what is performance audit in public sector

Public sector audit in Victoria: leading where? This overview highlights the key concepts and principles of performance audits conducted by the Office of the Auditor General of Canada (the OAG). In addition to complying with these CPA Canada standards, the OAG has policies in place for aspects of performance audits for which CPA Canada standards do not apply, however these policies are intended communicate legal and other requirements, as well as to help auditors comply with applicable direct engagement standards. and Morote, R.P. 35 No. 577-603. 14 No. 421-444. imperialism in action: an audit-based appraisal of the coalition provisional authority in Iraq, Critical Perspectives on Accounting, Vol. Exhibit1The OAG performance audit practice. Generally, the field could benefit from comparing auditing practices in different jurisdictions and across Supreme Audit Institutions (SAIs) (including the Westminster, board and court models) (Bonollo, 2019; Hay and Cordery, 2018). 28 No. Lockett, A., Moon, J., Visser, W., (2006), Corporate social responsibility in management research: focus, nature, salience and sources of influence, Journal of Management Studies, Vol. 313-336. 177-191. U.S. Government Accountability Office. Guthrie, J., English, L.M., Broadbent, J. and Laughlin, R. (2010), Performance audit of the operational stage of long-term partnerships for the private sector provision of public services, Australian Accounting Review, Vol. A national audit office VFM study, The audit report as an instrument for accountability in local governments: a proposal for Spanish municipalities, Developing performance audit in Spanish local government: an empirical study of a way forward, Internal auditors' roles: from watchdogs to helpers and protectors of the top manager, Performance measurement and management in co-production, Public Sector Reform and Performance Management in Developed Economies: Outcomes-Based Approaches in Practice, Factors influencing the whistleblowing behaviour: a perspective from the theory of planned behaviour, Search and recombination process to innovate: a review of the empirical evidence and a research agenda, International Journal of Management Reviews, The influence of auditor term length and term limits on US state general obligation bond ratings, Coping with complexity: internal audit and complex governance, New development: breaking out or hanging on? The dissemination of results from supreme audit institutions: independent partners with the media? 32 No. In2006, however, amendments under the Federal Accountability Act extended the OAGs mandate to recipients that had received $1million or more in funding over a five-yearperiod. 1, pp. 284-298. purchaserprovider models, contracting out, outsourcing, corporatisation, privatisation) has increased, driven by government policy based on NPM. Exhibit3CPA Canada assurance standards for performance audits. The achievement of these outcomes does not lie wholly within the control of the audit team. Raudla, R., Taro, K., Agu, C., Douglas, J.W., (2016), The impact of performance audit on public sector organisations: the case of Estonia, Public Organization Review, Vol. Financial Auditor: Job Details and Average Salary, 6 Components of an Accounting Information System (AIS), Financial Auditor: Career Path and Qualifications, Internal auditor: career path and qualifications, Internal Auditor (IA): Definition, Process, and Example, Internal Audit: What It Is, Different Types, and the 5 Cs, Corporate Governance Definition: How It Works, Principles, and Examples, Enterprise Risk Management (ERM): What Is It and How It Works, examine the efficiency and effectiveness of a program, Government Auditing Standards 2018 Version. Further, the analysis demonstrates how even theoretical approaches to public sector audits are consistent with the perspective of institutional logic associated with public sector reforms (traditional public administration, NPM and NPG). 7, pp. Several articles (29) are not tied to a particular geographic context but instead conceptual papers or literature reviews (see Figure 4). The following are critical steps for each of the phases. As well, it must be carried out at a reasonable cost. In addition to looking at the federal governments summary financial statements, the Auditor General was given a broader mandate to examine how well the government managed its affairs and to call attention to anything the Auditor General considers to be of significance and of a nature that should be brought to the attention of the House of Commons. 