Supreme Audit Institutions (SAIs) are national-level institutions that bear the weight of overseeing government activities in a world grappling with limited resources, political instability, and multiple crises. These institutions emerge as the bedrock of good governance and societal trust in this challenging landscape, substantially contributing to sustainable development, government quality, and democracy (Ansell et al., 2023).

Bovens and Wille (2021) underscore the significance of SAIs in the accountability landscape of modern democracies, proposing a model for assessing their accountability powers (watchdog accountability index). SAIs serve as crucial forums for accountability, possessing broad powers to oversee legality, performance, and corruption, thereby promoting transparency and effectiveness in executive power.

Despite efforts to explore differences among SAIs in various countries (Ferry et al., 2023), numerous issues still need to be solved. Johnsen (2019) also highlights the big variations in SAIs' impacts on organizations and society and their fragility and low effectiveness, as well as the scarcity of scientific research in many African, Asian, and Latin American countries.

Our research takes a unique approach by mapping the diverse institutional arrangements and capacities that shape public auditing efficiency and effectiveness, focusing on SAIs. This novel perspective allows us to delve deeper into the relations between State capacity and SAI attributes, exploring the political, economic, and social country contexts and the particular characteristics of each SAI. We discuss state capacity definition and, employing a wide range of indicators (Bäck et al., 2008; Vaccaro, 2023), we evaluate its relation with accountability.

With a comprehensive approach, we constructed a global detailed database from 189 United Nations member countries, all full members of the International Organization of Supreme Audit Institutions (INTOSAI). This extensive database forms the backbone of our research, enabling us to use clustering techniques for segmentation analysis and machine-learning tree-based techniques for cluster identification. We classify variables based on two dimensions: the characteristics of SAIs and the characteristics of their respective countries.

We examine four variables related to SAIs' attributes: participation in INTOSAI's regional organizations, jurisdictional power, main audit categories, and decision types. Departing from the literature regarding Supreme Audit Institution Models, our variables categorize SAIs with and without jurisdictional power. Additionally, we define the main audit categories into three types of public sector audits: financial audit, performance audit, and compliance audit. We consider two types of decision-making structures: monocratic and collegiate SAIs.

We sourced six databases with various countries regarding country characteristics, leading to 18 variables. We employ two international organizations with global reach datasets: the United Nations and the World Bank. Moreover, we use datasets collected by non-profit organizations such as the Fund for Peace and Transparency International or by academic institutions such as Varieties of Democracy and The Quality of Government Institute.

Our findings indicate that SAIs are heterogeneous within developed and developing countries. Most SAIs perform general audits, often with individual decisions. We also widely see non-judicial oversight and participation in regional sector organizations. Country-specific factors significantly distinguish SAIs. Analysis segmented SAIs into four clusters, using democracy measures for accountability quality. Clusters varied by country characteristics, with V-Dem accountability index, state capacity index and corruption perceptions index as critical variables.

From a comparative standpoint, our findings have significant implications. We found just one case of a country with moderate capacity and low levels of accountability, highlighting the importance of robust SAI activities. Conversely, there are two clusters with moderate to high state capacity and moderate levels of accountability, suggesting a positive correlation. Furthermore, there is a group of countries with low state capacity but high accountability, and additionally, there are two groups with low state capacity and moderate to low accountability.

In conclusion, our study sheds light on the complex interplay between state capacity, accountability, and SAIs' performance. By identifying different groupings of countries based on these factors, we provide a nuanced understanding of the global landscape of governmental oversight, emphasizing the critical role of accountability mechanisms in driving governance improvements. Our findings call for continued research to strengthen SAIs and enhance their worldwide contributions to transparency, accountability, and sustainable development.

