Academic journal article Canadian Public Administration

Searching for Strategy: Value for Money (VFM) Audit Choice in the New Public Management Era

Academic journal article Canadian Public Administration

Searching for Strategy: Value for Money (VFM) Audit Choice in the New Public Management Era

Article excerpt

Auditors in the Westminster system long ago slipped the bonds of limiting their work to verifying and reporting on the accuracy of public accounts. In the 1970s, their mandates were extended to measuring the managerial performance of government ministries through Value for Money (VFM) audits or "performance audits." Audit has become an important subject of inquiry but remarkably, the actual targets of VFM audits have never been documented. This study explores the range of VFM inquiries, taking the work of the Auditor General of Ontario (AGO) as a case in point. The website of the AGO states that:

Each year, the Office audits selected ministry or agency programs and activities, with the major ones generally audited every five to seven years. In deciding which areas to audit, the Office considers such factors as the results of previous audits, the total revenues or expenditures at risk, the impact of the program or activity on the public and the costs of performing the audit in relation to the benefits (Office of the AGO 2018).

This study explores the VFM inquiries of the AGO between 1997 and 2014 as a case to uncover trends of consistency of approach under the flourishing "new public management" philosophy of cutting costs and raising efficiencies. It asks three broad questions: does the frequency and intensity of VFM audits correlate with the financial importance of the ministries? Do political controversies affect the choice of what will be subject to a VFM audit? Finally, do Auditors General make a personal difference in what ministries will be audited through a VFM framework? The period 1997-2014 was chosen for review because it covers the first audits under the Progressive Conservative government led by Premier Mike Harris, elected in late 1995, and the end of the Liberal government under Premier Dalton McGuinty. It also corresponds to the unequivocal arrival of the "new public management" philosophy of cutting costs and raising efficiencies in the administration of the state (Evans and Smith 2015; Gendron, Cooper, and Townley 2001; Richards and Smith 2006) which made VFM all the more relevant to governance.

This study begins by reviewing the literature on VFM and provides background on Ontario's Auditor General's approach to VFM. It then reports on the findings of our empirical analysis, which a pattern of over-auditing of some ministries while important ministries are consistently under-audited, which challenge the notion that the audits are strategically chosen depending on risk, on size, or on impact. The study then considers other possible explanations and outlines a research agenda which should be of interest to scholars and practitioners alike.

Perspectives on VFM auditing

Remarkably few scholars have sought to track the workings of Auditors General, though there have been indications that this data could be helpful to a deeper analysis of the work of this important agent of Parliament. Most of those who research and write on audit have devoted studies on the impact of VFM far more than on its actual practice. Scholars of VFM have divided into three broad camps. The first and earliest either contested or defended the legitimacy of VFM either as instruments to improve the management of public affairs or as a control on democratic government. The second group, more contemporary, examines VFM through an impact lens. The third camp specializes in better understanding the technical aspects of VFM.

VFM and legitimacy

Michael Power, in his landmark The Audit Society: Rituals of Verification (1997; see also 2000), argued that modern society increasingly demanded that auditors function as an institutional check on those entrusted with decision-making and spending. In terms of politics, he pointed to the late 1980s/early 1990s when government VFM audits in the United Kingdom were applied with increasing frequency as demand to verify government action and practices grew louder. …

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