35 No. This is supported by guidance issued by the public sector board of IFAC which notes that the primary function of governments and most public sector entities is to provide services to constituents. Bowerman, M. (1994), The National Audit Office and the Audit Commission: cooperation in areas where their VFM responsibilities interface, Financial Accountability & Management, Vol. (2012), The existence and composition of audit committees in the New Zealand public sector, Australian Accounting Review, Vol. In this context, Raman and Wilson (1994) conclude that it is not always possible to ensure a high-quality audit and, therefore, it would be helpful to identify the determinants of a quality audit for selection purposes. endobj Substantiating the draft audit report. Choosing specific search terms is key to an SLR (Cronin et al., 2008). Bunn, M., Pilcher, R. and Gilchrist, D. (2018), Public sector audit history in Britain and Australia, Financial Accountability & Management, Vol. Haraldsson, M., Tagesson, T., (2014), Compromise and avoidance: the response to new legislation, Journal of Accounting and Organizational Change, Vol. 13 Nos 2/3, pp. van Acker, W., Bouckaert, G., (2019), The impact of supreme audit institutions and ombudsmen in Belgium and The Netherlands, Financial Accountability and Management, Vol. The authors used a structured literature review following Massaro et al. Research . Grseth-Nesbakk, L., Kuruppu, C., (2018), Diametrical effects in governmental accountability the auditor general's struggle to sustain balance in performance auditing reports and media disclosure, Pacific Accounting Review, Vol. 23 No. 24 Nos 7/8, pp. 499-506. (2010), Note on self-selection of auditors in the municipal sector, Accounting Perspectives, Vol. 2, pp. Podsakoff, P.M., MacKenzie, S., Bachrach, D., Podsakoff, N., (2005), The influence of management journals in the 1980's and 1990's, Strategic Management Journal, Vol. Oh, Y., Lee, K., (2020), External control mechanisms and red tape: testing the roles of external audit and evaluation on red tape in quasi-governmental organisations, International Review of Administrative Sciences. Reichborn-Kjennerud, K., (2014a), Auditee strategies: an investigation of auditees' reactions to the Norwegian state audit institution's performance audits, International Journal of Public Administration, Vol. Dal Mas, F., Massaro, M., Lombardi, R., Garlatti, A., (2019), From output to outcome measures in the public sector: a structured literature review, International Journal of Organizational Analysis, Vol. 3, pp. Parker, L.D., Jacobs, K. and Schmitz, J. Giroux, G. and Jones, R. (2011), Measuring audit quality of local governments in England and Wales, Research in Accounting Regulation, Vol. 23 No. 6, pp. Bringselius, L. (2014), The dissemination of results from supreme audit institutions: independent partners with the media?, Financial Accountability & Management, Vol. It has switched from the analysis and processing based on historical data to methods based on, The New Public Management supplies a rationale for broadening the mandate of external audit institutions to encompass performance auditing. Hegazy, K. and Stafford, A. 99-133. Institutional logic has the potential to be integrated with other theories to cover the micro-dynamics involved in (re-)constructing auditing tools as they are implemented in everyday practices (Modell, 2009). Parliament expects the government to spend money with due regard to value for money and to measure and report on the effectiveness of programs. 7, pp. The subject of an audit can be a government entity or activity (business line), a sectoral activity, or a government-wide functional area. Stephenson, P., (2017), Norms, legitimacy and institutional independence: the active role of the European court of auditors in setting international standards, Journal of Contemporary European Research, Vol. Organising the audit society: does good auditing generate less public sector corruption? %PDF-1.7 Often the performance information will be provided as part of the public sector organisations integrated report, in which case the auditors conclusion will be included within the integrated report. Innes, J.E., Booher, D.E., (1999), Consensus building and complex adaptive systems, Journal of the American Planning Association, Vol. 7 No. The standards for the performance audit are laid out by the GAO and cover three areas: general, field, and reporting. 348-364. Institutional work also can be adopted to investigate the internal dynamics and the interactive nature of auditors relationship to institutional changes (Czarniawska, 2009; Mouritsen, 2014). The managerial logic of NPM saw attention shift away from compliance with regulations. Emerald Group Publishing, Bingley, pp. Kells, S., (2011), The seven deadly sins of performance auditing: Implications for monitoring public audit institutions, Australian Accounting Review, Vol. Hazgui, M. and Malsch, B. Assessing and reporting the performance of national audit offices a threecountry comparison, Australian Journal of Public Administration, Vol. Barrett, P., (2019), New development: Managing risk for better performance not taking a risk can actually be a risk, Public Money and Management, pp. Roberts, S., Pollitt, C., (1994), Audit or evaluation? We decided not to consider articles from publications not included in our journal quality list (JQL). To investigate trends in public sector auditing research, we chose the terms audit, auditor, public sector, public administration and government in the string ((audit*) AND (public sector OR public administration*) AND (government*))[1]. Should it be? By international, his volume provides advice on how to institutionalize performance-based