New Public Management (NPM) led to the number of changes in the public sector including public sector auditing. Dye & Stapenhurst (1998) are calling for the measurement of “achieved outcomes” of government programs as a part of performance audits (Barata and Cain, 2001).
As a result, performance auditing gained an increasing prominence around the globe. Besides affecting and contributing to the effectiveness, efficiency and economy of the public sector, performance audit can also look beyond finances to assess the performance of government against its own objectives or in providing programs and services. The main aim of this type of auditing, as one of the mechanisms introduced by the NPM, is in the idea of possible improvement of the processes and institutions of public sector. Consequently, the change in auditing activities caused change of the auditors’ roles. Previously seen as inspectors or
“watchdogs”, auditors now have a much wider and influential role. Previous studies show that auditors have knowledge and power to promote reforms and help other actors with improvements within the government bodies. With the ability of auditors to play a new role of helpers, assistants and advisors - they should no further be recognised and limited by the function of inspectors.
Since corruption results from a system’s failure, better institutions or institutional reforms are a strong counterstrategy for combating this phenomenon. Better institutions mean making systems and structures more effective and efficient, which may be achieved by the implementation of a performance audit, which creates a deterrent to corrupt acts (Khan, 2006;
Otalor & Eiya, 2013). By the accurate performance of their new roles, auditors are able to provide good governance and, therefore, contribute to the fight against corruption.
Performance auditing was well studied in various contexts; however, the emerged roles of auditors are lacking research. Furthermore, there is no research on the impact that public sector auditors may have on preventing and reducing corruption. The study may be interesting both for the business and academic community. The role theory introduced by Kahn et al. (1964) and Katz & Kahn (1978) is used for the first time in order to understand the relationship between the public sector auditing and corruption. Therefore, the study contributes to the development of the role theory and complement the public sector auditing research with the unexplored case of a post-soviet country.
Prolonged negotiations on the potential cooperation between Ukraine and the EU stimulated the implementation of international standards, which caused the number of reforms in public
sector and in public sector auditing. The main aim of those reforms is seen in increasing the demand for performance information due to the possible improvement of organisations which it may bring (Tillema, Mimba, & van Helden, 2010). With the adoption of the best practices in the Ukrainian public sector, there is an expectation from the international actors that the role of auditors might change. However, as evidenced by Torres, Yetano, & Pina (2019), difficulties may occur with real implementation of performance audits, therefore, the change of auditors’
role may also be questioned.
The aim of the study is to illustrate auditors’ perceptions about their current roles in Ukrainian central government. Furthermore, this study focuses on the role of public sector auditors in preventing and reducing corruption in Ukraine. The results from the present case study is relevant, not only for Ukrainian public sector practitioners, but also for a wider audience.
Corruption is the most common occupational fraud schemes in Eastern Europe, moreover, transition economies are believed to be among the leaders in terms of corruption. According to Corruption Perceptions Index (CPI) released in 2019, Ukraine ranks 126th for the level of corruption perception in the public sector out of 180 countries. Anticorruption policies in Ukraine showed negative results in the previous year, with the loss of two points, scoring 30 out of 100 (The Corruption Perceptions Index, 2019; ACFE, 2018). As stated by Thomas de Waal (2016: p.1) “the problem is not that a well-functioning state has been corrupted by certain illegal practices; rather, those corrupt practices have constituted the rules by which the state has been run”.
Furthermore, corruption represents one of the most significant fraud risks for organisations in many industries and regions. Understanding the specific factors involved in corruption schemes can help organisations effectively prevent, detect and investigate them (ACFE, 2018:
p. 13). Public sector audit, therefore, is perceived as one of the tools for effective corruption combating. According to IIA (2012), one of the main responsibilities of public sector auditors in the public sector organisations they work for is addressing allegations of corruption through detection and deterrence.
So far, it is unclear what effects the introduction of the performance auditing has had on political and democratic processes in Ukrainian public sector. This paper aims to improve our understanding of this area based on case research of Ukrainian central government. The research present current state of the art of the performance auditing in Ukraine and provide
discussion about the roles of auditors. Numerous role senders and expectations arose role conflicts and inappropriate role behavior in Ukrainian central government. Our results, thus, portray that specific factors such as organisational environment, skills and competencies, number of staff and independence are crucial for the performance by auditor of an appropriate role. Possible ways of prevention and reduction of corruption, as well as potential obstacles auditors can face in the given context are discussed.
In this regard, the research intends to understand the role of public sector auditors in Ukrainian central government and sheds lights on the impact of the public sector auditing on corruption. The specific research questions of this study are:
1. What is the role of public sector auditors in Ukrainian central government?
2. How public sector auditors could prevent and reduce corruption in Ukraine?
The empirical findings were collected with the use of documentary analysis and semi-structured interviews with public sector auditors in Ukraine. Further, they were analysed using the role theory. As an example of unexplored post-soviet country with low perception for corruption Ukrainian case was chosen (The Corruption Perceptions Index, 2019). Ukraine has unstable and developing institutional context, with number of reforms regarding the international standards implementation. Therefore, the study on the roles of public sector auditors and their possible impact on corruption contribute to the better understanding of the effect of reforms in Ukrainian central government and provide both academics and practitioners with the information about the systems failures and possible improvements in the public sector.
In total, fifteen interviews with public sector auditors in Ukraine were undertook.
Master thesis consists of 7 (seven) chapters. Introduction explains the research topic, the motivation of the study, the research method and sources, it also presents some preliminary results of the study. Theoretical chapter present studies on performance auditing as well as the evolution in roles of public sector auditors and corruption. The role theory proposed by Kahn et al. (1964) and Katz & Kahn (1978) is disclosed and described further. Methodological chapter provides methods and sources, used in the research process. To get a general understanding of the research context, a short overview of public sector auditing in Ukraine is made in the next chapter. Research findings are presented in empirical chapter and further discussed, with the use of the role theory. The last chapter of the master thesis provides conclusions, limitations and suggestions for further research.