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The full text of a new draft guideline on value for money audits is provided. Guidance to auditors on the special factors to be taken into account in the application of auditing standards to value for money audits is offered.

Evidence of audit committee activity in the formative years of the Baltimore & Ohio (B&O) Railroad indicates that control and reporting activity developed long before the existence of regulatory mandate or the external auditing function. This is the earliest example of such an organized and continuing activity in American business history. With no previous business experience to model this enterprise, the organizers of the corporation put in place an audit committee of directors as a control device to safeguard assets and ensure proper handling of cash receipts and disbursements. Research into primary materials establishes that the committee not only performed regular routine audits of the “treasurer’s report,” but also identified and addressed critical problems of control and payment weaknesses. The discovery of the function of value‐for‐money (VFM) auditing by a committee of directors establishes historical context for today’s audit process and audit committee. Because the B&O was such an important entity, it influenced other railroads; and the railroad industry, in turn, greatly influenced the development of modern American businesses during the Industrial Revolution.

This paper aims to develop a classification scheme of different types of value for money (VFM) audits with different degrees of compliance audit, and to classify the performance audits carried out by the Swedish National Audit Office (SNAO) during its first six years as an independent state audit organization reporting to parliament.

The empirical data were gathered from all of the 150 audit reports published by the SNAO from its establishment in 2003 to the end of 2008. Seminars were arranged to discuss the classifications for validation.

The focus on traditional VFM audits (the “Three Es”) is unusual. Most audits carried out by the SNAO combine different types of extended VFM audits with compliance audit. On the one hand, they audit how the government and/or central agencies fulfil their mandates (from good to bad). On the other, they audit how the government and/or central agencies adhere to legislation, rules and policies (right or wrong). In some cases, the SNAO equates compliance audit with performance audit.

The authors have verbalised and visualised performance audit activities of interest not only to state auditors, but also to external stakeholders. One practical implication is that the Swedish national audit committee has conducted an evaluation of the SNAO that is partly based on the national report of this study, and has proposed a stronger focus on the Three Es.

The study addresses a new approach in terms of a classification scheme for performance audits, consisting of eight types of VFM audits and three degrees of compliance audit, and creating 24 possible combinations.

During 1994‐1995, work carried out by the author as Head of Unit for Facilities Management Research at Sheffield Hallam University has opened the way for the creation of a new approach to support service management and contracting that could potentially revolutionize the customers’ ability to ensure value for money from facilities management (FM) internal and outsourced contracts. Introduces the concepts of “living contracts” and “moving specification”, using FM in the UK National Health Service as an example. New management tools and methods based on the approach are currently being implemented in a number of contract situations with very positive early results. Describes some of the principles of the approach. Future work will aim to expose some of the early findings from the field data.

English local government audit has gone through fundamental change in the last decade and this period of instability looks certain to continue. Since 2014, councils have been audited by private sector auditors appointed theoretically by the councils themselves (though an overwhelming majority of councils have delegated this responsibility). The scope of audit after 2014 reduced to focus mainly on top-down financial management, rather than value for money or inspection. After growing concerns about the scope and quality of audit however, in 2020, the government commissioned Sir Tony Redmond to review local audit arrangements in England. The Redmond review identified several problems with the reformed structure and made recommendations for change. Currently, the sector is uncertain about what changes will be adopted to solve the issues discovered by Redmond.

“Probity audits” are a new type of audit gaining some popularity in the Australian public sector. Probity audits refer to independent reviews of government privatisations, contracting out projects (government procurements), and expression of interests to ascertain whether procedures followed are consistent with appropriate regulations, guidelines and best practice principles of openness and transparency. In recent times probity audits have been used by Australian public sector agencies in such activities as procurement, disposal of assets and contracting out of services. They provide one means of demonstrating open and accountable government processes, and assuring taxpayers that they are receiving value for money. However, there is scant empirical evidence on this topic. Surveys government departments in one Australian jurisdiction on their practices in relation to probity audits. Concludes that, while many have conducted probity audits, the concept is not fully understood. Further, the majority of the audits conducted were “real‐time” and performed by parties outside the public sector. Concludes by suggesting areas for further research.

This study reports the findings of a survey of Swedish auditors seeking opinions on the conceptual underpinnings of the long established private sector management audit in that country. The authors give the background to the historical calls for accountability and stewardship and draw parallels with calls for accountability by the large modern corporations which emanate from the agency contracts that management functions under. The findings conclude that the Swedish profession needs a theoretical base for its continued conduct of this audit function. The UK and US professions have taken tentative steps towards expanding the traditional financial audit but the rallying calls of visionaries seem as yet to be unheeded.

This study provides insights into the meanings given to audit quality (AQ) by audit partners responsible for delivering audit services. It explores the influence of contextual factors in the auditing setting on constructing such meanings and its representations.

Drawing on a symbolic-interactionist framework, this study takes an interpretive approach, employing semi-structured interviews with audit partners from the United Kingdom (UK).

Three primary meanings of AQ are identified. First, in contradiction to that offered by “mainstream” AQ research, audit partners in this study predominantly regarded the meaning of AQ as an economic concept in the context of the “business” of auditing, delivering the service quality (e.g. value-added auditing and value-for-money) that is expected by their audit clients. Second, the audit partners also espouse the meaning of AQ to be “fit for purpose” audit documentation and adherence to quality control that meets the standards of compliance demanded by independent audit inspections. Third, and similar to the classic convention of AQ, audit partners consider “inputs” to AQ, attributes related to individual auditors (e.g. qualifications, experience and training) as one of the key AQ meanings. A range of stimuli underlies AQ meaning construction, including the audit firm's commercial interests, legitimacy, image management and social identity resulting from audit partners' interactions with audit clients, regulators, and their own self-reflexivity. Interestingly, this study identifies a considerable potential conflict between the meanings assigned to AQ, which suggests that auditors are struggling to strike a balance between the competing demands of those meanings.

This exploratory study addresses only the audit partners' perceptions concerning the meaning of AQ. Findings of this study are relevant to auditors and other parties, such as regulators, in addressing competing dimensions of AQ and potential choices involving conduct and content in any individual audit engagement.

The study complements existing research into AQ by exposing the rationales and potential behaviours that underlie commitments to quality by those involved in commissioning audit engagements. It also adds detailed evidence of how contextual factors in the auditing environment interact with auditors' notions of AQ.

Accountability in the public sector has generally been discussed in light of public sector auditing and performance measurement. Performance audit or ‘value for money’ audit practice has been implemented at various government levels for assessing three key areas of performance – economy, efficiency and effectiveness. This practice has been significantly influenced by recent reforms in the public sector globally. Local governments or city councils play a significant role in providing community services at grass-root levels. How different actors are involved in auditing practices at the local level has attracted recent research interest world-wide. This chapter contributes to the global public sector accounting literature by presenting a critical overview of the development of local government auditing in Australia. It focusses on the role of the local government regulations and various stakeholders in audit scope, methodologies and practices with an illustration from the state of Victoria in Australia. The evidence presented will contribute to understanding international audit practices in local governments across the globe.

A response to Smith′s (1992) attempt (in AAAJ, Vol. 5 No. 1, 1992) to address the difficulties in performance auditing and production function modelling in public sector management (arguing that regression analysis is an inadequate approach for value‐for‐money auditors, and is fundamentally flawed in failing to account for the anticipatory adjustments to the system made by politically motivated administrators). Agrees with Smith that quantitative effectiveness audit has limited value in the wider context of public sector accountability. Raises a number of issues concerning Smith′s data and analysis and his bases for dismissing this approach to effectiveness audit.