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Prelims

Auditing Practices in Local Governments: An International Comparison

ISBN: 978-1-80117-086-4, eISBN: 978-1-80117-085-7

Publication date: 15 June 2022

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Citation

(2022), "Prelims", Ferry, L. and Ruggiero, P. (Ed.) Auditing Practices in Local Governments: An International Comparison (Emerald Studies in Public Service Accounting and Accountability), Emerald Publishing Limited, Leeds, pp. i-xviii. https://doi.org/10.1108/978-1-80117-085-720221018

Publisher

:

Emerald Publishing Limited

Copyright © 2022 Laurence Ferry and Pasquale Ruggiero

Half Title Page

Auditing Practices in Local Governments

Series Page

EMERALD STUDIES IN PUBLIC SERVICE ACCOUNTING AND ACCOUNTABILITY

Series editors:

  • Enrico Bracci, University of Ferrara, Italy

  • Laurence Ferry, University of Durham, UK and, Rutgers University, USA

  • Alfred Tat-Kei Ho, University of Kansas, USA

  • Maria Francesca Sicilia, University of Bergamo, Italy

  • Ileana Steccolini, University of Essex, UK

Recent research has shown that there is a growing gap between academia and practice in public sector accounting, auditing and accountability. This is a particularly important issue in the context of public services and policies, where a number of emerging issues and trends, such as fiscal sustainability, global climate change, demographic changes, equity and inclusive growth, government transparency, citizen participation and engagement, political polarisation and fragmentation, the growth of false information in social media, and new forms of public–private-non-profit partnership, as well as technological advancements, such as big data, block-chain, and digital transformation, bring about new challenges and require innovative, timely, and effective solutions.

To strengthen the debate between academia and practice, Emerald Studies in Public Service Accounting and Accountability aims to provide a forum where academics, practitioners, and policy makers can interact and promote new ideas related to hot topics and emerging trends. Through innovative use of different formats, such as short-form books, in-depth case studies, and debates, this series will foster a dialogue between those in academia and those in practice, both leading to the advancement of research in this field and increasing its impact.

Volumes in this series:

  • Auditing Practices in Local Governments: An International Comparison

    Edited by Laurence Ferry and Pasquale Ruggiero

  • Measurement of Assets and Liabilities in Public Sector Financial Reporting: Theoretical Basis and Empirical Evidence (Forthcoming)

    Edited by Josette Caruana, Marco Bisogno and Mariafrancesca Sicilia

Editorial Page

EDITORIAL BOARD

  • Pawan Adhikari, University of Essex, UK

  • Eugenio Anessi-Pessina, Università Cattolica del Sacro Cuore, Italy

  • Massimo Anzalone, The Court of Audit, Italy

  • Marco Bisogno, University of Salerno, Italy

  • Katharina Bryan, EU Court of Auditors, Luxembourg

  • David Caplan, Chartered Institute of Public Finance and Accountancy, UK

  • Josette Caruana, University of Malta, Malta

  • Carolyn Cordery, Aston University, UK

  • Drew Cullen, Chartered Institute of Public Finance and Accountancy, UK

  • Adina Dudau, University of Glasgow, UK

  • Sheila Ellwood, University of Bristol, UK

  • Dorothea Greiling, Johannes Kepler Universität Linz, Austria

  • Ron Hodges, University of Birmingham, UK

  • Zahirul Hoque, Prince Sultan University, Saudi Arabia

  • Gwenda Jensen, International Federation of Accountants, Canada

  • Maarten de Jong, The Court of Audit, The Netherlands

  • John Kamensky, IBM Center for The Business of Government, USA

  • Gustaf Kastberg, University of Gothenburg, Sweden

  • Shayne Kavanagh, Government Finance Officers Association (GFOA), USA

  • Sanja Korać, University of Speyer, Germany

  • Mariannunziata Liguori, Durham University, UK

  • Laura Maran, RMIT University, Australia

  • Rebecca McCaffry, Chartered Institute of Management Accountants (CIMA), UK

  • Dean Michael Mead, Governmental Accounting Standards Advisory Council (GASAC – GASB), USA

  • Alex Metcalfe, Association of Chartered Certified Accountants (ACCA), UK

  • Fabrizio Mocavini, State General Accounting Department – Ministry of Finance, Italy

  • Zachary Mohr, University of North Carolina at Charlotte, USA

  • Tom Overmans, Utrecht University, The Netherlands

  • Gabriel Cid Puron, Centro de Investigación y Docencia Económicas (CIDE), Mexico

