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Effect of outsourcing public sector audits on cost‐efficiency
Author(s) -
Chong KarMing,
Dolley Colin,
Houghton Keith,
Monroe Gary S.
Publication year - 2009
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/j.1467-629x.2009.00302.x
Subject(s) - audit , outsourcing , public sector , business , operational auditing , accounting , performance audit , context (archaeology) , statutory law , joint audit , internal audit , economics , marketing , economy , paleontology , political science , law , biology
This study compares the cost‐efficiency of ‘in‐house’ and outsourced to private sector audit supplier arrangements to deliver financial audits in the public sector by examining audit cost‐efficiency within the context of the public sector arrangement at one state in Australia (Western Australia). The results for 178 public agencies show that outsourced audits are, in general, more costly than in‐house audits, but this result is conditional on the type and size of public agency. Specifically, outsourced audits are more costly than in‐house audits for small statutory authority audits, whereas for specialist audits (i.e. hospitals) and large and complex statutory authority audits, the in‐house supply is equally efficient as the outsourced service.