An examination of Pacific nations’ legislatures’ interactions with Supreme Audit Institutions and the impact on audit quality
Abstract
Purpose
The purpose of this paper is to report a study of public accountability within the political and economic structures that characterise Pacific nations. The authors examine audit quality with respect to Pacific Island nations’ governmental reporting to investigate ways to improve accountability in a region that is economically and environmentally challenged.
Design/methodology/approach
The authors examine whether audit quality in Pacific Island nations is associated with the practical arrangements of Supreme Audit Institutions (SAIs), taking into account external factors. The “practical arrangements” include the independence of a SAI (regarding its staffing and funding) and also the requirement for it to report to the Executive. The financial setting in each jurisdiction has been seen to impact the quality of financial reporting and auditing. The authors examine mediating factors such as income, political stability and education that may also impact audit quality. This study uses publicly available databases as well as jurisdictional annual reports and the associated audit opinions and management letters (where available). Jurisdictional reports on public financial management were also analysed.
Findings
The authors find that public sector audit quality is low in many Pacific countries, concluding that public accountability is impaired. While the authors recommend changes to the practical arrangements that can improve audit quality, the mediating factors also impact audit quality. They argue that a renewed focus on financial capability could enhance public accountability in these nations, but there are limiting factors that are difficult to overcome.
Practical implications
There are problems in providing accountability for public sector activities in Pacific nations. The authors suggest that improvements to the appointment and funding of SAIs to enhance their independence will help to reduce these issues.
Originality/value
The authors present a framework for analysing SAIs’ practical arrangements and audit quality that includes variables that may mediate the effects of these practical arrangements. They apply the model to 20 Pacific jurisdictions, showing that the practical arrangements of a SAI directly impact audit quality. Nevertheless, there are instances where audit quality is poor despite good practical arrangements, implying that mediating factors also play a substantial role in determining audit quality of a SAI.
Keywords
Acknowledgements
The authors are grateful for the support and funding for this research from PASAI. Authors also thank Dr Peni Fukofuka for their encouragement to submit to the Pacific Odyssey Special Issue and associated Talanoa. In addition to obtaining valuable feedback from that forum author also appreciate the anonymous reviews author received on the paper to improve it.
It has come to the attention of the publisher that the article, Carolyn J. Cordery, David Hay and Sione Taufa “An examination of Pacific nations’ legislatures’ interactions with Supreme Audit Institutions and the impact on audit quality”, published in Pacific Accounting Review, Vol. ahead-of-print No. ahead-of-print, was published with an incorrect title. This error was introduced in the editorial process and has now been corrected in the online version. The publisher sincerely apologises for this error and for any inconvenience caused.
Citation
Cordery, C.J., Hay, D. and Taufa, S. (2024), "An examination of Pacific nations’ legislatures’ interactions with Supreme Audit Institutions and the impact on audit quality", Pacific Accounting Review, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/PAR-05-2024-0095
Publisher
:Emerald Publishing Limited
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