The role of transparency in auditing

• Date: 01 August 2019
• Published date: 01 August 2019
• DOI: http://doi.org/10.1111/faam.12193
• Author: Jenny de Fine Licht

Received: 31 January 2017 Revised: 16 May2018 Accepted: 20 June 2018

DOI: 10.1111/faam.12193

ORIGINAL ARTICLE

The role of transparency in auditing

Jenny de Fine Licht

School of Public Administration, Universityof

Gothenburg, Gothenburg, Sweden

Correspondence

Jennyde Fine Licht, School of Public Administra-

tion,University of Gothenburg, Box 712, 405 30

Gothenburg,Sweden.

Email:Jenny.definelicht@spa.gu.se

Fundinginformation

SwedishFoundation for Humanities and Social

Sciences

Abstract

The concepts of auditing and transparency frequently appear in dis-

cussions about contemporary public-sector challenges, but the rela-

tionship between them rarely has been examined. This paper argues

that transparency might be viewed as both an effect of auditing and

aprerequisite for auditing. Broadly speaking, the former tends to

be articulated more in the auditing literature—where transparency

often justifies auditing—while the latter often appears in the trans-

parency literature. By proposing a distinction between “raw trans-

parency” and “refined transparency,” this paper strives to increase

conceptual clarity and establish a theoretical basis for various audit-

ing activities.

KEYWORDS

auditing, monitoring, New Public Management, transparency

1INTRODUCTION

With the rise of the New Public Management (NPM) reform agenda in the 1980s and 1990s, and its increased focus

on efficiency and quality assurance, auditing, and other related monitoring activities generallygained increased atten-

tion as tools to improve public-sector management and governance (e.g., Pollitt et al., 1999; Power, 1999). Through

rigorous, high-quality auditing, it was thought that the democraticsystem could control administration and that admin-

istrative managers could control their agencies and organisations to ensure rule adherence, efficiency,economy, and

quality.Around the same time, transparency became a buzzword among modern government and international organi-

sations (Hood, 2006). Generally associated with rightfulness and democracy,transparency was equated with sunlight

and became a metaphor and a weapon of high expectationsto fight waste, malpractice, and corruption in the public and

private sectors (e.g., Islam, 2006; Kosack & Fung,2014).

Auditing and transparency are both related to the NPM agenda in that they are viewed as policing functions in the

absence of direct steering or trust-based relationships, thereby presumably making management more visible, veri-

fiable, and efficient. They also are connected frequently to discussions about good governance and modern manage-

ment. However, how they actually relate to each other rarely is examined.This paper demonstrates the connectiv-

ity between the ideas and practices of auditing and transparency,thereby contributing conceptual clarity to auditing

and transparency literature bydeveloping a theoretical framework for future analyses of auditing processes and prac-

tices that view transparency as an empirically oriented concept, rather than a buzzword. By reviewing auditing litera-

ture to understand transparency,and reviewing transparency literature in search of a possible role for auditing and/or

monitoring, this article shows that there are two main roles for transparency in relation to auditing. Both are present,

Financial Acc & Man. 2019;35:233–245. wileyonlinelibrary.com/journal/faam c

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