Chapter 7: Enacting Regimes of Auditability: Strategic Plans and Processes
8.6 Research Implications and Conclusions
8.6.1 Study Limitations
This study is limited to the VAGO in Victoria, Australia, and the findings of this study may not be applicable or attributable to other Auditors-Generals’ Offices due to differences in the audit mandate, financial management requirements and social and political environment factors. There are nine Auditor-Generals’ Offices in Australia.42 These Auditors-Generals’ Offices have different audit mandates, audit acts and financial management acts. The VFM audit function is also not a compulsory annual audit, similar to the financial audit. The VFM audits at the VAGO are undertaken at the discretion of the Auditor-General, with the consent of the PAEC of Victoria.
This study’s findings are limited to VFM audit practice only. The Auditor-General’s Office has two major audit functions: the annual financial audits of government entities and VFM audits. The financial audit is completed with different requirements, such as audit and financial management acts, accounting standards and auditing standards. Therefore, the findings of this study are applicable only to the VFM audit function of the VAGO. VFM audits are not compulsory for every government organisation.
Future research is needed on the role of the PAC in implementing the VFM audit recommendations because that process is a part of the public sector accountability drama
42 These include the ANAO, QAO, Northern Territory Audit Office, New South Wales Auditor-General’s Office, Australian Capital Territory Auditor-General’s Office, VAGO, Tasmanian Auditor-General’s Office,
performed by the Auditor-Generals’ Offices in front of auditee organisations, Parliaments and PACs. The VFM audit report recommendations are reviewed and remedial actions are imposed on auditee organisations by the PAC of the Parliament. This review process by the PAC is the last link of the public sector accountability and audit process. The effectiveness of VFM audit practice is dependent on the follow-up actions taken by the PACs. These aspects of implementing and monitoring the follow-up actions of the VFM audit are to be examined for the VAGO, PAEC of the Victorian Parliament, other Auditors-Generals’ Offices and PACs of State Parliaments.
Further research is needed on the relationship of state auditors’ independence and the VFM audit function in different jurisdictions. Gendron et al. (2001) and Skaerbaek (2009) argue that the Auditor-General’s Office has compromised the socially accepted norms of auditor independence while undertaking VFM audit. Gendron et al. (2001) and Skaerbaek (2009) argue that VFM audit work reflects the consultancy services provided to the State Government, while simultaneously working as the financial auditor and thereby violating the social norms of auditor independence. This study could not find any evidence to support Gendron et al.’s (2001) and Skaerbaek’s (2009) conclusions on violations of the social norms of auditor independence in the context of the VFM audit practice at the VAGO. Therefore, further research is needed to determine whether there is a breach of auditor independence when undertaking the VFM audit role by Auditors-Generals’ Offices.
A few comparative studies have evaluated VFM audit practice in Australia (Glynn 1985; Hatherly & Parker 1988). Since the publication of these studies, the VFM audit function has developed and advanced considerably. There is a need to enhance the knowledge of comparative VFM audit practices adopted by the Auditors-Generals’ Offices in Australia and other countries. These proposed comparative VFM audit studies must examine the VFM audit mandate, independence, scope of the audits, audit methodologies adopted, in- house processes and procedures, selection of the VFM audit cases, liaison with the PACs and Parliaments, and the variety in audit recommendations.
This study examined how regimes of auditability are created and enacted in an Auditor- General’s Office for the VFM audit practice. The creation and enacting of the regimes of auditability involve the development of VFM audit methodologies and enacting those methodologies in the audit environment. There is a body of literature that examined this process under the theme of the ‘construction of auditability’ in the context of private auditing firms and there is a gap in the audit literature on the ‘construction of auditability’ for VFM audit (Power, 2003b). Therefore, this study examined the ‘construction of auditability’ process in the context of the VFM audit practice adopted in Auditor-General’s Offices. The VFM audit practice differs from the private sector financial audit in several ways including the appointment of the auditor, audit mandate, audit methodologies, scope of audit, selection of audit projects and reporting practices. The nature of the VFM practice and its key stakeholders are also different from the financial audit because the VFM audit is controlled and guided by the parliamentary legislations and not by the financial accounting standards and corporations law. Hence, there is a necessity to understand the construction of auditability for the VFM audit practiced by the Auditor-General’s Offices.
This study extends the notions of construction of auditability for the VFM audit practice by examining the development of VFM audit methodologies and strategic planning processes adopted and implemented by the Auditor-General’s Offices. The most unique finding of this study is that the audit methodologies are enacted, mobilised and re-engineered through the strategic planning process of the Auditor-General’s Office and this backstage activity performs a public legitimacy role which has no clear counter-part in private sector auditing firms. The strategic planning involves the creation and submission of corporate and annual plans and annual reports to the stakeholders of VFM audit in the audit environment. These strategic planning documents work as mediating devices and inscriptions that provide nexus between the audit methodologies and the audit environment. This study concludes that the strategic planning process and inscriptions are central objects of the VFM audit that make the VFM audit methodologies operationalise or implementable to produce the VFM audit reports. The strategic planning process supports the Auditor-General’s Office to continually engage with the audit environment, to modify the VFM audit methodologies and to prevent the possible outflowing of the VFM audit and public sector audit frame.
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