A grounded theory of reconstructing public sector audit

Abstract

This thesis explores the effects of the transfer of English public sector audit contracts to private firms in 2012 as a result of the abolition of the Audit Commission. Financial audit is a key accountability mechanism over public spending, so changes in audit arrangements can affect the accountability of public sector entities. I use a constructivist grounded theory approach and 23 interviews with auditors and clients to research how the transfer has affected the financial audit of public sector entities. I find that auditors and audit firms have reconstructed what it means to undertake a good quality audit in the UK public sector, in line with the firms’ commercial objectives. There is more emphasis on image and customer service, and less on public sector specialisation. Crucially, efficiency is incorporated into auditors’ understanding of audit quality, such that less work is necessary to do a good quality audit. I draw on Bourdieu’s theory of symbolic violence to demonstrate how the new meaning of audit is imposed and perpetuated. This research explicates hitherto unexplored practical consequences of the change to public sector audit in England. This could be valuable to those making policy decisions in other jurisdictions of the UK (Scotland, Wales and Northern Ireland), which still operate national audit institutions similar to the Audit Commission. More generally, it helps to explain how some New Public Management cost savings are achieved. It also adds to our theoretical understanding of how the dominant parties in the audit sector continue to extend their remit, and to define how audit works