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Probity audits, real time audits which review compliance with process and conformance with guidelines, are gaining popularity in the Australian public sector. Prior research has noted that the conduct of probity audits by auditors‐general may pose problems for their independence. This paper provides empirical evidence on the extent to which probity audits are performed by auditors‐general in Australia, and the perceptions of auditors‐general to any dilemmas posed. The study finds that approximately half of the auditors‐general conduct probity audits, and that “independence” is a key concern for those who do not perform these tasks. This in‐depth study of probity audits contributes to an understanding of the changing nature of public sector audit.

This article investigates the role of the state auditor in Alberta. An analysis of the Office of the Auditor General of Alberta’s annual reports shows that the role of the Office has significantly changed to promote and encourage the implementation in the public sector of a particular type of accountability informed by new public management. The authors argue that the Office has increased its power to influence politicians and public servants about the merits of its specific understanding of what accountability should be. However, as the Office becomes more powerful, it also becomes more vulnerable to complaints about a lack of independence from the executive. Indeed, the Office is now so closely associated with new public management that we believe that it is difficult for the Office to sustain the claim that it is able to provide independent assessments of public‐sector administration.

Supreme audit institutions, such as the auditors‐general, are considered a crucial link in the accountability chain between parliament and the executive arm of government. The purpose of this study is to examine the enabling legislation of the supreme audit institutions of the Association of Southeast Asian Nations (ASEAN) member countries from a public sector accountability and independence perspective. Following on from INTOSAI (1998), English and Guthrie (2000) and De Martinis and Clark (2001), this study uses an accountability and independence framework to identify and compare the current legislation applicable to the supreme audit institutions of the ASEAN member countries with regard to independence, autonomy, mandate, funding issues, and related parliamentary powers. This study finds that while on average each jurisdiction has addressed slightly less than half the total number of issues under examination, there is considerable diversity with regard to the particular issues addressed. The study suggests policy implications to further strengthen the provisions for accountability and independence of supreme audit institutions through amendments to the enabling legislation of the various jurisdictions.

This paper aims to provide insights into how the New Zealand Office of the Auditor-General (NZOAG) legitimised the selection of topics for performance audit in the New Zealand public health sector over a 10-year period, 2003-2013, by fulfilling the key actors’ “taken for granted beliefs” of the dual roles of the NZOAG: its independence and accountability.

This paper uses evidence gathered from interviews with representatives of the District Health Boards, the Ministry of Health (including Health Advisory Committee members) and NZOAG staff, along with publically available documentary evidence over a 10-year period. The authors draw on Suchman’s (1995) authority on institutional legitimacy to inform the research findings.

The New Zealand Auditors-General (NZAGs) get inputs from various sources such as their own audit teams, parliamentary deliberations, the Ministry of Health, the District Health Boards, media and public concerns and complaints. These sources initiate ideas for performance audits. Subsequently, the NZAGs use the recurring themes and risk assessment criteria while simultaneously consulting with the auditees (the MOH and the DHBs) and other actors, such as health advisory groups, to select topics for such audits. This signals to the key actors, such as the MOH and the DHBs, that the NZOAG is addressing the topics and concerns relevant to the former while discharging its public accountability role. Furthermore, the consultative approach acts as a catalyst, ensuring that the actors involved with public sector health service delivery, specifically the auditees, accept the selected topic. This leads to a lack of resistance to and criticism of the topic; the selection process, therefore, is legitimatised, and credibility is added to the audits. Because of the consultative approach taken by the NZAGs, the actors, including the performance auditors, continue to believe that the Office acts independently from third party influence in selecting their audit topics, elevating the NZAGs’ moral legitimacy with respect to their public accountability role.

The study’s focus group does not include parliamentary representatives, only representatives from the DHBs, the MOH and the NZOAG; therefore, the conclusions on effective discharge of the NZOAG’s accountability role and Parliamentary acceptance is not conclusive – the NZOAG acts on behalf of the Parliament in discharging its accountability role and the latter is also the formal recipient of the reports.

The implications for practitioners and policymakers are that the use of a consultative approach to select topics for performance audit in the absence of performance auditing standards ensures auditee readiness and acceptance of such audits. This also promotes mutual benefits and “trust” between the AG and auditees. Such audits can be used to bring about efficacy in health service delivery.

The selected topics for audits will have an impact on citizens’ lifestyles, with improved health services delivery.

There is a dearth of research on who initiates the ideas for performance auditing and how the Office of the Auditor-General selects topics for such audits. This study adds a new dimension to the existing performance auditing literature. The authors reveal how the NZOAG seeks to legitimise the selection of topics for such audits by consulting with the auditees and other actors associated with public sector health service delivery, while upholding its independent status and making transparent how it discharges its accountability role within the context of performance auditing.

The purpose of this paper is to explain the origins and evolution of auditing and control by linking the changes in the manner in which the audits were conducted with the changes in the institutional function and development of the English East India Company (EIC).