accountability, especially in countries that lack good accountability systems. Morin, D. (2008), Auditors generals universe revisited: an exploratory study of the influence they exert on public administration through their value for money audits, Managerial Auditing Journal, Vol. The Auditor General provides an opinion as to whether the summary financial statements of the federal and territorial governments are fairly presented according to their stated accounting policies. The client for performance audits is Parliament and the legislative assemblies of the territories. Udf9KYm;]3Rn^%[X#t&H Bpl"c][V\ 193-209. They may include the effectiveness, economy, and efficiency of a program and compliance with legal requirements. The timing and rationale for each audit are important considerations to enable the OAG to fulfill its performance audit mandate. On the trail of the audit commission, Consensus building and complex adaptive systems, Journal of the American Planning Association, Financial management performance of public sector: quality of internal auditor, International Journal of Accounting, Auditing and Performance Evaluation, Value for money auditing in New Zealand: competing for control in the public sector, Making sense of social practice: theoretical pluralism in public sector accounting research, Reinventing auditing, redefining consulting and independence, The strategic options of supreme audit institutions: the case of four Nordic countries, Performance auditing in local government: an exploratory study of perceived efficiency of municipal value for money auditing in Finland and Norway, Supreme audit institutions in a highimpact context: a comparative analysis of performance audit in four Nordic countries, Performance auditing and the narrating of a new auditee identity, Transforming social sector auditing-they audited more, but scrutinized less, The seven deadly sins of performance auditing: Implications for monitoring public audit institutions, New public management and governance: a comparison, Neoliberalism and the origins of public management, Review of International Political Economy, Juggling between ex-ante and ex-post audit in Greece: a difficult transition to a new era, Modernisation versus problematisation: value-for-money audit in public services, Transforming the public sector: 19982018, Performance auditing, new public management and performance improvement: questions and answers, The diversity of the Brazilian regional audit courts on government auditing, Employee isolation and support for change in the public sector: a study of the internal audit profession, Corporate social responsibility in management research: focus, nature, salience and sources of influence, The perception of public sector auditors on performance audit in Malaysia: an exploratory study, Public accountability and the public expenditure and financial accountability tool: an assessment, Performance audit scope and the independence of the Australian commonwealth auditorgeneral, Harvesting public audit knowledge: implications for theory and practice, Audit committee effectiveness: a public sector case study, IT auditing activities of public sector auditors in Malaysia, Fraud interpretation and disclaimer audit opinion: evidence from the Solomon Islands public sector (SIPS). 81 No. 26, pp. 24-34. We suggest future studies could use emerging streams of institutional theories (e.g. Visit emeraldpublishing.com/platformupdate to discover the latest news and updates, Answers to the most commonly asked questions here. 226-245. The Auditor as an Evaluator. The focus in the literature has changed over time, caused by developments in the public sector because of NPM and NPG. 1, pp. 111-129. Small world? 9 There is no specific format or wording that is prescribed by international regulations for reporting on public sector performance information, though in some jurisdictions the national regulators may issue country-specific requirements. Shore, C., Wright, S., (2015), Audit culture revisited: rankings, ratings and the reassembling of society, Current Anthropology, Vol. Rahaman, A.S., (2009), Independent financial auditing and the crusade against government sector financial mismanagement in Ghana, Qualitative Research in Accounting and Management, Vol. The audit team sets out the objective, scope, and criteria in a key planning document called the audit logic matrix. 20 No. The Auditor General is appointed for a10-year, non-renewable term by the Governor in Council after consultation with the leader of every recognized party in the House of Commons and the Senate, and approval of the appointment by resolution of both the House of Commons and the Senate. Furqan, A.C., Wardhani, R., Martani, D. and Setyaningrum, D. (2020), The effect of audit findings and audit recommendation follow-up on the financial report and public service quality in Indonesia, International Journal of Public Sector Management, Vol. endobj The audit of performance information in public sector organisations can be approached in a similar way to the audit of KPIs in private sector organisations, and conventional audit techniques can be employed, though they will need to be tailored to the specific measures that are subject to audit. Audit Commissions became key actors in the governance of democratic communities (Humphrey, 2002) and are seen as the custodians of accountability (Coetzee and Msiza, 2018) in papers published from the early 2000s (Funnell, 2003). 