Supreme audit institutions in a high‐impact context: A comparative analysis of performance audit in four Nordic countries

• Author: Kim Klarskov Jeppesen,Thomas Carrington,Jarmo Vakkuri,Åge Johnsen,Kristin Reichborn‐Kjennerud,Külli Taro
• Published date: 01 May 2019
• Date: 01 May 2019
• DOI: http://doi.org/10.1111/faam.12188

Received: 1 October 2016 Revised: 4 December 2018 Accepted: 18 December 2018

DOI: 10.1111/faam.12188

ORIGINAL ARTICLE

Supreme audit institutions in a high-impact

context: A comparative analysis of performance

audit in four Nordic countries

˚

Age Johnsen1Kristin Reichborn-Kjennerud2

Thomas Carrington3Kim Klarskov Jeppesen4Külli Taro5

Jarmo Vakkuri6

1OsloBusiness School, Oslo Metropolitan Uni-

versity,Oslo, Norway

2WorkResearch Institute, Oslo Metropolitan

University,Oslo, Norway

3StockholmBusiness School, Stockholm Univer-

sity,Stockholm, Sweden

4CopenhagenBusiness School, Copenhagen,

Denmark

5RagnarNurkse School of Innovation and Gover-

nance,Tallinn University of Technology,Tallinn,

Estonia

6Facultyof Management, Tampere University,

Tampere,Finland

Correspondence

˚

AgeJohnsen, Oslo Business School, Faculty of

SocialSciences, Oslo Metropolitan Univer-

sity,P.O.Box4, St. Olavs plass, NO-0130 Oslo,

Norway.

Email:aage.johnsen@oslomet.no

Fundinginformation

JointCommittee for Nordic Research Councils

inthe Humanities and Social Sciences (NOS-HS),

Grant/AwardNumber: 219574

Abstract

This article analyses survey data regarding the impact of supreme

audit institutions’ (SAIs) performance audit on public administration

in four Nordic countries. Regression analysis with pooled data from

Denmark, Finland, Norway and Sweden indicates that performance

audits have positive impacts on usefulness, changes, improvements

and, to some extent, accountability, as perceived by auditees who

have experienced the audits. The results show that some of the fac-

tors that earlier research found important for the impact of perfor-

mance audits in some countries were insignificant for all the four

Nordic countries, but that SAIs’ legitimacy, audit quality and conse-

quences of media attention were important factors.

KEYWORDS

democratic accountability, government, improvement, performance

audit, public management reforms

1INTRODUCTION

The quality of government is important for many aspects of society,such as social, economic and political outcomes,

and predictability and impartiality are especially important for good governance (Rothstein, 2011). This appreciation

for the quality of government has been reinvigoratedby the works of Fukuyama (2015), who argued that the adminis-

trative capacities of states to deliverpublic goods and services are vital for the quality of governance. Some countries,

particularly Northern European and Nordic countries, consistently score high on measures for the quality of govern-

ment, economic development, equality,welfare and trust. Fukuyama even stated that ‘getting to Denmark’ should be

an important aim for the public policy of many countries and governments.

Supreme audit institutions (SAIs) and their performance audits are assumed to be important for the quality of gov-

ernment. There is a long history of audits in government being used to make the public sector efficient, effective and

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2019 John Wiley & Sons Ltd wileyonlinelibrary.com/journal/faam FinancialAcc & Man. 2019;35:158–181.

JOHNSEN ET AL.159

accountable, and almost all countries todayhave SAIs. However, this practice is based on assertions of a positive impact

on public administration and society,but without much empirical evidence.

The Nordic countries have a relatively long history of audits in government,with some countries having mandated

governmental audits in their constitutions since the early 1800s. The development of audits in government in this

region has closely followed the general development in public administration in many OECD countries after the Sec-

ond World War,and some of the Nordic countries have, since the 1960s, been frontrunners in developing and using

performance audit in government (Richardson & Kindblad, 1983).

Prior research has not identified anysignificant impact that the organisation of the SAIs has had on economic effects

such fiscal policy, government efficiency or productivity, except for a negative relationship with corruption for those

countries that use a court (Napoleonic) model (Blume & Voigt, 2007). Some studies have indicated that performance

auditswork well in some of the Nordic countries (Reichborn-Kjennerud, 2013; Reichborn-Kjennerud & Johnsen, 2018).

Another study indicated that the accountability regime with SAIs that are organised with the board (collegiate) or

Westminster model, as used in the Nordic and North-European countries, and conduct numerous performance audits,

have higher impacts than the ‘French’ or other accountability regimes (Torres, Yetano, & Pina, 2016). Therefore, it is

interesting to study how audit in governmentworks in the high-trust, ‘high-impact’ Nordic context because this knowl-

edge can be used for developing audit theory and improvingpractice.

Accordingly,the purposes of this article are to measure the impact of performance audits, empirically analyse pos-

sible determinants in the audit process that influence the impact and explore common determinants across countries.

The Nordic countries are especially interesting to study because the accountability regime that they employ seems to

have high impact. The research questions are: (1) How do SAIs’ performance audits impact public administration? (2)

What determines the positive performance audit impacts? By public administration, we mean ministries, agencies and

other public-sector organisations that receive government funding and are therefore objects for the SAIs’ audit. This

article analyses severaldimensions of the impact of SAIs’ performance audits in four Nordic countries – Denmark, Fin-

land, Norway and Sweden – as perceivedby civil servants who have experienced the performance audits in the audited

organisations (auditees). We conduct this analysis by replicating a survey research instrument and pooling existing

data from a Norwegian dataset (Reichborn-Kjennerud, 2013) with new and comparable data from Denmark, Finland

and Sweden. We identify SAIs’ legitimacy, audit quality and consequences of media attention, as important determi-

nants for severalof the impacts.

This article contributes in several ways to theory and practice in public administration, audit and accountability.

First, we analyse audit practices, particularly types of performance audits and design of the audit processes, in one

of the accountability regimes currently associated with high impact. Second, we analyse several dimensions of impact

and their determinants. Third, we probe the external validity of the ‘mechanism’ behind the earlier documented per-

formance audit model in Norway, to a wider Nordic and international context.These determinants are important for

developing a general theory for audit impact, as well as for improving practices, because some of these factors seem

to be working in the Nordic context but not in some other contexts, and some factors that work in some countries do

not work in other countries within the same context. Such issues may be subject to managerial discretion and organi-

sational design, amenable for potentially developing ‘best practices’,and are therefore important for policymakers and

managers. These issues are also interesting for future research in other contexts.

The remainder of the article is structured as follows. The second section reviews literature on the impact of perfor-

mance audit in government. The third section presents the conceptual framework and hypotheses.The fourth section

documents the research methods. The fifth section analyses the results. The sixth section discusses the results. The

final section concludes.

2LITERATURE REVIEW

Until the 1970s, public administration was preoccupied with public policy and ‘who gets what, when and how’, and

emphasised planning and budgeting. The attention was predominantly on input. Thus, governmental audit institutions