organization of Supreme Audit Institutions (INTOSAI) ; National Association of State Auditors ; Comptrollers and Treasurers (NASACT) ; not-for-profit (NFP) entities ; natural language processing (NLP) ; Office of Management and Budget (OMB) ; Request for proposal (RFP) ; Two-stage least squares (2SLS) ; United Kingdom (UK) ; United States (US)

New development: Whither the strategic direction of public audit in an era of the ‘new normal’?

IMPACT Given ongoing questions about the role and performance of auditing, the challenges faced by public sector auditors are how to not only maintain the confidence of governments/parliaments and the general public but also to show the usefulness and relevance of audit processes, findings and recommendations in an environment that is significantly adjusting and evolving to a ‘new normal’. This article is a timely examination of public audit strategies from national audit offices, assessing whether they are likely to deliver the objectives of the new normal, for example with the increased focus on digital transformation, work methods, communication and collaboration. It also contributes to the now long-standing practice of shared learning by public audit offices around the world. The article includes national audit offices’ reactions to the changes needed post Covid-19.

Public Sector Audit, Transparency and Good Governance on Financial Accountability of Public Sector Entities in Rivers State, Nigeria

This study investigated the effects of public sector audit, good governance and financial transparency on financial accountability of twenty – six (26) ministries in the Rivers State Civil Service. The study employed cross sectional survey research design. The population consisted of twenty – eight ministries and the Taro Yamene model was used for sample size determination while simple random sampling was employed. The study used primary and secondary sources of data collection. Questionnaire was the primary source of data collections after the application of content and face validity while Cronbach alpha was employed to test the reliability of the instrument. The dependent variable was financial accountability index while the independent variables consisted of financial audit index, performance audit index, compliance audit index, good governance index and financial transparency index. The responses obtained from the questionnaire were analysed with univariate, bivariate and multivariate analysis. The multiple regression analysis suggested that there is a positive and significant relationship between financial audit index, performance audit index, compliance audit index, good governance index and financial transparency index on accountability in public sectors in Rivers State. The study concluded that public sector audit, good governance and financial transparency promote financial accountability in the Nigerian public sector. Therefore, the following recommendations were provided amongst others that The Accounting Officers in government Ministries, Department and Agencies (MDA) should carry out government business in accordance with accountability, transparency, effectiveness and efficiency, responsiveness, forward vision and rule of law for the welfare of the citizens.

Assessing the development of performance audit methodology in the supreme audit institution: The case of Indonesia

Badan Pemeriksa Keuangan (BPK), or The Audit Board of the Republic of Indonesia, has introduced performance audits intensively since public sector audit reforms were initiated in 2001. However, the implementation of performance audits still faces several obstacles. This study examines the development of the performance audit methodology in BPK, which can be divided into three stages: before the revitalization of BPK in 2006, the initial development of performance audits during 2006-2010, and the maturity of the implementation of performance audits since 2011. This study concludes that several key factors have affected the implementation of performance audits at BPK, including the development of audit guidelines, the dynamics of medium-term government planning, the focus of the BPK’s Management, and assistance provided by other supreme audit institutions (SAI). To address new realities and challenges in the future, more sophisticated performance audit methods need to be adopted by BPK, such as big data analytics, the adoption of governance audits, and employing public policy analysis. Without adopting such methods, the institutionalization of ​​effective performance audits might not be achieved in the future.

Public sector audit in uncertain times

AbstractIn the future, environmental disasters and resource constraints will continue to impact the public sector audit environment. Governments will be held responsible for their responses and the corresponding financial impacts, particularly rising levels of public debt. Supreme Audit Institutions (SAIs) are vital in keeping governments accountable. Yet, they also need legitimacy and they are subject to isomorphic pressures to gain this. Mimetic isomorphism explains SAIs’ structures, although they remain diverse, worldwide. Our analysis of extensive data about SAIs together with statistical measures about countries, an international survey and document analysis enables us to make projections about what isomorphic pressures will shape SAIs and enable them to deal with an uncertain future. Examining public debt and the United Nation's Sustainable Development Goals as case studies, we show how isomorphism will shape SAIs’ responses to an uncertain future.

