Value for Money and Audit Practice in the UK Public Sector

Abstract

Summary: This paper uses both role theory and audit expectations gap theory to critically evaluate the ability of Value for Money (VfM) audit procedures to improve performance in UK public sector organisations. The paper reports on an empirical study of seventeen auditors and twenty two representatives of VfM client organisations. Specifically, the study has the following objectives; to examine auditors" and clients" expectations and perceptions about the ability of the VfM audit to improve public sector organisations" performance;  to examine, from both auditors" and clients" perspectives, the impact of the interplay of personal (the VfM auditors" competence relevance of skills, experience and knowledge of the public bodies" activities), interpersonal (task interdependence between the external VfM auditors and the clients) and external factors (the ambiguity of the VfM audit process) on the VfM audit performance; and  to identify the nature of potential role conflicts in the VfM audit environment along with the causes and consequences of such potential conflicts.The results show that the VfM audit was perceived as an important potential means with which to improve institutional performance in the public sector, but had been poorly implemented in the audited bodies. While the majority of the VfM auditors interviewed took an extremely positive view of their own achievements in terms of improving public institutions" performances and delivering VfM services, the majority of the clients that we interviewed were not convinced of their auditors" competence to carry out a VfM audit effectively, and to provide them with valuable recommendations.Our results show that differences in expectations and perceptions of role between the external VfM auditors and the auditees give rise to significant conflict. Three types of role conflict

The Impact of Performance Audit on Public Administrations in Saudi Arabia: An Exploratory Study

“…In terms of power, consistent with Alwardat et al (2015), this study shows that auditors enjoy a statutory or coercive power since they belong to the SSAI which has a strong constitutional support and a mandate for conducting audit in public organisations. They are acting as watchdogs for the Saudi Government and required to hold administrators accountable for the use of public resources.…”

“…She argues that cooperation between the auditors and auditees can enhance understanding of the issues involved, increase the perceptions of the usefulness of audit, and accordingly, increase the implementation of recommendations (Van Loocke & Put, 2011;Van Der Meer, 1999). In the same vein, (Alwardat et al, 2015;Reichborn-Kjennerud, 2013) examine auditees' perceptions of performance audits and suggest that the auditees perceptions of the usefulness of performance audit depends on their expectations and perception of the quality of auditors' reports, the relevance of their recommendations and of the SAI as an institution, as well as on their experiences in the process and the degree to which their recommendations have been implemented. This is supported by a study conducted by Reichborn-Kjennerud (2014), which analyses the auditees' perceptions of performance audit.…”

“…Morin (2001) and Alwardat et al 2015 suggest that auditors' style of leadership, their experience, their professional skills, their credibility in the eyes of the auditees and the connotations perceived by the auditees in the influence modes, and the use of statutory power by the auditors, are all factors that could enhance or hinder their impact on public administrations. Morin (2001) has also suggested that the will at staff level and at the top management of the audited organisation, political will and the timing of performance audit, all are environmental factors which might affect the impact of performance audit on auditees.…”

“…Other studies have also addressed the impact of auditors' personal factors on the influence of performance audit (Alwardat et al, 2015). But, very little is known about the influence of the Saudi Supreme Audit Institutions (SSAIs) on public administrations, and what factors can enhance or hinder their influence.…”

Are Latin American performance audits leading to changes?

“…Alwardat, Benamraoui, and Rieple () in the UK and Reichborn‐Kjennerud () in Norway showed that the auditees perceived the utility of the performance audits depending on their perception of the quality of the audit reports, as well as on their experiences in the auditing process. For Lonsdale (), in Europe, the content of the reports and the resources and procedures that the auditors use to form their opinions are crucial for making the audit reports credible and valuable.…”