Page 72 - Azerbaijan State University of Economics

Samuel Atsibha Gebreyesus: The Effect of Audit Legal Frameworks on Public

Expenditure Management …

Some of the factors that contribute to corruption flourishing in the nation include a

lack of accountability and transparency, low levels of democratic culture and
tradition, a lack of citizen participation, unclear regulations and authorization, a low
level of institutional control, a lack of punitive measures, and the centralization of
power and resources. In spite of the fact that anti-corruption laws remain strong in
principle, they are not properly put into practice. The judiciary and legislature
remain under the executive's control (Rahman, 2018).

2. LITERATURE REVIEW
2.1. The Concepts of public Sector and Public Sector Audit
Defining the public sector is difficult due to the complexity of the delineation.
However, literature suggests that the public sector can be defined in terms of source
of funding, ownership and control, direction or regulation, or the provision of social
services (Danescu, 2011). In general, the public sector consists of governments and
any publicly controlled or publicly funded entities, corporations and other entities
that provide public programs, goods or services.

Traditionally, the independent external auditor's function has been to assure the
legislature that the financial statements that the government has provided abide by
relevant accounting standards. The legislature needs confirmation from a recognized
professional organization that the administration hasn't "cooked the books." This
assurance has expanded over time to also include assurance that the existing
financial systems are in accordance with the standards. The external auditor is
regarded as playing a crucial role in the accountability process in this function. Since
it is an attested audit, the auditor's "report" is formally a part of the public
accountability process between the government and the legislature and is included in
the government's reporting to the legislature. It is also part of the official record
(Mayne, 2006).The external auditor continues to provide the legislative assurance
through performance audit. Instead than focusing on the government's financial
records, it is important to consider how effectively and efficiently it is achieving its
goals. Most reporting is straightforward, with the auditor's report being presented to
the legislature and made available to the public. Since the reporting is required by
law, it is an integral part of the accountability system. Compared to the financial
attest job, the performance audit role for external auditors is a significantly more
recent development.

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