Supreme audit institutions and public value: Demonstrating relevance

• Published date: 01 May 2019
• Author: Carolyn J. Cordery,David Hay
• Date: 01 May 2019
• DOI: http://doi.org/10.1111/faam.12185

Received: 19 November2016 Revised: 12 May2017 Accepted: 5 July 2017

DOI: 10.1111/faam.12185

ORIGINAL ARTICLE

Supreme audit institutions and public value:

Demonstrating relevance

Carolyn J. Cordery1,2 David Hay3

1VictoriaBusiness School, Victoria University

ofWellington, P.O.Box 600, Wellington, New

Zealand

2AstonBusiness School, Aston University, Aston

Triangle,B4 7ET, Birmingham

3Universityof Auckland Business School, P.O.Box

92019,Auckland, New Zealand

Correspondence

CarolynCordery, School of Accounting and Com-

mercialLaw, Victoria Business School, Victoria

Universityof Wellington, P.O.Box 600, Welling-

ton,New Zealand.

Email:Carolyn.cordery@vuw.ac.nz

Abstract

Supreme Audit Institutions (SAIs) have an important role in ensur-

ing public sector accountability; their main activities being managing

the audit of public sector entities’ financial statements and assess-

ing probity/compliance, providing advice to parliamentary commit-

tees, and undertaking performance audits. Standards issued by the

International Organization of SAIs encourage SAIs to recognize

the value they deliver through their activities and to demonstrate

that to citizens, Parliament, and other stakeholders.The recognition

ofthe need to be democratically accountable for efficiency and effec-

tiveness is one aspect of public value, which is also concerned with

the just use of authority (Moore, 2013). The purpose of this article

is to develop the components of a SAI's public value and, through

a comparative international study, to analyze how SAIs’ report on

the public value they deliver.Analyzing reporting against the model

developed in this article indicates that SAIs reporting prioritizes cri-

tiques to increase public sector efficiency and effectiveness, rather

than government policy.In addition, it finds SAIs generally fail to dis-

cuss any negative consequences of their work. SAIs are encouraged

to develop new waysto demonstrate their ongoing relevance.

KEYWORDS

audit relevance, financial audit, public audit, public value, strategic

value triangle

1INTRODUCTION

Almost 200 countries around the world operate Supreme Audit Institutions (SAIs). These publicly funded SAIs under-

take financial statement audits for agencies and governmentas a whole, as well as compliance and performance audits

(The World Bank, 2001). The International Organization of Supreme Audit Institutions (INTOSAI) (2013)asserts that

SAIs deliver public value through ensuring public sector accountability,and independently and objectively supporting

reform; but little academic analysis exists of how theyreport on public value.

Public value is increasingly important both practically and theoretically (Bryson, Crosby, & Bloomberg, 2015),

although the concept is complex and contested (Hartley,Alford, & Hughes, 2015; Moore, 2013). Taking the principle

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2018 John Wiley & Sons Ltd wileyonlinelibrary.com/journal/faam FinancialAcc & Man. 2019;35:128–142.