  • Iris Saliterer, Albert-Ludwigs-Universität Freiburg, Germany

  • Johann Seiwald, International Monetary Fund, Austria

  • Ross Smith, International Public Sector Accounting Standards Board (IPSASB), Canada

  • Shahzad Uddin, University of Essex, UK

  • Jarmo Vakkuri, University of Tampere, Finland

  • Frank, H. M. Verbeeten, University of Amsterdam, The Netherlands

  • Rob Whiteman, Chartered Institute of Public Finance and Accountancy (CIPFA), UK

  • Zaozao Zhao, National Academy of Economic Strategy, China

Title Page

Auditing Practices in Local Governments: An International Comparison

EDITED BY

LAURENCE FERRY

Durham University, UK, and Rutgers University, USA

AND

PASQUALE RUGGIERO

University of Siena, Italy and University of Brighton, UK

United Kingdom – North America – Japan – India – Malaysia – China

Copyright Page

Emerald Publishing Limited

Howard House, Wagon Lane, Bingley BD16 1WA, UK

First edition 2022

Editorial matter and selection © 2022 Laurence Ferry and Pasquale Ruggiero.

Individual chapters © 2022 The Authors.

Published under exclusive licence by Emerald Publishing Limited.

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No part of this book may be reproduced, stored in a retrieval system, transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without either the prior written permission of the publisher or a licence permitting restricted copying issued in the UK by The Copyright Licensing Agency and in the USA by The Copyright Clearance Center. Any opinions expressed in the chapters are those of the authors. Whilst Emerald makes every effort to ensure the quality and accuracy of its content, Emerald makes no representation implied or otherwise, as to the chapters’ suitability and application and disclaims any warranties, express or implied, to their use.

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

ISBN: 978-1-80117-086-4 (Print)

ISBN: 978-1-80117-085-7 (Online)

ISBN: 978-1-80117-087-1 (Epub)

Dedication

Laurence Ferry – Dedicated to my wife Anchalee, daughters Dior and Eloise, mother Hazel and father Laurence

