Supreme Audit Institutions Research Articles

The Influence of Factors on the Demand for Performance Auditing in the Public Sector

Performance audits (PA) are becoming essential in supreme audit institutions (SAIs). This study aims to explain why developing countries need to expand the function of PA and to explore and measure the impact of each factor on the need to develop PA in Vietnam. The research combines qualitative (group discussion) and quantitative methods by surveying 157 state auditors of the State Audit of Vietnam (SAV). Data is processed through SmartPLS 4.0.8.5 to verify the measurement and linear structure models. The results of the statistical analysis also show that all three factors have an impact on the development of PA, including (i) the degree of public governance reform, (ii) the accountability of SAV, and (iii) occupational influence. Besides, the model test results show that, from the perspective of SAV, the need to improve performance is higher than accountability. Public governance reform factors, external support, and SAI accountability contribute to enhancing the value of PA. The findings of this study complement the audit theory on three fronts: (i) PA will become more important when pursuing the goal of increasing accountability rather than improving performance; (ii) PA continues to evolve to adapt to social changes; and (iii) additional empirical evidence demonstrating that countries with low levels of transparency and accountability and inconsistent legal systems have higher audit “demand” but low supply of PA. This study proposes a PA development model to: (i) forecast the ability and level of the development audit of each SAI; and (ii) contribute to enhancing the value of PA using the PA topic selection tool. In addition, the developed scale is tested to ensure its reliability and validity. So this scale can be used to survey the needs, feasibility, and expected value that each audit subject brings before and after implementation. Doi: 10.28991/ESJ-2024-08-01-07 Full Text: PDF

How do Supreme Audit Institutions reflect societal change? A Prosopographical Analysis of Top Civil Servants in the German States (1945–2022)

Research on top civil servants reveals the increasing heterogeneity within this once rather homogeneous group across many countries in recent decades. While changes in the composition of administrative elites in government departments and agencies in different countries have received considerable attention in existing literature, top civil servants in Supreme Audit Institutions (SAI) have so far hardly been considered. In light of this gap, this article investigates the change of socio-demographic and career backgrounds among SAI presidents in the German states over more than 70 years (1945–2022), utilizing prosopographical data. The results indicate larger changes with regard to gender representation and study background, whereas age, career background, and educational degree have undergone only moderate changes.

The Independence of Supreme Audit Institution in Mitigation Financial Fraud in Nigeria

The subject of enquiry is to ascertain the independence of Supreme Audit Institutions in mitigating financial fraud in Nigeria. Regular audits of public financial account are entrusted in the Office of the Auditor-General in Nigeria. In addition, the increase in wastages and ineffective governance by agencies of the public sector has brought enormous pressure on the supreme audit institutions. However, numerous challenges weakened the independence of Supreme Audit Institution (SAIs) to have effective performance in Nigeria. This includes insufficient funding, lack of knowledge and experience, the required enabling environment, adherence to international standards, appointment and promotion of Supreme Audit Institution (SAI) heads/leadership, among others. The argument of this study is anchored on the assumption that the process of appointing staff of the Supreme Audit Institution (SAI), deliberate under-funding of the institution and quality of external auditors hired can impair SAIs from carrying out their statutory duties effectively to achieve their set mandate. The study therefore is supported by agency theory and fraud triangle theory. Primary data source wasused as data for analysis. A survey approach was used, through the administration of questionnaires to the staff in the Office of the Auditor-General, Ministries, Agencies and Boards in the Ondo State Government. A population of (200) respondents were sampled. Data analysis approach used for the test of each null hypothesis was Chi Square (X2). The results showed that since Nigeria's democracy began in 1999 and has persisted unabatedly, public officers have engaged in a number of corrupt practices, for which SAIs have not done a creditable job of increasing public accountability. The study comes to the conclusion that the inability of SAIs in Nigeria to carry out their deterrent and prevention functions is the reason why corrupt practices among public officials continue to occur. To enable them to serve as public officers' watchdogs, SAIs in Nigeria should have more financial, political, administrative, and organizational autonomy.