35 No. Raman, K.K., Wilson, E.R., (1994), Governmental audit procurement practices and seasoned bond prices, Accounting Review, pp. In terms of research methodology, qualitative methods were popular, which were used in 109 of the articles. Published by Emerald Publishing Limited. Scoping the audit identifies the specific issues to be examined and sets the boundaries of the audit, including the time period under audit. 2, pp. Gareth Davies. In the OAGs case, the intended users are Parliament and the legislative assemblies of the territories. 89 No. In the context of NPG, some studies (Pollitt, 2006; Radcliffe, 2011; Reichborn-Kjennerud, 2013; Morin, 2016; Reichborn-Kjennerud, 2014b; Rosa and Morote, 2016; Grseth-Nesbakk and Kuruppu, 2018; Svrdsten, 2019) discuss how the results of performance audit activities are communicated. 7, pp. 4, pp. Chiang, C. (2010), Insights into current practices in auditing environmental matters, Managerial Auditing Journal, Vol. Henry, W., Crawford, M., Manochin, M., McKendrick, J., Porter, B. and Stein, W. (2007), Audit committees in scottish local authorities 1998-2005, Public Policy and Administration, Vol. This paper offers a comprehensive review of the public sector auditing literature, discussing different perspectives over time. 36 No. 4, pp. Collin, S.-O., Haraldsson, M., Tagesson, T. and Blank, V. (2017), Explaining municipal audit costs in Sweden: reconsidering the political environment, the municipal organisation and the audit market, Financial Accountability & Management, Vol. Through performance audits government entities are held to objective standards of executing the responsibilities that they are legally authorized and charged to carry out. Barzelay, M., (1997), Central audit institutions and performance auditing: a comparative analysis of organisational strategies in the OECD, Governance, Vol. Risk-based planning. Rosa, C.P. An audit's scope is wide and can seek to determine fraud and wasteful processes that are a hindrance to the stated objectives of a program. The audit team also conducts a risk assessment to determine the audit risksthe risk of making erroneous observations and drawing faulty conclusions and hence making inappropriate recommendations in the reportand how to mitigate the risks by using appropriate audit procedures and other strategies. A direct engagement is an assurance engagement in which the practitioner evaluates the underlying subject matter against applicable criteria and aims to obtain sufficient appropriate evidence to express, in a written direct assurance report, a conclusion to intended users about the outcome of that evaluation. While several articles have taken this focus, it remains a fruitful topic for examination, particularly concerning the audit of external entities and related part transactions (Cesrio et al., 2020). Coetzee, P., (2016), Contribution of internal auditing to risk management, International Journal of Public Sector Management, Vol. We then checked further to ensure that we included articles that the search engines had not extracted, perhaps because of the keywords used and included those articles. She has worked in multiple cities covering breaking news, politics, education, and more. Cesrio, G., Cardoso, R.L., Aranha, R.S., (2020), The surveillance of a supreme audit institution on related party transactions, Journal of Public Budgeting, Accounting and Financial Management, Vol. Owing to its developing nature, however, it has been noted that it lacks formal audit methodologies. 20 No. 1, pp. Supreme Audit Institutions at a Critical Juncture, Diffusion of Corporate Risk-Management Characteristics: Perspectives of Chief Audit Executives through a Survey Approach, Audit committee best practice disclosure: Cluster analyses to determine strengths and weaknesses, Diametrical effects in governmental accountability the auditor generals struggle to sustain balance in performance auditing reports and media disclosure. Copley, P.A., (1991), The association between municipal disclosure practices and audit quality, Journal of Accounting and Public Policy, Vol. (2013), A few good men: public sector audit in the Swan River Colony, Accounting History, Vol. Issuing the transmission draft. Although relevant to the topic we chose to analyse, many articles extracted from Scopus or WoS are about the private sector or only mention public sector audit in passing. It is also important for audit teams to keep their knowledge up to date through ongoing communication with entities, reviewing entity performance reports and internal audit reports, monitoring Parliamentary committee activity, and media monitoring. Wilkins, P., (1995), Performing auditors? 1, pp. @,Pq\}B/WXJ5*fn'PEOJs]{T~ TSF T\ @*.h6F>t-V 3WN We found an additional 91 articles using the inclusion criteria. 