Employee isolation and support for change in the public sector: a study of the internal audit profession

ABSTRACT

We investigate the preferences of public sector internal auditors for changes in their work practices. Informed by the literature, we posit that feelings of trust in the workplace and/or frustrations arising from perceived organizational ‘isolation’—a dimension of work alienation—motivate support and acceptance of change. We also argue that professional bodies directly and indirectly influence these relationships. These conjectures are tested using structural equation modelling and a survey of Canadian public sector internal auditors. The findings provide valuable insights into the process of adaptation and transformation in public sector settings across countries, jurisdictions, and accountability functions.

KEYWORDS:

• Internal audit
• public sector
• organizational psychological safety
• organizational psychological isolation
• professional bodies

Acknowledgments

We acknowledge financial support from the Government Internal Audits Council of Canada and the Institute of Internal Auditors. We are particularly grateful to Shelley Pelkey, David Zussman, James Go, Matthew Inman, and Karino Santoro, the editor and two referees of this journal and seminar participants for constructive comments. Errors are ours.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. We note the role Canada’s ‘sponsorship scandal’—the 2004 revelation that $100 million of government funds were paid to a variety of communications agencies as illegal ‘payments’ for contributions to the Liberal Party—played in resurrecting the Office of the Comptroller General and in reforming financial accountability throughout the federal service. While the event had important ramification for the Liberals, corruption surrounding the sponsorship scandal was localized rather than systemic (Free and Radcliffe 2009).

2. Subjective work alienation acquired a number of meanings through time. Seeman (1959) broke down these meanings into five alienation dimensions: powerlessness, meaninglessness, normlessness, social isolation, and self-estrangement (Tummers and Knies 2013). We focus on the isolation dimension.

3. Vinten (1992) reporting on a survey of 34 000 internal auditors, recount the names internal auditors claim to have been called including: backstabbers, company sneaks, goons, snakes, even ‘scum of the earth’.

4. Power (2005) notes that compared to other Westminster-style governments, American public sector auditing operates in the shadow of the law and are generally concerned ‘lower status’ agents of change than elsewhere.

5. The insights were useful in identifying the areas of change relevant to the internal audit function in the public sector. The round table is discussed below.

6. We note that the IIA standards remain somewhat ‘opaque’ regarding internal audit’s role in challenging strategic decisions or the processes followed and information used in formulating strategy (Chambers 2014a). In other words, there is little guidance regarding the conduct of advisory services of a critical nature and this uncertainty may inhibit some internal auditors to fully endorse expansion into advisory services. This can lead to differences in the intensity of preferences for change across the three areas.

7. A copy of the questionnaire is available from the authors upon request.

8. The project’s methodological approach was approved by the University of Ottawa’s Ethics Committee to ensure compliance with the Tri-Council Policy Statement on the Ethical Conduct for Research Involving Humans.

9. Sindberg and Lipscomb (2005) develop a ‘professional isolation’ measurement scale for public school music teachers but it includes items that were not relevant to the internal audit profession ‘e.g. Scheduling has an impact on my level of professional isolation’. Our construct is informed by their study but adapted to the public sector internal auditing context.

10. In particular, we examined models that included ‘evaluation’ as an area of change and models that accounted for attitudes to ‘auditor independence’. These performed less satisfactorily and were discarded.

11. More concretely, there is a statistically significant indirect effect of OPS through the IIA construct but the coefficient estimate of 0.002 implies that the effect is negligible (see Table 11).

Additional information

Funding

This work was supported by the Government Internal Auditors Council of Canada [GIACC-University of Ottawa #144568].

Notes on contributors

Catherine Liston-Heyes

Catherine Liston-Heyes is an economist with degrees from University of Ottawa and McGill University. From 1993 to 2011, she was a member of faculty at the Royal Holloway School of Management (University of London). She joined the University of Ottawa in 2011. She has published extensively on regulatory, environmental, and corporate responsibility issues.

Luc Juillet

Luc Juillet is an expert on public administration and policy-making. Amongst other things, he founded the Graduate School of Public and International Affairs at the University of Ottawa where he is currently member of faculty. He publishes regularly on issues of environmental policy, emergency management, ethics regulation and civil service reform and often acts as a consultant for various Canadian government agencies.