THE ROLE OF SUPREME AUDIT INSTITUTIONS IN ACHIEVING SUSTAINABLE AGRICULTURE

The subject of this paper is the role of supreme audit institutions in achieving sustainable agriculture. Sustainable agriculture refers to ensuring food security and mitigating the negative impacts of agriculture on the environment. Governments around the world adopt various policies and strategies to promote sustainable agriculture. SAIs can audit the fulfillment of national goals, to check whether the government provides sufficient, safe and nutritious food, affordable for all, and whether food is produced in a sustainable way, without serious impacts on environmental resources.

ASSESSING THE EFFECTIVENESS OF AUDITS IN PUBLIC ADMINISTRATION

Abstract The feedback supreme audit institutions (SAI) provide from their audits of public funds and property owned by the national and local governments is critical to the audited governments and public authorities, while also important information for both the professional and general public. The article seeks to assess the performance of the SAIs in the Visegrád Four (V4) countries by evaluating hypotheses that assess the effectiveness of the audits they conduct. Data for the analysis came from annual reports of the institutions and interviews conducted with their staff. The evaluation covers sixteen years (2005-2020) and the five hypotheses established in this article were assessed using the Pearson and Spearman correlation coefficients. In general, a conclusion could be drawn from the analysis that the volume of new audit findings was not influenced by the number of audits from previous years or the number of recommendations made therein. On the other hand, the relationship between the number of audits conducted and the number of criminal complaints filed was seen as statistically significant. The public sector works slightly differently in all countries, but the SAI needs to be able to identify and point out the most significant systemic issues concerning the various areas of the state economy. Keywords: public administration; audits conducted; audit findings; Supreme audit office, Visegrád Four (V4) countries.

Supreme Audit Institution Recommendations and the Legal System: The Case of Indonesia

Abstract The audit recommendations of the Indonesian supreme audit institution (Badan Pemeriksa Keuangan, BPK) acquired new significance after the collapse of the authoritarian state in 1998 and constitutional amendments in 1999–2002 that reformed the regulation and institutional governance of public sector audit in Indonesia. However, while the reform of public sector audit regulation was carried out through a strong adoption of private sector audit standards and the Westminster SAI model, the BPK retained some of its Napoleonic legacy. This syncretic organisation led to confusion about the BPK’s role and position in the Indonesian legal system. Using a historical and case study approach, this paper analyses the relationship between the BPK’s audit recommendations and the Indonesian legal system. It argues that it is important for the BPK to develop auditing standards that take full account of higher rules, administrative law, and national interests, or at least not to adopt and abolish auditing standards that are counterproductive to its judicial function – not merely to accommodate private international law instruments developed by private non-state actors operating outside the legal framework of a sovereign state.

An Empirical Analysis of Impact of Supreme Audit Institutions on the Audit Failures in Iraq

There is increased public outcry in Iraq on the government’s wastage of public spending, corruption, high recurrent expenditures and ineffective budget performance by different government entities. This led to increase in pressure on the Supreme Audit Institutions (SAIs) to reduce of audit failure in order promote economic development. This study aimed to examine the role of supreme audit institutions in reduce of audit failure and examine the Impact of Reduce Audit Failures on promote economic development. The target population in the present study is linked to auditors from the Federal Board of Supreme Audit of Iraq. The total number of Auditors 1734 Auditor. The sample size in this study is 317. PLS software version 4 was used to test the research model. The findings showed that the major contribution of SAIs efforts are preventing corruption, reduce of audit failures and supporting accountability, transparency, supporting a robust financial-management system and promote economic development. Therefore, it is crucial that SAIs become the linchpin of the integrity of the country, as they are responsible for auditing government income and expenditure, the watchdog over financial integrity and the credibility of information provided.

