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In a column I wrote for this publication in September 1994, I mentioned that I was enrolled in the interdisciplinary (public administration and sociology) Ph. D. program at the University of Missouri – Kansas City. I wrote that my tentative dissertation topic was an analysis of factors related to the establishment of performance audit functions in local governments.
Last week I successfully defended my dissertation, entitled “The Spread of Performance Auditing Among American Cities.”
The study traces the development of performance auditing in the United States and argues that performance auditing speaks to classic problems in public administration. Through an analysis of the public administration literature, the case is made that public administration has historically been concerned with efficiency, effectiveness, and equity in the delivery and administration of government programs and services. Then, using government audit standards and material from the mission statements and reports of city audit functions, I make the case that these are also central issues for auditors conducting performance audits.
A theoretical framework for explaining the spread of performance auditing is developed, primarily from the literature of the diffusion of innovations, but also using the frame analysis of organizations developed by Bolman and Deal, and the concept of the activist auditor put forth by Wheat. The frame analysis argument is that individuals analyze and understand organizations from four different perspectives, or frames: structural, symbolic, human relations and political. Activist auditors:
- Take a proactive and holistic view of the jurisdiction in which they audit;
- Are willing to go beyond the mandate of an audit directed by an outside authority;
- Self-initiate important audits;
- Issue other reports in addition to audits;
- Follow the audit standards in their work;
- See the public as their ultimate client; and
- Are willing players in the politics of policy and organizational change.
The study covers all 218 cities in the United States with a population of 100,000 or greater. The primary means of data collection was a survey of audit directors in those cities. The survey response rate for cities with an audit function was 88 percent. An audit function was found to exist in 148 cities, 109 of which conduct performance audits.
The adoption of performance auditing was found to be correlated with the classic features of the diffusion of innovations model. One of the principal features of that model is the S – curve. The innovation is gradually adopted at first with a shallow slope to the curve representing the cumulative number of adopters, then the slope of the curve increases sharply at a “take-off” point as the number of adopters rapidly increases, and finally the curve levels off again as fewer members of the community are left to adopt the innovation. The take-off point for performance auditing was about 1990.
Performance auditing is positively correlated with city size and with proximity to other cities with performance auditing. Audit directors who are more committed to performance auditing are more likely to belong to more professional organizations and to attend more annual meetings and conferences. In addition, auditors who are more committed to performance auditing are more likely to use the political frame to analyze organizations and to have beliefs about auditing that are consistent with Wheat’s activist auditor concept. The most significant surprise in the study was that there was a negative relationship between the council-manager structure of government and performance auditing.
Many of you who responded to the survey asked to be informed of the results. The most practical way for me to do that is to publish the results. I have a great deal more data than I was able to include in the dissertation. For example, the survey produced a wealth of purely descriptive information about the current state of municipal auditing. In the relatively near future, I will try to publish an article in one of the trade journals that communicates this descriptive information. Further down the road, I will work on articles that extend the analysis in specific ways. For example, linking auditing and external measures of financial management like bond ratings, examining the philosophical basis for the ethical practice of politics in auditing, and examining the relationship between audit and political power and culture in communities.
From the outset, my colleagues in ALGA have been very supportive of this effort, and for that I am extremely grateful. I welcome questions, comments or suggestions about the research.
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Funkhouser on Auditing