PERFORMING AUDITORS?: ASSESSING AND REPORTING THE PERFORMANCE OF NATIONAL AUDIT OFFICES—A THREE-COUNTRY COMPARISON

Abstract: This article reviews self-assessment and reporting strategies of national audit offices in the United Kingdom, Sweden and Australia and develops a framework for the reporting of their performance. There is a common emphasis in the audit office objectives on serving their primary client and on improving the performance of the public sector, but there are differences in emphasis regarding the clients being served. The differing approaches to assessing and reporting their own performance can in part be attributed to differences between their mandates, objectives and identification of the clients being served. The audit offices have developed complementary internal quality assurance processes which generate additional performance information and have been subject to external peer reviews which assess and report on their performance. A framework is developed which clarifies the relationship between audit office objectives and the measures used. It involves a hierarchy of performance parameters, including effectiveness, efficiency and workload and gives priority to meeting the needs of the primary client. The study has revealed that significant progress is being made in particular areas of assessing and reporting audit office performance and this should encourage audit offices to share their experiences internationally to enhance their own accountability to their primary clients and the communities they serve.     

From Voucher Auditing to Junkyard Dogs: The Evolution of Federal Inspectors General

Accountability in American government reaches as far back as the Continental Congress and General Washington's army. This tradition of accountability is carried on today by inspector general offices set up in almost every major department of the federal government. Through their audits and investigations, the inspectors general voice concerns over government internal controls, economy, efficiency, and effectiveness. Since 1981 they claim savings from their work totaling $92 billion.
"Some officials handle large sums of public money; it is therefore necessary to have other officials to receive and examine the accounts. These inspectors must administer no funds themselves. Different cities call them examiners, auditors, scrutineers and public advocates." These are the words of Aristotle in 325 B.C. Today, the United States government has its inspectors general to examine, audit, scrutinize, and advocate.     

Auditing as a tool of government accountability? Exploring divergent causal mechanisms through three Honduran cases

Audits of government entities offer a potential tool to hold public officials to account and to improve the functioning of public administration; however, empirical studies of audit impacts show mixed results. This is largely due to the diversity of audit regimes with different goals and accountability mechanisms, which yield different causal chains. In this study, I compare three distinct audit regimes with distinct casual mechanisms in Honduras. I find that backward-looking audits, which aim to hold officials accountable for past behavior or performance, require effective horizontal accountability mechanisms to investigate and prosecute cases. Forward-looking audits, which aim to hold officials accountable for future behavior or performance, require independent accountability mechanisms, a systematic follow-up methodology, public dissemination, and pressure from the media and civil society. Complementary initiatives that build on audit recommended reforms are found to strengthen these weaknesses in the causal mechanism linking audits to outcomes.     

Central Audit Institutions and Performance Auditing: A Comparative Analysis of Organizational Strategies in the OECD

The New Public Management supplies a rationale for broadening the mandate of external audit institutions to encompass performance auditing. This article examines conceptual, empirical, and managerial issues raised by external performance auditing. Conceptually, performance auditing is a misnomer for a class of mainly evaluative review activities. Empirically, OECD countries vary in terms of the specific types of performance audits conducted by their principal external audit bodies. Explaining such variation offers some insight into the contemporary politics of public management policy. Managerially, audit bodies whose mandate includes performance auditing confront two major strategic issues: whether to conduct such evaluative reviews in an auditing style and whether to gear their work to achieving performance improvement in auditee organizations.     

Signaling Government Financial Reporting Quality to Credit Analysts

The quality of governmental financial reporting and auditing is of continuing concern to oversight bodies and to those interested in the financial accountability of governments. While governments may have operational incentives to improve financial reporting, external incentives depend on external users' ability to distinguish cities with better reporting practices from those with inferior systems. Two methods that cities with better systems may use to distinguish themselves are the GFOA's Certificate of Excellence for Financial Reporting and through the reputation of the audit firm. This article examines whether the degree of reliance that bond raters place on accounting data is influenced by the Certificate and by the type of auditor. In addition, since inadequate fees have been cited as a possible cause of substandard audits, we examine the trend in audit fees for cities for the period 1985–1989. The findings suggest that the use of a Big Eight audit firm does increase the reliance placed on cities' financial statement numbers but there is only weak evidence that the Certificate has a similar effect. In addition we find evidence of a significant decline in audit fees for the period 1985–1989.     

Service Delivery: The Audit Dimension

Reporting of performance information on public sector services has increased substantially in recent years. The audit of such information, however, is still relatively uncommon. In 1989 the Audit Office in New Zealand was confronted with a legislative requirement to audit Statements of Service Performance (SSPs). This paper backgrounds New Zealand's shift in emphasis from program effectiveness audits to the audit of non-financial performance information, describes the development of audit methodology in this area and identifies lessons learned.     

