Research Method: Case Study Method

This study adopts the case study method to examine an Auditor-General’s Office as the research context. The Auditor-General’s Office selected for the study is VAGO. The VFM audit is a complex accounting phenomenon, and examining the development of VFM audit

practice requires detailed longitudinal analysis of the practices, procedures and documents of the Auditor-General’s Office. This enables the researcher to develop new theories, if necessary, about the development of VFM audit (Cooper & Morgan 2008). Similarly, Humphrey and Scapens (1996, p. 100) argue that case studies are useful to examine the development and performance of complex accounting practices:

While recognizing the important contributions of ‘alternative’ accounting research in challenging the well-established roots of accounting knowledge and history, the paper argues that we should move beyond the ‘illustrative’ use of social theory in case-based research. Such uses of social theories have brought the ‘political’ and ‘social’ into the realms of accounting knowledge, but it has not produced significant insights into the intricacies, diversities or contradictions of accounting practice in contemporary organizations. As explanations have largely resided in social theories themselves, rather than in (theoretically informed) observation, accounting research has struggled to explain the differential nature of day-to-day accounting practices.

Accordingly, the case study research method is used in this study to unlock the backstage daily practices of an Auditor-General’s Office in fabricating auditing methodologies, planning documents and audit reports. There are various categories of case studies, such as interpretive, descriptive, illustrative, experimental and exploratory case studies, yet the distinctions between these different categories are not clearly visible (Scapens 2004, pp. 259–260). The present study narrates the history and development of VFM audit practice. It also explains how VFM audit appeared at the ‘margins of accounting’ (Miller 1998) and progressed as an effective public sector audit method within about three decades. Therefore, this study uses an interpretive, descriptive and illustrative case study. The illustrative case study describes why and how new accounting technologies were developed in economic entities (Scapens 2004, pp. 259–260). This study attempts to describe how VFM audit practice was established by developing new audit methodologies and various other internal procedures by an Auditor-General’s Office over a longer period. The case study research method is the most suitable method to examine this development of accounting phenomena over a long period because it allows the research to examine the daily activities of an organisation and its related actors.

This study adopts the concepts of framing and overflowing, supplemented with the concepts of actors, scripts and inscriptions, to address the research problem. As such, the

theoretical framework is compatible with the research method to examine the in-house processes of an Auditor-General’s Office. Examining the VFM audit practice involves exploring the front stage and backstage practices of VFM audit and the creation of the audit environment by the case organisation. The case study method provides the opportunity to examine the inside activities of an Auditor-General’s Office in-depth and over a long period, to explore the backstage and front stage practices and audit environment. The actors15 are the Auditor-General and staff of the Auditor-General’s Office, Parliament, PAEC and auditee organisations. One of the front stages of the Auditor-General’s Office is the Parliament, where VFM audit reports are submitted to parliamentary members. The backstage is the in-house activities of the Auditor-General’s Office, in which the audit methodologies and other field activities of VFM audits occur. The actors communicate with scripts and inscriptions that include VFM audit reports, planning documents, annual reports, audit programs and other various documents generated by the Auditor-General’s Office. In this way, in-depth analysis of the establishment and evolution of VFM audit methodologies and other institutional practices at the VAGO is performed.

4.3.1Selection of the Case Organisation

This study examines the micro-activities undertaken in the development of VFM audit methodologies and audit environment in an Auditor-General’s Office. This requires a case organisation that has engaged in the fabrication of audit methodologies, strategic plans and audit reports, as explained by Scapens (2004, p. 261):

Cases should be selected so that the researcher can focus on the questions to be addressed in the research. The research question(s), together with the theoretical framework that underpins the research, will define the characteristics of the cases to be studied, and the researcher should try to select cases that display those characteristics.

This study selects the VAGO as the case organisation because it has maintained a well- developed VFM audit group of actors and stakeholders (Callon 1986; Latour 1987, 2005) in developing and performing VFM audit practice since 1982. The VAGO is a unique

15 _{Callon’s (1998, 1999) work of framing and overflowing concepts draws from social dramaturgy, framing} (Goffman 1959, 1974) and actor network theory (Latour 1987, 2005). In addition to the actors, Goffman (1959) highlights the concept of audience. In this study, the Parliament, PAC and auditee organisations are

example through which to explore various attributes, such as the idiosyncratic influence of the Auditors-General; the macro social, economic and political influences that have shaped VFM auditing; and an organisation that has developed VFM audit methodologies and strategic plans.

The VAGO engaged actively with the Victorian Parliament, auditee organisations and audit environment, stating that it had expertise to be the auditor to evaluate VFM in government departments and programs. The VAGO was established in 1851 and had a history of 131 years of public sector audit experience before it commenced VFM audit in 1982. The VAGO submitted its first VFM audit report to the Victorian Parliament in June 1982. Subsequently, the Victorian Parliament gave a specific mandate to the VAGO to conduct VFM audits under s. 16 of the Audit Act 1994 of Victoria, Australia. The VAGO had developed audit methodologies for VFM audits from 1984. In implementing VFM audits, the VAGO adopted a comprehensive audit methodology similar to that used in Canadian Auditor-Generals’ Offices since 1982. The VAGO also developed in 2005 its own RBA methodology in collaboration with the Queensland Audit Office (QAO), known as the Integrated Public Sector Audit Methodology (IPSAM). The IPSAM is now used by several Auditor-Generals’ Offices in Australia, including QAO, VAGO, the Tasmanian Audit Office and the Australian Capital Territory Auditor-General’s Office.

The research period for this study is 25 years from 1982 to 2007. Some important political and social events took place during this period. For example, Waldron, who was appointed Auditor-General in 1977, was the architect of the VFM audit under the umbrella of the comprehensive16 audit approach adopted at the VAGO. Further, there were major developments in VFM audit methodologies and management of VFM audit during this period. The PAEC (2010, p. 23) of the Victorian Parliament completed an inquiry into Victoria’s Audit Act 1994, and, in its discussion paper, recognised the VAGO as expert in VFM audit. It also confirmed that the VFM audit profession was solely limited to the public sector organisations in Victoria (PAEC 2010). The VFM audit practice of the

16 _{The comprehensive audit methodology refers to the audit covering the financial audit, compliance audit and} VFM audit in one government organisation or project. The VAGO (1984a) adopted the comprehensive audit

VAGO experienced changes in the person of the Auditor-General and was subject to broader institutional forces associated with the NPM reforms. Thus, the VAGO has maintained a well-developed VFM audit practice and other attributes, such as audit methodologies and strategic planning process, and has all the characteristics that should be available in order to examine the research problem. The VAGO also assisted in providing access to the inner workings of an Auditor-General’s Office and in providing access to the VAGO’s closed VFM audit files. These matters contributed to selecting the VAGO as the case organisation.