21 No. CSQC1the Canadian Standards on Quality Control dealing with a firms responsibilities for its system of quality control for audits, CSAE3001Canadian standard on assurance engagements that applies to direct assurance engagements, AuG-50Conducting a performance audit in the public sector in accordance with CSAE 3001 (supplementary Guideline for CSAE 3001). Military influences on the evolution of public sector audit and accounting 18301880, The curse of Sisyphus: Public sector audit independence in an age of economic rationalism, Performance Audit Scope and the Independence of the Australian Commonwealth Auditor-General, Reflexive Watchdogs? x=kQ-B`,jDALD10,%XDT6P$$1gv9sS=y mnmD E / jZ j&s VNX j.I{ rr}NX R o7|( F t9aQ -~!n `:sbE LUsNX ,dQl @,5'. FRAMEWORK FOR PUBLIC-SECTOR AUDITING 9 Mandate9 Public-sector auditing and its objectives 10 Types of public-sector audit 11 4. 86-94. 24 No. 550-571. The influence of auditor term length and term limits on US state general obligation bond ratings, A few good men: Public sector audit in the Swan River Colony, 18281835, Political and organizational legitimacy of public sector auditing in New Zealand local government, Communication as a Transparency and Accountability Strategy in Supreme Audit Institutions, Resistance to ControlNorwegian Ministries and Agencies Reactions to Performance Audit, Internal auditors' roles: From watchdogs to helpers and protectors of the top manager, Factors affecting the internal audit effectiveness: A survey of the Saudi public sector. These reports to a Crown corporations board of directors provide an opinion on whether there is reasonable assurance that there are no significant deficiencies in the corporations systems and practices that were selected for examination. Throughout the history of the OAG, however, Auditors General have reported on whether public money was spent the way Parliament intended; from JohnLornMcDougal, the first independent Auditor General of Canada in1878, who reported on instances of waste, to MaxwellHenderson, Auditor General in the1960s, who was known for his emphasis on findings of mismanagement and inefficiency. "Government Auditing Standards 2018 Version," Pages 18-22. The Washington state legislature's audit staff defines it simply: A performance audit is analysis that answers a question. Colquhoun, P., (2013), Political and organisational legitimacy of public sector auditing in New Zealand local government, Accounting History, Vol. 399-411. Forensic audits may be conducted to determine if wrongdoing occurred, or to gather evidence for the case against an alleged criminal. 517-538. 4, pp. 33 No. Alzeban, A., Gwilliam, D., (2014), Factors affecting the internal audit effectiveness: a survey of the Saudi public sector, Journal of International Accounting, Auditing and Taxation, Vol. 2, pp. Troupin, S., Put, V., Weets, K., Bouckaert, G., (2010), Public audit systems: from trends to choices, presented at 6th Transatlantic Dialogue Conference, 24-26 June, Siena, available at: https://soc.kuleuven.be/io/pubpdf/IO03060027_Troupin_put_2010_TAD_Public%20Audit%20Systems.pdf. 8 No. In jurisdictions where this is not a requirement, the auditor may be asked to perform a separate engagement to the financial statement audit, the objective of which is to report specifically on the performance information. 1, pp. Public sector audit in Victoria: Leading where? (2021), "Exploring past, present and future trends in public sector auditing research: a literature review", Meditari Accountancy Research, Vol. What kinds of technologies are likely to exist and how will they affect the field going forward? Keeping Secrets ? What are the potential benefits and risks for auditors, auditees and audit institutions? 3, pp. 18 No. Audit topics may also be selected in response to a request from the government or a parliamentary committee, or identified as a priority area by the Auditor General. Reflexive watchdogs? Marchi, L. and Bertei, M. (2016), Performance audit in the public sector. 29 No. The Audit Office and New Zealands Bureaucratic Revolution. 11 No. 229-254. 75-94. In Englishs study of the Australian state of Victoria, she finds that the reforms undertaken were politically rather than economically motivated. 11 0 obj _qA 35 No. Further as in any audit, the working papers must contain a summary of findings and clear conclusions on the procedures that have been performed. CPA Canada Handbook sections and excerpts are reproduced herein for your non-commercial use with the permission of The Chartered Professional Accountants of Canada (CPA Canada). 7 No. 427-441. 1-12. 30 No. Performance audits are conducted as assurance engagements. The OAG applies the Canadian Standard on Assurance Engagements (CSAE) 3001 for direct engagements established by the Chartered Professional Accountants of Canada (CPA Canada). 1-16. Enterprise risk management (ERM) is a holistic, top-down approach that assesses how risks affect an organization and devises plans on how to approach different risks. 50 No. Broadbent, J., Guthrie, J., (2008), Public sector to public services: 20 years of 'contextual' accounting research, Accounting, Auditing and Accountability Journal, Vol.

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