Implementation of the Federal Chief Financial Officers Act

The Chief Financial Officers (CFO) Act of 1990 proposes to rationalize the many financial practices and systems of the federal financial establishment. Due to the significant number and magnitude of the changes required by the Act, those involved in implementing the Act are encountering unanticipated practical problems and issues. This article addresses some of the surfacing difficulties, including, the qualifications of CFO's; implementation costs, standards, and authority; content of financial statements; and the scope of audits including performance measurement.     

Elections in Western European parliaments

Parliaments often elect holders of important extra‐parliamentary offices such as heads of state, constitutional judges, heads of audit institutions and ombudsmen. What drives the behaviour of parliamentary actors and the outcome of such elections? This article explains actor behaviour theoretically, drawing on spatial factors, principal‐agent arguments about the importance of nonspatial candidate characteristics and signaling arguments about competitive considerations beyond the specific election. Empirically, it provides the first comparative analysis of such elections outside the United States Senate using original data on 100 elections for four external offices in 14 Western European parliaments. The findings show that spatial variables, nonspatial candidate characteristics and features of the competitive context systematically affect the election outcome. The article contributes to comparative parliamentary research in general by demonstrating how parliamentary activities, other than lawmaking, can be analysed using established theories and by showing that consensual aggregate outcomes can be explained within a competition‐based rational choice model.     

How Do Interest Groups Seek Access to Committees?

Concerns that interest groups use their financial resources to distort the democratic process are long‐standing. Surprisingly, though, firms spend little money on political campaigns, and roughly 95% of publicly traded firms in the United States have never contributed to a political campaign. Do interest groups seek political access through their modest contributions, or are these contributions only a minor and forgettable part of the political process? In this article, we present comprehensive evidence that interest groups are extremely sophisticated in the way they make campaign contributions. We collect a new data set on U.S. state legislative committee assignments and legislator procedural powers from 1988 to 2014, merged with campaign finance data, in order to analyze over 440,000 candidate–committee observations across 99 legislatures. Using a series of difference‐in‐differences designs based on changes in individual legislators' positions in the legislature, we not only show that interest groups seek out committee members, but we also show that they value what we call indirect access. When a legislator gains procedural powers, interest groups reallocate considerable amounts of money to her. The results reveal how interest groups in a wide range of democratic settings seek to influence the policy process not only by seeking direct access to policy makers but by seeking indirect access to legislative procedure as well.     

Probity Auditing: Keeping the Bureaucrats Honest?

The use of probity audits has flourished in the public sector in recent years. This growth has been accompanied by the development of probity guidelines by a number of central agencies and infrastructure providers across Australia. However, these guidelines tend to focus on competitive procurement processes and ignore broader factors applying to other processes in which probity audits are also used. Further, as there are no professional standards governing a probity audit (unlike most other types of audit), it is important that agencies have a clear understanding of their benefits and limitations and of the skills and experience required of a probity auditor before they commission one.     

Performance Measurement in State Budgeting: Advancement and Backsliding from 1990 to 1995

Performance measurement has been one of the dominant themes of budget reform in the 1990s and has been prevalent in the mainstream of budgeting since the 1950s. Given the attention that performance measurement has had nationally, states might be expected to have made major strides in this arena in recent years. The article considers the current status of performance measurement practices, and identifies both advancement and backsliding made by states between 1990 and 1995. The discussion is based on data obtained from surveys of state budget offices in those two years. Indexes of performance measurement were constructed, and these became the bases of regression analyses using independent variables pertaining to state characteristics. Generally, these analyses were unsuccessful in explaining the variations among the states. The findings underscore the diversity among the states in their budgetary practices and the fact that budget reform, in the sense of increased use of performance measurement, is not necessarily achieved in a straight line of progression. The article considers possible explanations for the changes.     

Local Government Procurement of CPA Audit Services: The Role of the States

Recent studies have raised serious concerns about the quality of governmental audits by independent CPAs. Part of the problem is that many governmental units do not use effective audit procurement procedures. This article examines current state guidelines for the procurement of CPA audit services by local governments and recommends an expansion of the states' role in this area.     

How Do We Know if it's Working?

This article introduces the first of the three cross‐cutting themes used to assess Australian integrity systems: evaluation of their consequences. It argues that an evidence‐based approach to assessing the overall impact of integrity and corruption prevention measures is possible, based on experience in Australia, drawing on measures including the evolving State of the Service surveys of the Australian Public Service Commission. However, different types of measurement serve different institutional purposes, with little current integration and no overall agreed framework for how they might be combined to help judge performance. The article identifies key issues that need to be addressed in developing such a framework.     

The Limits and Possibilities of Volunteering: A Framework for Explaining the Scope of Volunteer Involvement in Public and Nonprofit Organizations

Despite popular rhetoric concerning the benefits of volunteerism for public and nonprofit organizations, the use and management of volunteers to assist in the delivery of services is uneven: some organizations rely heavily on volunteer labor for this purpose, while others circumscribe volunteer contributions or eschew volunteer involvement altogether. This article introduces eight dimensions of volunteer involvement—four involving organizational decisions and four regarding volunteers’ decisions—that make up the overall scope of volunteer involvement in an organization. Based on a review of the literature, the article presents a conceptual framework and several research propositions concerning how organizational characteristics, volunteer management, and environmental factors affect the overall scope of volunteer involvement in an organization.     