The Process of Institutional Strategic Planning the Level of the Ministry of Labour and Achievement of Public Policies Objectives

The paper is presenting the main results of the research on the Supreme Audit Institution reports regarding the institutional strategic plans realised by Ministry of Labour from Romania. The adoption of performance budgeting implies a shift in the focus of budget process, from the management of inputs to a focus on the results of spending and the achievement of policy objectives.The adoption of performance budgeting implies a shift in the focus of the budget process from the management of inputs to an emphasis on results and the achievement of policyobjectives.

Does increasing auditors' independence lead to more forceful public auditing? A study of a Canadian internal audit reform

AbstractThe value of auditing as an instrument of accountability depends upon the independence of auditors. However, the extent to which auditors feel free to review the operation, compliance, and performance of public programs and objectively communicate findings to stakeholders has rarely been assessed. A Canadian public service reform in 2006 introduced institutional safeguards to bolster the independence of departmental internal auditors, but left legislative auditors working for the Auditor General's Office (i.e., Canada's Supreme Audit Institution) unaffected. We analyze and compare 2677 audit reports written by internal and legislative auditors before and after the reform. After the reform, the language used by internal auditors became more assertive and evaluative, but not more critical. This suggests that the safeguards had a meaningful impact on how auditors perform their accountability function but that factors other than independence may be driving their willingness to be more adversarial and critical when communicating audit findings.

감사원의 독립성과 정치적 중립성

Since long time ago, Korean people have taken a skeptical view of the independency and political neutrality of the Board of Audit and Inspection as a constitutional institution because the Presidents in Korea have often repeated to indirectly expel the existing commissioners before the completion of their tenures after the President started his or her term and appoint his or her close aids as the commissioners of the Board.
 Recently, just after the new Administration had recommended the early retirement of the chairpersons of the Anti-Corruption and Civil Rights Commission and Communications Commission before the completion of their tenures, the Board of Audit and Inspection started the inspection of the two Commissions to seemingly oppress the chairpersons. These incidents aroused the public response which demanded the extensive reforms for the Board of Audit and Inspection in Korea.
 For the above reasons, this paper will, at first, examine the provisions concerned with the independency and political neutrality in the Constitution and the Board of Audit and Inspection Act. And then, it will reveal the problems in administering the Board of Audit and Inspection concerned with its independency and political neutrality and compare with the Supreme Audit institutions in U.K., U.S.A., Germany, Japan and France. Finally, this paper will suggest the reform measures to secure the independency and political neutrality of the Board of Audit and Inspection in Korea through the revision of the Constitution.

THE ROLE OF SUPREME AUDIT INSTITUTIONS IN THE DEVELOPMENT OF A GREEN ECONOMY TO ACHIEVE SUSTAINABLE DEVELOPMENT GOALS

Problems related to the development of green economy exist in all countries of the world. These problems are particularly relevant in developing countries, whose economic growth depends on the extraction of carbon fuel minerals. The purpose of this study is to identify the problems hindering the development of green economy and the role of the supreme audit institutions in solving these problems. In recent years, the Supreme Audit Institutions (SAI) have become increasingly convinced of the value of interaction with civil society to achieve sustainable development goals as a way to increase government accountability and audit quality. Despite the constant cooperation with civil society in the course of daily activities, it becomes more important than ever during global emergencies, such as the COVID-19 pandemic. The issue raised is relevant for Kazakhstan as well. The article provides a literary review on the topic, on the basis of which a conclusion is made about the desire of the SAI to increase its public utility with the help of an audit according to the prevailing evidence. However, we have proposed measures to enhance this role by taking a more substantial part in energy reporting.

