Page 54 - Azerbaijan State University of Economics

Samuel Atsibha Gebreyesus: Eterminants Of Public Sector Audit Quality: The Case Of The
Office Of The Federal Auditor General, Ethiopia (OFAG)

However, the 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 has not "cooked the books." This
assurance has expanded over time to also include assurance that the existing financial
systems are following 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 legislative assurance through performance audits. Instead of
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 reporting is required by law, it is an integral part of the accountability
system. Compared to the financial audit job, the performance audit job for external
auditors is a significantly more recent development.

There are two types of audits in the public sector: financial audits (including compliance)
and performance audits (Dwiputrianti, 2011). Compliance auditing refers to the
traditional forms of an audit that, like financial auditing, have been known since Ancient
Egypt and China. The idea of the independence and self-reliance of state auditors was
firmly set up, the consolidation of legislative requirements in the auditing of public
finances was formed, and the fundamental institutional patterns of public auditing,
namely auditing chambers led by the Auditor General, were anchored (Yuliia & A, 2018).
Performance auditing is defined as an impartial evaluation of the economy and efficiency
of auditee operations and the effectiveness of public-sector programs.

Public sector audits are conducted to protect public-owned resources by ensuring adequate
accountability, upholding standards of conduct in the public sector, and helping public
services get value for money. The International Organization of Supreme Audit Institutions
(INTOSAI) defines public sector auditing as an examination of the operations, activities,
and systems of a given entity to verify that they are being carried out or functioning

54