Page 77 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.79, # 1, 2022, pp. 69-79

5. RESULT AND DISCUSSION
The researcher wants to know if a suggested mediator, M, can actually explain the
impact of X on Y. Estimating the indirect effect through the mediator M is used to
answer this question (Hayes 2013). The study assessed the mediating role of Audit
quality on the relationships between Audit legal framework and Public expenditure
management. The result revealed a significant indirect effect of audit legal
framework on public expenditure management (0.0448, t=13.5709), Supporting H1.
Furthermore, the direct effect of audit legal framework on public expenditure
management in the presence of the mediator was also found significant (b=.3100,
p<0.001). Hence, Audit quality partially mediated the relationship between audit
legal framework and public expenditure management. It is a complementary
mediation rather than a competitive mediation since both direct and indirect effects
have the same positive coefficients.

Table 8: Mediation analysis
Relationship Total Direct Indirect Confidence t- Concl
Effect Effect Effect Interval Statistics usion
Audit legal Lower Upper
framework- Bound Bound
>Audit quality- .3548 .3100 .0448 13.5709 Partial
>Public .0212 .0738 Mediat
expenditure ion
management

6. ONCLUSION AND RECOMMENDATION
6.1 Conclusion
The study discovered that the higher the audit quality of the auditor general, the better
the public expenditure management in public-sector entities. Even if there are
different factors that affect the efficiency and effectiveness of government expenditure
management, the legal framework of audit institutions has a significant influence on
the parties who are involved in the public expenditure management aspects of
government activities by creating a deterrent effect to work in line with legal
frameworks. Furthermore, if the audit legal frameworks are clear and unambiguous, it
reduces conflict between the auditee and the auditor of the audit institution.

6.2 Recommendation
❖ The government should allocate adequate resources to improve audit
institutions in order to fulfill its responsibility to ensure that public-sector
organizations fulfill their intended purpose without resource waste,
misappropriation, or corruption.

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