Standardizing local governments’ audit reports: for better or for worse?

IMPACT

This article contributes to the policy debate on whether to standardize audit reports in public sector organizations. It offers useful insights that national regulators and standard-setters can consider when introducing new rules and standards in the audit regulatory space. Regulators and standard-setters interested in teasing out the professional support that auditors can offer should be aware of the need for a balance between standardization and freedom in preparing annual audit reports.

ABSTRACT

The article investigates audit reports in Italian local governments using the theoretical lens of standardization theory. By means of a content analysis on 90 audit reports for the financial year 2018, the effectiveness of a standardized audit model for the audit report is discussed. The findings reveal that standardization seems to lead to a rigid approach in producing the audit reports of local governments. The study offers insights into rethinking the audit regulatory space in public sector organizations.

KEYWORDS:

• Audit reports
• financial auditing
• Italian local governments
• standardization