Accounting and auditing in municipal organisations – Four papers on accounting compliance and audit costs

Abstract

This thesis is a quantitative study of accounting compliance and audit costs in Swedish municipal organisations, consisting of four papers. Three of the papers explore factors that explain accounting compliance concerning financial reporting and revenue recognition in Swedish municipal water, sewerage and solid waste management organisations. The fourth paper explores the determinants of professional audit costs in Swedish municipal administrations. The overall purpose of this thesis is to contribute to the knowledge of what factors influence accounting compliance and audit costs in municipal organisations.

Explaining accounting compliance in the water and sewerage and solid waste management sectors reveals that these sectors are influenced partly by different factors and partly by the same factors but differently. The results indicate that the strength and the strictness of the institutional framework (legislation, sanctions, court cases) play an important role in relation to if and how each sector is influenced by certain economic, political and institutional factors. Further, the studies show that factors like market competition, legal form of corporation, regionalisation, cross-sectoral coordination and engaged audit firm alter, replace or introduce new institutional, political and economic forces that influence accounting compliance. These are all factors that can be linked to municipal reforms, thus providing some evidence on the consequences of such reforms. Regarding audit costs the results of the thesis also indicate that audit costs vary dependent upon external stakeholder factors (population, tax base and tax rate), which supports the proposition that audit cost might be influenced by external monitoring demand and political signalling incentives. The implication is that audit might not only be a tool to secure compliance; it might also be a tool to manage stakeholder relations.

From a policy perspective, the results indicate that the changing institutional and organisational environment (municipal governance reforms) has not been matched by attention to, and regulation of, reporting structures that secure external vertical accountability reporting, neither at the utility service level and nor at the consolidated municipal level. The general implication for future policy and regulations should therefore be to recognise the influence of different economic and institutional forces and develop accountability models that enable and preserve the benefits of governance forms and structures without losing transparency and accountability. The findings of this thesis suggest that accounting regulation and audit control need to bridge the public–private sector divide, level out sector-specific regulations and possibly connect regulation and accountability to the consolidated municipal organisation in order to preserve organisational freedom while securing compliant accountability information to relevant stakeholders.

Abstract (Swedish)

Popular Abstract in English

Over the last 30 years, the implementation of accrual accounting in public sector settings has been fundamental to public sector accounting policy development. The move from cash accounting to accrual accounting highlights the importance of understanding accounting choice, compliance and auditing in municipal organisations. This thesis is a quantitative study of accounting compliance and audit costs in Swedish municipal organisations, consisting of four papers. Three of the papers explore factors that explain accounting compliance concerning financial reporting and revenue recognition in Swedish municipal water, sewerage and solid waste management organisations. The fourth paper explores the determinants of professional audit costs in Swedish municipal administrations. The overall purpose of this thesis is to contribute to the knowledge of what factors influence accounting compliance and audit costs in municipal organisations.

The results indicate that the strength and the strictness of the institutional framework (legislation, sanctions, court cases) play an important role in relation to if and how accounting compliance and audit costs are influenced by economic, political and institutional factors. Further, the studies show that major municipal governance reforms such as deregulation, corporatisation, regionalisation and cross-sectoral coordination influence accounting compliance. Thus, the conducted research also provides some evidence on the intended and unintended consequences of municipal reforms. From a policy perspective, this thesis suggest that future accounting regulation and audit control need to bridge the public–private sector divide, level out sector-specific regulations and possibly connect regulation and accountability to the consolidated municipal organisation in order to preserve organisational freedom while securing compliant accountability information to relevant stakeholders.

• author: Haraldsson, Mattias
• supervisor: Torbjörn Tagesson; Stefan Yard
• opponent: Professor Christiaens, Johan, Department of Public Governance, Manaqement and Finance, Ghent University
• organization: Department of Business Administration
• publishing date: 2016
• type: Thesis
• publication status: published
• subject: Business Administration
• keywords: Accounting Transparency Accountability Compliance Auditing Public Sector
• in: Lund Studies in Economics and Management
• volume: 134
• pages: 87 pages
• defense location: EC3:207, Holger Crafoords Ekonomicentrum
• defense date: 2016-04-29 13:00:00
• ISSN: 0284-5075
• ISBN: 978-91-7623-687-1
• language: English
• LU publication?: yes
• id: cfeebae7-69a6-4f4f-abc2-e2206b85a297 (old id 8861834)
• date added to LUP: 2016-04-04 13:32:59
• date last changed: 2019-05-21 19:11:32