Pasquale Ruggiero – Dedicated to my wife Giuliana

Contents

List of Tables and Figures xv
List of Contributors xvii
Chapter 1: The Why, Who and What of Public Sector Auditing
Laurence Ferry, Pasquale Ruggiero and Henry Midgley 1
1.1. Introduction 1
1.2. Why Auditing: Models and Practice Variations, Accountability and Performance 4
1.3. Who Is the Auditor? 5
1.4. The What of Auditing Processes 7
1.5. The Structure of the Book 9
References 10
Chapter 2: Local Government Auditing in Australia
Zahirul Hoque and Thiru Thiagarajah 13
2.1. Introduction 13
2.2. The History of Local Governments in Australia 15
2.3. The Development of Government Auditing Practices in Australia 16
2.4. Role of Various Stakeholders in Audit Practices 17
2.5. Auditor Independence 19
2.6. Financial and Performance Statements Audit 19
2.7. Public/Private/Hybrid Audit Regulatory Setting, Audit Scope, and Audit Approach 22
2.8. Final Remarks 24
References 24
Chapter 3: Local Government Auditing in Austria
Tobias Polzer, Sebastian Vith and Günter Bauer 27
3.1. Introduction 27
3.2. The Local Government Context Against the Background of Wider Administrative Reforms 28
3.3. Historical Development of Public Auditing 29
3.4. Structures and Responsibilities: New Actors on the Austrian LGA Landscape 29
3.5. Audit(or) Independence 33
3.6. Scope of Audits and Influence of Auditing Organisations 34
3.7. Instruments and Metrics 35
3.8. Conclusion 36
Acknowledgements 37
References 37
Chapter 4: Local Government Auditing in Brazil
André Feliciano Lino, Ricardo Rocha de Azevedo, Ismar Viana and André Carlos Busanelli de Aquino 39
4.1. Introduction 39
4.2. Auditing Practices: Contemporary History 40
4.3. Structure 41
4.4. Audit(or) Independence 42
4.5. Inspection as Performance Management (KPIs) 43
4.6. Public/Private/Hybrid Audit Regulatory Setting 43
4.7. Scope 44
4.8. Conclusion 45
References 46
Chapter 5: Local Government Auditing in the People’s Republic of China
Zaozao Zhao 47
5.1. Introduction 47
5.2. The Contemporary History of the Chinese Auditing System and Reforms 48
5.3. The Organisational Structure and Management of the Chinese Audit System 50
5.4. Auditor Independence 52
5.4.1. Maintaining Independent Legal Basis 52
5.4.2. Maintaining an Independent Internal Management System and Organisation Culture 52
5.5. Classification and Character of Auditing 53
5.5.1. Audit Types 53
5.5.2. Audit Power 53
5.5.3. Financial Audit and Its Development 54
5.6. Employment of Private Contractors 55
5.7. Conclusion and Discussion 55
References 56
Chapter 6: Local Government Auditing in England
Laurence Ferry, Henry Midgley and Aileen Murphie 57
6.1. Introduction 57
6.2. Auditing Practices: Contemporary History 59
6.3. Structure: Fragmented Versus Single Unit 60
6.4. Audit(or) Independence 61
6.5. Inspection as Performance Management (KPIs): Service and Organisation Levels 62
6.6. Public/Private/Hybrid Audit Regulatory Setting 62
6.7. Scope: Financial Audit, Value for Money Auditing and/or Other Public Interest Area 62
6.8. Final Remarks 63
References 63
Chapter 7: Local Government Auditing in France
Marcel Guenoun and Robin Degron 65
7.1. Introduction 65
7.2. Auditing Practices: Regional Chambers of Accounts in France: A Progressive Move Towards Performance Auditing 67
7.3. Fragmented Performance Auditing in CRC: A Collegial Quest for Transparency 68
7.4. Auditing Structures: From a French-style Garden to an English Style? 70
7.5. The Independent Financial Judge and its Toolbox 70
7.6. Conclusion 71
References 72
Chapter 8: Local Government Auditing in Germany
René Geissler 73
8.1. Introduction 73
8.2. Local Level Framework Conditions 74
8.3. Structure of Auditing 75
8.4. Scope 77
8.5. Auditor Independence 78
8.6. Performance Management 80
8.7. Regulatory setting 81
8.8. Conclusion 81
References 82
Chapter 9: Local Government Auditing in Italy
Pasquale Ruggiero, Andrea Mazzillo and Patrizio Monfardini 83
9.1. Introduction 83
9.2. The Context to the Local Government System 84
9.3. Auditing and the Control Framework 85
9.4. Scope 86
9.5. Independence of the Auditor 88
9.6. Performance Management 89
9.7. Auditing Regulation and Practice 90
9.8. Conclusion 91
References 91
Chapter 10: Local Government Auditing in the Netherlands
Tjerk Budding, Herman van Brenk, Remko Renes and Rein-Aart van Vugt 93
10.1. Introduction 93
10.2. Auditing Practices: Contemporary History 96
10.3. Structure: Fragmented Versus Single Unit 97
10.4. Audit(or) Independence 98
10.5. Inspection as Performance Management (KPIs): Service and Organisation Levels 99
10.6. Public/Private/Hybrid Audit Regulatory Setting 99
10.7. Scope: Financial, VFM Auditing and/or Other Public Interest Area 99
10.8. Conclusion 100
References 100
Chapter 11: Local Government Auditing in New Zealand
Carolyn Cordery, David Hay and Robert Cox 103
11.1. Introduction 103
11.1.1. Local Government in New Zealand 103
11.2. Auditing Practices: Contemporary History 106
11.3. Structure 106
11.4. Audit(or) Independence 107
11.5. Inspection as Performance Management (KPIs): Service and Organisation Levels 108
11.6. Public/Private/Hybrid Audit Regulatory Setting 108
11.7. Scope: Financial, Value for Money (VFM) Auditing and/or Other Public Interest Area 108
11.8. Conclusion 109
References 109
Chapter 12: Local Government Auditing in Portugal
Susana Jorge, Sónia Nogueira and Ana Calado Pinto 111
12.1. Introduction 111
12.2. Auditing Practices: Contemporary History 113
12.3. Structure: Fragmented Versus Single Unit 115
12.4. Audit(or) Independence 116
12.5. Inspection as Performance Management (KPIs): Service and Organisation Levels 117
12.6. Public/Private/Hybrid Audit Regulatory Setting 118
12.7. Scope: Financial, VFM Auditing and/or Other Public Interest Area 118
12.8. Conclusion 119
References 119
Chapter 13: Local Government Auditing in Spain
Lourdes Torres and Ignacio Cabeza 121
13.1. Auditing Practices: Contemporary History 121
13.2. Structure: Fragmented Versus Single Unit 123
13.3. Audit(or) Independence 125
13.4. Inspection as Performance Management (KPIs): Service and Organisation Levels 125
13.5. Public/Private/Hybrid Audit Regulatory Setting 126
13.6. Scope: Financial, Value for Money (VFM) Auditing and/or Other Public Interest Area 127
13.7. The Impact of New Technologies on Auditing in Spain 128
References 129
Chapter 14: Local Government Auditing in Sweden
Torbjörn Tagesson and Per-Åke Brunström 131
14.1. Introduction 131
14.2. Professional and Politically Appointed Auditors 132
14.3. Structure 132
14.4. Audit(or) Independence 133
14.5. Inspection as Performance Management (KPIs): Service and Organisation Levels 133
14.6. Public/Private/Hybrid Audit Regulatory Settings 134
14.7. Scope: Financial, Value for Money Auditing and/or Other Public Interest Areas 135
14.8. Conclusion 136
Acknowledgements 136
References 136
Chapter 15: Local Government Auditing in Switzerland
Pascal Horni and Martin Köhli 139
15.1. Introduction 139
15.2. Auditing Practices: Contemporary History 140
15.3. Structure 140
15.4. Audit(or) Independence 143
15.5. Inspection as Performance Management (KPIs) 144
15.6. Regulatory Setting 144
15.7. Scope 145
15.8. Conclusion 146
References 146
Chapter 16: Where is Public Sector Auditing: A Comparative Analysis
Laurence Ferry, Pasquale Ruggiero and Henry Midgley 149
16.1. Introduction 149
16.2. Audit Space and Structure 150
16.3. Audit Independence and Competition 151
16.4. Audit Scope and Coverage 154
16.5. Inspection 155
16.6. Further Thoughts 157
References 158
Index 161