STATE AUDIT IN THE FIELD OF ASSESSING THE EFFECTIVENESS OF THE USE OF NATURAL RESOURCES: WORLD EXPERIENCE

Against the background of globalization of trends in the transition to «green» technologies and the economy, the increase in related costs, the relevance of assessing the effectiveness of audit activities in the environmental sphere is also increasing. In this regard, the article examines the world experience in organizing and conducting a state audit of the efficiency of the use of natural resources. In particular, the authors consider the methodological approaches of the supreme audit institutions of foreign countries that occupy high positions in international ratings of environmental protection and the use of resource-saving technologies. As a result of the study, it was revealed that most of the external state audit bodies do not conduct an audit of the use of natural resources, not in the form of a separate type of audit, but as an audit of efficiency. In some cases, these audits combine elements of an efficiency audit and a compliance audit, as well as a financial audit. At the same time, in the structure of the efficiency audit elements used in the activities of the supreme audit institutions of the countries under study, «economy», «efficiency» and «efficiency» can be distinguished, with the exception of the experience of Canada, whose audit management adds «environment» and «sustainable development». Based on the results of the analysis, the authors formulated conclusions in the context of considering the possibility of adapting the best best practices of the Supreme Audit Institutions in domestic conditions in the field of assessing the effectiveness of the use of natural resources and environmental protection measures in general.

Real‐time audit of public agencies: Utility, controversy and lessons for an emerging practice

Real‐time audit is the auditing of actions as they occur and the publishing of findings before the audited action was completed. It is an emerging practice of Supreme Audit Institutions (SAIs) in many countries, and it marks a stark departure from the traditional ‘after‐the‐fact’ auditing practice. Real‐time audits have been widely used in the auditing of COVID‐19 relief programmes in many countries. Whereas in the United States and many other countries, this practice became popular only in recent years, Israel's SAI in Israel has been conducting real‐time audits since the 1970s. The article surveys SAI practices in various countries regarding the timeliness of the auditing of public agencies and presents the pros and cons of real‐time audits based on an analysis of the Israeli experience. We conclude by outlining several issues that SAIs should consider before choosing to conduct a real‐time audit.

The importance of independent audit and ethics in prevention of risk in businesses

Purpose- Regarding risks that express the possibility of loss of financial, physical, human and intellectual resources of businesses, not only due to their effects on the existence of the relevant businesses; At the same time, due to its devastating effects extending to international economies, it has become necessary to make institutional and legal regulations at national and international levels. Since the focus of the regulations is on "independent auditing and ethical rules", examining this issue constitutes the purpose of the study. Methodology- The method of the study is to consider the audit institutions and concepts developed for the prevention of risk in the historical development process, to reveal the importance of independent auditing and ethical principles in terms of stakeholders and the social environment, and to evaluate the subject in a whole, based on the literature. Findings- In preventing risks; It has been determined that audit activities are carried out under three headings: public audit, internal audit and independent audit. In independent auditing, which provides assurance regarding the reliability of financial data and statements, ethical principles are a prerequisite for ensuring the public interest. When we look at the historical roots of the concept of independent auditing and ethical principles; The emergence of financial reporting and auditing scandals behind the sudden bankruptcies of international companies such as Enron, World Com, Xerox, Lucent in the USA and Parmalat in the EU has shaken the trust in capital markets, company management, financial reports, independent audit companies and auditors. The need to re-establish public confidence in the markets and to introduce regulations regarding the transparency, honesty and financial information disclosure responsibility of public companies necessitated institutional structuring and regulations. In this context, the Treadway commission, established in 1985 in the USA, prepared the Sarbanes-Oxley Act (SOX) in 2002, and based on this law, the Public Company Accounting Oversight Board (PCAOB) was established to monitor the accounting sector in order to protect the interests of public company investors. International Supreme Audit Institutions have published the Code of Ethics Standard (ISSAI 30). In parallel, the Public Oversight Institution (KGK) and Capital Markets Board (SPK) in Turkey published the "Corporate Governance Principles". Conclusion- In order to prevent risks, independent auditing based on ethical principles, on the one hand, ensures the protection of stakeholders and public interest; On the other hand, it will contribute to the successful continuation of the activities of the related enterprises. The trust and transparency to be provided in the investment environment will be the guarantee of the development of national and international economies in general and the increase of social welfare and the dynamic of development. Keywords: : Risk, audit, ethics JEL Codes: M12, G10

Development of Risk-Based State-Owned Enterprises Performance Audit Framework to Enhance Company Value

