Supreme Audit Institutions and Public Value: Demonstrating Relevance

Abstract

Supreme Audit Institutions (SAIs) have an important role in ensuring public sector accountability; their main activities being managing the audit of public sector entities' financial statements and assessing probity/compliance, providing advice to parliamentary committees, and undertaking performance audits. Standards issued by the International Organisation of SAIs encourage SAIs to recognise the value they deliver through their activities and to demonstrate that to citizens, Parliament and other stakeholders. The recognition of the need to be democratically accountable for efficiency and effectiveness is one aspect of public value, which is also concerned with the just use of authority (Moore, 2013). The purpose of this paper is to develop the components of a SAI's public value and, through a comparative international study, to analyse how SAIs report on the public value they deliver. Analysing reporting against the model developed in this paper indicates that SAIs' reporting prioritises critiques to increase public sector efficiency and effectiveness, rather than government policy. In addition, it finds SAIs generally fail to discuss any negative consequences of their work. SAIs are encouraged to develop new ways to demonstrate their ongoing relevance.

Are Latin American performance audits leading to changes?

“…To function properly, the relationship between the SAI and the audited institution has to be based on good communication in a context of mutual trust. High‐quality audits require using legitimate audit standards and current audit techniques, complying with codes of ethics, and employing well‐trained staff (Cordery & Hay, ; IOSAI, ). Both parties should behave as partners and the audits have to be implemented with a constructive approach, balancing a recognition of good practices of the auditee and the recommendations, as has been emphasized by audit institutions with a strong tradition in performance audits, such as the National Audit Office of the UK.…”

“…So, the results suggest a direct relationship between the importance given to the stakeholders and the level of corruption. SAIs obtain legitimacy and support through being independent and building trust (Cordery & Hay, ) while reducing corruption through professionalization (Gustavson & Sundström, ). In Latin America, as has been shown, auditees' trust of their SAI is crucial to becoming a believer and, so, to avoid reactionary behaviors.…”

“…The first group includes, among others, the works of Brown and Craft () and Johnston (), focused on the US General Accounting Office, Hatherly and Parker () on Australia, and Pollitt et al () and Torres et al () on Europe. The implementation of recommendations by the auditees is a measure of client satisfaction; therefore, public value could be assessed by how many SAI recommendations the auditees accept and act upon (Cordery & Hay, ; Gendron, Cooper, & Townley, ). These papers analyze the content of the audit reports, the type of performance audits, the type of recommendations, and the changes introduced in the audited entities after the performance audit reports.…”

“…These papers analyze the content of the audit reports, the type of performance audits, the type of recommendations, and the changes introduced in the audited entities after the performance audit reports. Studies about the implementation of recommendations show great variations in the extent to which the auditees implement recommendations, from 21% in Estonia to 90–100% in Australia, the UK and the Netherlands, and around 80% in the USA (Azuma, ; Cordery & Hay, ; Lonsdale, ; Pollitt & Summa, ; Raudla, Taro, Agu, & Douglas, ).…”

“…A common conclusion of these studies is that the ability of the SAIs to be effective through their performance audit work is far less straightforward than a simple model might imply (Morin, ). Additionally, other studies focus on SAIs' plans and strategies, disclosures, and media relationships (Cordery & Hay, ; González, López, & García, ; Yetano, ).…”