List of Tables and Figures

Tables

Table 3.1. Differences in Terms of Responsibilities and Autonomy of RAIs Regarding LGA. 32
Table 15.1. Cantonal Stipulations for Audit of Local Governments and the Involvement of Private Audit Firms. 142
Table 16.1. Audit Space and Structure. 150
Table 16.2. Different Approaches to Independence. 152
Table 16.3. Audit Scope. 154
Table 16.4. Inspection and Performance Reporting. 156

Figures

Fig. 3.1. Control and Audit of Local Governments in Austria. 31
Fig. 5.1. The Organisational Structure of the National Audit System. 51

List of Contributors

Günter Bauer Court of Audit of Carinthia, Austria
Per-Åke Brunström EY, Sweden
Tjerk Budding Vrije Universiteit Amsterdam, the Netherlands
Ignacio Cabeza Foundation for Public Sector Auditing, Spain
Carolyn Cordery Victoria University of Wellington, New Zealand
Robert Cox Audit New Zealand, New Zealand
André Carlos Busanelli de Aquino University of São Paulo, Brazil
Ricardo Rocha de Azevedo Federal University of Uberlândia, Brazil
Robin Degron University Paris 1, France
Laurence Ferry Durham University, UK, and Rutgers University, USA
René Geissler Technical University of Applied Sciences Wildau, Germany
Marcel Guenoun Institute for Public Management and Economic Development, Ministry of Finance; Aix Marseille Université, CERGAM, IMPGT, France Institut de Management Public et Gouvernance Territoriale, France
David Hay University of Auckland, New Zealand
Zahirul Hoque Prince Sultan University, Saudi Arabia
Pascal Horni Zurich University of Applied Sciences (ZHAW), Switzerland
Susana Jorge University of Coimbra and Research Centre in Political Science, Portugal
Martin Köhli Swiss Federal Audit Office, Switzerland
André Feliciano Lino University of Essex, UK
Andrea Mazzillo Corte dei Conti, Italy
Henry Midgley Durham University, UK
Patrizio Monfardini University of Cagliari, Italy
Aileen Murphie Durham University, UK
Sónia Nogueira Instituto Politécnico de Bragança and Research Centre in Political Science, Portugal
Ana Calado Pinto APPM SROC, Lda., Portugal
Tobias Polzer WU Vienna University of Economics and Business, Austria
Remko Renes Nyenrode Business Universiteit, the Netherlands
Pasquale Ruggiero University of Siena, Italy and University of Brighton, UK
Torbjörn Tagesson Linköping University, Sweden
Thiru Thiagarajah La Trobe University, Australia
Lourdes Torres University of Zaragoza, Spain
Herman van Brenk Nyenrode Business Universiteit, the Netherlands
Rein-Aart van Vugt Deloitte, the Netherlands
Ismar Viana National Association of Courts of Accounts’ Auditors, Brazil
Sebastian Vith WU Vienna University of Economics and Business, Austria
Zaozao Zhao Chinese Academy of Social Sciences (CASS), People’s Republic of China
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