Investigating Fraud Risks Assessment Practices in Public Sector Audits

Fraud Risk Assessment (FRA) is claimed to be an important activity at the audit planning stage in both the private and public sectors. In fact, because of the importance of FRA activities, Auditing Standards (SAS 99, ISA 240, ISSAI 1240) have required auditors to carry out FRAs at the audit planning stage. FRA is considered as the core activity of financial audit planning because of the impact of fraud on the sustainability of an entity, quality of life, and economic growth. This study aimed to determine the practice of FRA in public sector audits and to find out more about the obstacles faced by auditors during the audit process and to find out the causes of these obstacles by considering the approach to the Audit Standards used. This study found that auditors’ performance can be determined based on their complete compliance with audit standards. We have encountered a serious problem that requires firm action from the government or a competent official, namely the auditor’s willingness in preparing the Fraud Risk Assessment Matrix. In addition, we recommend the Audit Standards Board to adopt international public sector auditing standards and disseminate them through training for auditors, students, and professionals. Keywords: fraud risk assessment, public sector audit, auditor competency

Public financial control in Ukraine: state, problems, prospects

The authors assess the current state of public financial control in Ukraine, identifies its main problematic aspects and suggests ways to solve them. There is a direct interdependence between increasing the level of corruption and weakening the effectiveness of public financial control. Forms and types of public financial control are considered depending on controlling subjects. The authors identify forms of public sector audit according to the ISSAI standards which include financial audit, performance audit and compliance audit. The paper touches upon the necessity of legislative introduction of audit of conformity with the corresponding definition of the purpose, tasks, subjects, objects, methods and procedures. It is proposed to implement the Standard for Auditing the Compliance of Public Resources, which will define general provisions, principles and criteria of compliance audit, as well as the procedure for planning, directions, methods and control points in its implementation, generalization and implementation of results. The main generalized indicators of activity of the Accounting Chamber in the period between 2009 and 2019 are presented and the basic trends in the development of the public financial control are covered. It characterizes the number of inspected objects, prepared reports, the volume of detected violations, the number of relevant response documents and the amount of estimated funding. The structure of identified violations in the main areas includes violations of the budget legislation, inefficient management of funds and violations of the administration of the revenue side of the state budget. The basic criteria for carrying out performance audit are defined and their analytical assessment is provided. The main directions of improvement of the public financial control with the use of key characteristics of the concept of good governance are offered, the fundamentals of which include the rule of law, equality, inclusiveness, efficiency, transparency and accountability. It is recommended to introduce and use a unified report on budget offenses, which will facilitate communication between regulatory authorities and allow for receiving, processing and storeing large amounts of information on the results of auditing.

Evolution of a public sector audit office: Evidence from the Republic of Fiji

AbstractThe Office of the Auditor General, Republic of Fiji was founded in 1970 on audit principles and national laws inspired by its former British colonial power. The Fijian Office operates in a challenging national context of coup‐determined regimes, military authority and ethnically‐dividing social practices. The purpose of this study is to uncover the processes and dynamics that explain how this Office remains a stable institution despite its challenging environment. We seek to understand how members of Fiji's Office of the Auditor General comprehend their role, find meaning in their actions and negotiate their authority in the context of powerful others. Our approach is qualitative and employs data from 28 interviews conducted over 12 years and historical documents. Our findings take into account wider social processes and reveal that through shared commitment and international associationism the Office of the Auditor General comes to absorb the norms and values of its westernised professional organizations. The contribution of the study is in revealing how external professional bodies and an empowered internal rationale can construct an institutional discourse that offers the potential for social stability even where local resistance is strong.