Using Sunder’s contract theory of a firm as an interpretive framework, this paper introduces to the debate material documenting the evolution of the auditing practice during a period of 40 years using the single case of the EIC.

Auditing in the EIC evolved from a simple adjudication on allowable expenditures to ex post verification of transactions, and from using volunteers to paid auditors. Initially, the company was organized into a series of separate, terminable stocks, and simple verification by volunteer auditors chosen from among the shareholders was sufficient to secure the latter’s interests. When the increasing number, size, and complexity of transactions by the EIC rendered the adjudication approach insufficient, ex post verification of financial transactions was added. With a clearer separation between ownership and control at the time of the introduction of permanent joint stock, the audit function assumed a more professional form.

This paper contributes to the research on the early modern period at a time of the formation and rapid development of the first joint-stock organization. It offers a dynamic picture of the evolution of control and auditing as a response to the growth of business, organizations, and the attendant challenges of governance.

This chapter provides an overview of local government auditing in New Zealand by outlining the nature of local government, particularly the legislative requirements in respect to financial and service performance reporting and those for external audit. It also summarises the role and powers of the Controller and Auditor-General and their office in respect to local government audit in New Zealand.

This paper aims to explore the contributions that public sector audit through reforms can make in dealing with the issues of occupational fraud in Ghana.

The issues surrounding the Ghana Audit Service (GAS) reports issued to parliament were reviewed using socio-legal methodology. The discussion as well as the theoretical contribution is informed by stakeholder theory.

The findings show matching of irregularities as reported by regular audit reports to schemes of occupational fraud and abuse as well as how the power to surcharge and disallow would serve as a deterrence mechanism in the fight against occupational fraud.

This paper concludes with discussions on specific requirements including the use of fraud investigators and modern forensic techniques in a collaborative effort with guidelines from the Supreme Audit Institution to minimise fraud.

This study, to the best of the authors’ knowledge, is the first to explore the role of GAS in minimising occupational fraud.

The purpose of this paper is to investigate insights into current practices in auditing “environmental matters” in accordance with Audit Guidance Statement 1010: The Consideration of Environmental Matters in the Audit of Financial Reports, which was introduced by the New Zealand Institute of Chartered Accountants in 2001.

The approach to gathering evidence for this study is qualitative semi‐structured in‐depth personal interviews with 27 auditors: 18 financial auditors (FAs) in chartered accounting practice and nine public sector auditors (PSAs) from the office of the Auditor‐General.

The interview findings confirmed that the auditors respond to isomorphic pressures that affect them, either by employing acquiesce or compromise strategies and that institutional theory fits best as an appropriate theory to frame the research. Environmental matters are only considered in the planning of a company audit when it is significant and relevant to financial reporting. However, evidence showed that FAs are influenced by mimetic isomorphism by adopting the perspective of company management. On the other hand, PSAs are driven by the legislative mandate imposed by the Local Government Act 2002 to search out and verify the validity, accuracy and completeness of information on environmental matters. FAs auditing both companies in the private sector and public sector organisations are able to maintain two dissimilar approaches and attitudes, depending on the type of entities they are auditing.

As with all qualitative interviews, there are some limitations associated with individuals' responses to the semi‐structured open‐ended interview questions.

To prioritise the consideration of environmental matters in the audit practices of FAs for company audits will require both coercive and normative pressures in their organizational sphere.

This study assists in understanding an audit phenomenon not widely known. It would also add a geographical variation to existing literature.

This paper explores the value of financial statement auditing in the public sector. The study applies theory about auditing from the private sector as well as the public sector to explore ways in which public sector auditing can be expected to be valuable. It shows that there are a number of complementary explanations that can be applied to examine the value of public audit, including agency, signaling, insurance, management control, governance and confirmation explanations. The evidence from research and history is generally consistent with the agency and management control explanations. There is some support for the signaling and insurance explanations, while research evidence suggests that governance has differing impact in the public sector compared to the private. The confirmation hypothesis is also potentially relevant. Reviewing the history of the development of public sector auditing functions shows that at least some developments were consistent with explanations such as agency theory and management control. Auditing in the public sector is an area where more research is valuable. The paper concludes with a discussion of issues for further investigation.

Despite attempts to close the expectation gap, researchers in the USA and other countries continue to demonstrate the existence of differences between auditors’ beliefs about their responsibilities and the public’s understanding of the audit function. This study considers how ambiguous language in auditor communications, and the context in which it occurs, contribute to the expectation gap. An experiment examined auditors’ and bankers’ understandings of the phrase “substantial doubt” used in a going concern audit report. It was predicted and found that auditors and bankers had different general understandings of the meaning of “substantial doubt” and their understandings were conditioned on ownership structure, a contextual variable. The results demonstrate the potentially crucial role of context in ambiguous communications with users. Implications of these results are discussed, as are suggested areas for future research.