In the face of fierce economic competition among State Owned Enterprises (SOE), encouraging each company to grow its corporate value through the development of a risk-based performance audit framework may be the best option for SOEs in Indonesia. SOE management can make ongoing improvements and respond rapidly to market changes by detecting company performance risks. The purpose of this research is to develop an SOE risk-based performance audit framework in order to increase company value. The Analytical Hierarchy Process (AHP) method was utilized to create an effective and efficient performance audit framework based on expert justification. The study's findings indicate that the Supreme Audit Institution (BPK) strategy’s main priorities for the construction of the SOE risk-based performance audit framework include three important aspects: 1) synergy between BPK audits and SOE risk management and risk assessment by SOE internal auditors; 2) development and improvement of SOE risk management quality, and 3) effective risk assessment by SOE internal auditors. This strategy is supported by various major variables, including SOE risk management, risk assessment by SOE internal auditors, BPK audit scope, BPK audit standards, BPK audit guidelines, and BPK auditor competencies.

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.

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.

"How the Personal Profiles of US State Governors Impact on Financial Sustainability"

"This paper considers the extent to which the Governor’s profile might influence the financial sus tainability of the State government, via an empirical study of 50 US States during the period 2006–2013. The results obtained show that financial sustain ability may be prejudiced when the State govern ment experienced financial unsustainability during the previous year, and when it is led by a Governor who is a Democrat, Black, and/or long serving. A favorable influence on financial sustainability is pro duced when the Governor is female, serving in his/ her home State, has children and has a college edu cation. These findings highlight factors that should be considered with respect to promoting financial sustainability via public policies, providing valuable information to facilitate supervision by the State Legislature (General Assembly) and Supreme Audit Institutions. Moreover, these findings enable oppo sition parties and other stakeholders as citizens to evaluate the financial viability of electoral promises."

The Determination of State Budget Governance of Indonesian Public Higher Education Institutions Post COVID-19 Pandemic

The communication and information openness era, which has become increasingly massive after the COVID-19 Pandemic, has encouraged open relations between the community and state universities in education programs, especially budget management. This study aims to analyze the determination of state university budget management in terms of budget realization, the role of technology, and public information disclosure. This study raises the dimensions of the variable position of technology, perceptions of budget realization, public information disclosure, principles of general financial management, transparency, and accountability concerning managing state finances in universities. Convenience sampling became the technique chosen for sampling and was further analyzed with the SEM-PLS procedure through the SmartPLS application with 237 respondents. This study found the effect of budget realization and public information disclosure in fulfilling the principles of positive public financial management. However, this study does not support the role of technology in supporting the principles of public financial management. This study also notes the positive influence of public financial management principles on state universities' transparency and accountability. This study highlights the maximum future strengthening of higher education budget management with the organizational commitment of higher education institutions under the strict supervision of the government and the community indirectly. Technology does not support it, but it impacts the public in tracing information on Higher Education budget management according to the mandate of various parties, including the Indonesian Supreme Audit Institution.

The value of public audit - theories and empirical evidence

This study is a review of the main issues in public audit. The theoretical concepts of operation, organizational differences, national and regional peculiarities, visions of specialists in the field, etc. are investigated. Practically all states in the world have institutions or commissions with the ability to check the bodies that work with public money. There are three basic models based on which any superior entity in the public audit functions: Westminster, the board of administration, and Napoleonic. Obviously, variations may appear. However, there are more and more trends of structural and functional similarity of higher institutions. Their sources are classified into three types of isomorphism: coercive, mimetic and normative. For a deeper analysis, we did not limit ourselves to findings of the structures, but we even addressed the theoretical bases of the necessity or value of the public audit. Within the broader framework of neo-institutional theory, we have reviewed six economic and administrative theories that could explain the demand for public audit: agency theory, signal theory, assurance theory, management control theory, governance theory, and confirmation theory. In order not to remain only in the strictly theoretical framework, we also discussed the opinions of specialists working in the field, expressed through a questionnaire administered by the International Organization of Supreme Audit Institutions. The conclusions try to foreshadow some future trends in public audit, under the pressure of current economic transformations.