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Measuring audit quality of local governments in England and Wales

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  • Giroux, Gary
  • Jones, Rowan

Abstract

The purpose of this paper is to model and test the audit quality provided to local governments in England and Wales. A key question is: are there major differences in audit quality provided? The Audit Commission, a national public body under Parliament, regulates the audits. It sets audit standards, appoints the auditors, and (although each auditor and client local government set the specific audit fee for that client) it establishes a formula to determine standard audit fees. The Audit Commission also conducts an annual review of the audit quality provided by the selected auditors, as well as a survey of client satisfaction. The majority of audits are conducted by District Auditors (public sector employees of the Audit Commission). About a quarter of local governments are audited by one of six private sector auditors (including three of the Big 4). Actual results indicate that audit quality differences are associated with the number of governmental audit clients and local government type. Generally, there were modest quality differences by auditor category.

Suggested Citation

  • Giroux, Gary & Jones, Rowan, 2011. "Measuring audit quality of local governments in England and Wales," Research in Accounting Regulation, Elsevier, vol. 23(1), pages 60-66.
    • Handle: RePEc:eee:reacre:v:23:y:2011:i:1:p:60-66
    DOI: 10.1016/j.racreg.2011.03.002
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    References listed on IDEAS

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    1. Deis, Donald Jr. & Giroux, Gary, 1996. "The effect of auditor changes on audit fees, audit hours, and audit quality," Journal of Accounting and Public Policy, Elsevier, vol. 15(1), pages 55-76.
    2. Mark A. Clatworthy & Howard J. Mellett & Michael J. Peel, 2002. "The Market for External Audit Services in the Public Sector: An Empirical Analysis of NHS Trusts," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 29(9‐10), pages 1399-1439.
    3. Gary Giroux & Rowan Jones, 2007. "Investigating the audit fee structure of local authorities in England and Wales," Accounting and Business Research, Taylor & Francis Journals, vol. 37(1), pages 21-37.
    4. T. E. Cooke, 1998. "Regression Analysis in Accounting Disclosure Studies," Accounting and Business Research, Taylor & Francis Journals, vol. 28(3), pages 209-224, February.
    5. Mark A. Clatworthy & Howard J. Mellett & Michael J. Peel, 2002. "The Market for External Audit Services in the Public Sector: An Empirical Analysis of NHS Trusts," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 29(9‐10), pages 1399-1439.
    6. McLelland, Andrew J. & Giroux, Gary, 2000. "An empirical analysis of auditor report timing by large municipalities," Journal of Accounting and Public Policy, Elsevier, vol. 19(3), pages 263-281.
    7. Basioudis, Ilias G. & Ellwood, Sheila, 2005. "External audit in the National Health Service in England and Wales: A study of an oversight body's control of auditor remuneration," Journal of Accounting and Public Policy, Elsevier, vol. 24(3), pages 207-241.
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    Cited by:

    1. Loveday A. Nwanyanwu, 2017. "Audit Quality Practices and Financial Reporting in Nigeria," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 7(2), pages 145-155, April.

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