Abstract:
Performance audit, compared to the traditional financial and compliance audits, is a
relatively new innovation that emerged amidst accountability concerns in the public
sector. Economic crises, ministerial scandal and inefficiencies were among the
impetus that led the public to demand better performance and greater accountability in
the public sector, and performance audit was among the many responses to such
demand. In New Zealand, performance audit is carried out by the Controller and
Auditor General (the AG) under the mandate granted by the Public Audit Act 2001.
Adapting the methodology from grounded theory, this study looks at the impact of
performance audit on seven entities audited in 2006 by the AG. This study found that
the entities were impacted through the manifestation of implemented audit
recommendations and the attainment of performance audit goals. In particular, there is
a high acceptance and implementation rate to the audit recommendations made in the
seven audits. The implementation of accepted recommendations consequently led to
the changes within the entities in terms of managerial practices, as well as internal
systems and processes. In some entities, these changes were translated into
performance improvement, where the entities experienced changes in the way that
they carried out their operations. However, based on interviewees' accounts being the
auditees of the audits, most interviewees viewed performance audit as having a
greater role for performance accountability compared to performance improvement.
Whilst the auditees found the audit recommendations useful, the impact on
performance in their view has not been significant. Rather, the auditees viewed
performance audit as having a more important role as an assurance tool in terms of
their accountability to the public.