The Foreign Relations of European Regions: Competences and Strategies

The article traces the foreign relations of 81 European regions by looking first at the constitutional competences which these regions enjoy within their nation-states. We discover that the regions in federal states have expanded their competences in two directions: conducting autonomous foreign activities and influencing national foreign policy. How far the Belgian regions, as well as the German and the Austrian Länder go in both directions depends very much on the scope of their competences in domestic politics. In non-federal states (France, GB, Italy), regionalisation brought rather more leeway to conduct a certain level of autonomous foreign activity than regional influence in national foreign policy. When we – in a second step – trace the strategies or directions of international activities which the regions pursue it becomes obvious that setting up an office in Brussels in order to adapt to political integration is very common among West European regions. In contrast, much more variety can be observed when examining the regions' strategies to adapt to fundamental economic and cultural transformations. Some European regions invest heavily in economic promotion offices and in transnational partnerships while others lack the motivation or ability to invest in these forms of foreign relations.     

From Performance Budgeting to Performance Budget Management: Theory and Practice

This article examines the decades‐long practices of performance budgeting in different countries and their associated challenges from a multilayered institutional framework. Based on theory and lessons learned, the article recommends an array of strategies to address institutional and organizational barriers. It also proposes to reconceptualize performance budgeting as a performance budget management system and suggests how multiyear budget planning, financial risk assessment, policy planning, the departmental budget cycle, the program budget cycle, stakeholder engagement, regular spending reviews, and performance audits should be integrated more closely to address the long‐term fiscal challenges faced by many governments and to respond to the public pressure on agencies to do more with less.     

The State as Investment Market: A Framework for Interpreting the Post‐Soviet State in Eurasia

What type of state has emerged in post‐Soviet Eurasia, and what kind of theoretical framework can help us understand its behavior and performance? This article argues that we can usefully understand the logic of political and administrative organization in terms of a kind of “investment market.” Access to the state is frequently determined by actual financial payment. Would‐be officials invest in offices to obtain access to a stream of income associated with an office. This framework represents a novel perspective on the post‐Soviet state, which has hitherto either been premised on modernization theory or emphasized a robustly personalistic logic of political organization.     

Auditor Tenure, Fixed Fee Contracts, and the Supply of Substandard Single Audits

Our purpose is to provide empirical evidence of the relations between the quality of governmental audit services and auditor tenure and between quality and fixed fee audit contracts. Audit quality is assessed by Offices of Regional Inspectors General and is based on a review of the audit reports and supporting working papers. We test a model of quality supplied on a sample of audit engagements selected from a population of audited federal assistance programs. The empirical analysis finds that the probability of receiving a substandard audit increases with the length of the auditor-client relationship. Our analysis finds a positive relation between fixed fee contracts and the incidence of violations of professional standards among audits of federal assistance programs. Additionally, we provide evidence that the incidence of noncom-pliance with professional standards is significantly lower when the audit contract contains a provision for administrative and/or legal remedies in the event of substandard performance.     

Do indicators influence treaty ratification? The relationship between mid-range performance and policy change

Treaties are a valuable tool for policymakers because they are both legally binding on, and symbolically powerful signals of, commitments of states that ratify. Why states choose to ratify treaties is unclear, although social pressures appear to play some role. This article argues that global performance indicators can influence the ratification process, but that the effect varies depending on where states fall on these measures. In the mid-range of a scale, fast ratification has significant benefits and relatively few costs. However, indicators have less of a catalysing effect at the extreme ends of the scale, where the costs are higher and the benefits are lower. This article uses policy performance indicators as independent variables in duration analyses of the ratification of the United Nations Convention against Corruption (2003) and the Protocol to Prevent, Suppress and Punish Trafficking in Persons Especially Women and Children (2000). It finds states in the mid-range of the indicator are faster to ratify than states that are not ranked, whereas the other categories are statistically insignificant. These findings imply that indicators matter for those in the middle, but not as much for those at the extremes. This finding enriches our understanding of treaty ratification and has potential implications for performance metrics as a tool to promote policy change for those states in the middle, highlighting the strengths and limitations of indicators as a force for change.     

The Influence of Federal Regional Offices on State Medicaid Maternal and Child Health-Care Services

This article focuses on the influence of federal regional administrativeoffices on maternal and child health-care services in stateMedicaid programs. The empirical results demonstrate that regionaladministrative offices affect the adoption of state policy choices.More traditional economic and political variables seem to havelittle direct impact These findings provide important insightsinto the role of federal regional offices in state Medicaidmaternal and child health-care services. They emphasize theneed for further empirical research on the exact processes bywhich regional administrative offices exert their impact onthe American policy process.