The value of public sector audit: Literature and history

  • David Hay, Carolyn Cordery
  • Journal of Accounting Literature, June 2018, Elsevier
  • DOI: 10.1016/j.acclit.2017.11.001

A literature review of why public sector audit might be of value.

What is it about?

We provide a short history of public sector audit and then develop a framework through which we could explain why stakeholders would value public sector audit. This framework comes mainly from the private sector audit literature, although we also draw on the little public sector audit literature there is. Agency theory and management control are the two main reasons for audit, but we also find signalling and insurance explanations are valid. There are mixed results on governance explanations and while we do not find much support for the confirmation hypothesis, it is one of the areas for more research.

Why is it important?

Almost every country has a Supreme Audit Institution that is responsible for audit in the public sector. It is important to discuss and agree responses to the drivers of stakeholder value. This paper helps with a framework that can be expanded.


Professor Carolyn J Cordery
Aston University

This is the first of three papers that David Hay and I developed from a research project within NZ's Supreme Audit Institution. I think the framework enables us to analyse the work of public sector auditors and what it is that stakeholders value/expect of them.

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The following have contributed to this page: Professor Carolyn J Cordery