References

Ansell, C., Sørensen, E. & Torfing, J. (2023). Public administration and politics meet turbulence: The search for robust governance responses. Public Administration, 101(1), 3–22. https://doi.org/10.1111/padm.12874

Bäck, H., & Hadenius, A. (2008). Democracy and State Capacity: Exploring a J-Shaped Relationship. Governance, 21(1), 1–24. https://doi.org/10.1111/j.1468-0491.2007.00383.x

Bovens, M., & Wille, A. (2021). Indexing watchdog accountability powers a framework for assessing the accountability capacity of independent oversight institutions. Regulation & Governance, 15(3), 856–876. https://doi.org/10.1111/rego.12316

Ferry, L., Hamid, K., & Hebling Dutra, P. (2023). An international comparative study of the audit and accountability arrangements of supreme audit institutions. Journal of Public Budgeting, Accounting & Financial Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JPBAFM-10-2022-0164

Johnsen, Å. (2019). Public sector audit in contemporary society: A short review and introduction. Financial Accountability & Management, 35(2), 121–127. https://doi.org/10.1111/faam.12191

Peters, B. G. (2014). Accountability in Public Administration. In M. Bovens, T. Schillemans and R. Godin (Eds), The Oxford Handbook of Public Accountability (pp.211–225). Oxford University Press. https://doi.org/10.1093/oxfordhb/9780199641253.013.0032

Vaccaro, A. (2023). Measures of state capacity: so similar, yet so different. Quality & Quantity, 57, 2281–2302. https://doi.org/10.1007/s11135-022-01466-x

The literature has envisaged the growing relevance of performance auditing in the public sector (Rana, Steccolini, Bracci, & Mihret, 2022). However, the transition towards performance auditing is not without limits in changing the traditional routines, methodologies and procedure of financial auditing (Cordery & Hay, 2019). The analysis of the institutional of new accounting and auditing practices has attracted the interest of scholars showing the potentiality of institutional theories as well as its limits (Modell, 2022). Most research on accounting practice development has focused on private sector professional (Heusinkveld & Benders, 2002; Suddaby & Greenwood, 2001, Anand et al., 2007; Gardner et al., 2008; Heusinkveld & Benders, 2005; Morris, 2001). Research on sustainability audit and assurance, especially has focused on the private sector specifically on the supply side of the practice, that is looking at how or who delivers these practices (Michelon et al., 2019). Another strand have explored the role of actors or the process of institutionalizing these practices (Hazaea, Zhu, Khatib, Bazhair, & Elamer, 2022; O’Dwyer, Owen, & Unerman, 2011). Although sustainability audits and assurance to an extent have been studied in the private sector (still at an infancy phase), public sector auditing research with respect to sustainability is still at an embryonic phase (Manetti and Toccafondi, 2012).

The focus of this study, investigating the institutionalization of the new practice of SDG audits. The approach of looking at emergence and embedding (Anand et al, 2007) is very important in understanding the genealogy of emerging practices, especially in the case of SDG audits, whose effectiveness is still yet to be felt and or debatable by grassroots stakeholders. This research seeks to firstly study the process of emergence of SDG audits and secondly, the process of institutionalization (and or embedding) of the new practice (SDG audits) by looking at strategies employed in institutionalizing SDG audits. Our research not only focuses on public sector auditing but specifically on public sector auditing in emerging economies, by looking at the role of the INTOSAI development initiative (IDI) in the institutionalization of SDG audits in emerging economies. One of the IDI mission is to foster the adoption of effective auditing practices by SAIs in emerging nations, which usually lack of resources to perform complex audits such as SDG audits.

To attain the objective of understanding the institutionalization, and diffusion of SDG audits we pose the following research question:

R1 What are the strategies used in institutionalizing SDG audits by SAIs?

To answer the above question, institutional theories were borrowed to act as a lens to our analysis, specifically the study was grounded on institutional entrepreneurship, that is looking at “purposive actions” (Thomas, Lawrence and Suddaby 2006a) of institutional entrepreneurs (Battilana, Leca, & Boxenbaum, 2009; Hardy & Maguire, 2012) to create SDG audits.

Research on sustainability audit and assurance, especially has focused on the private sector specifically on the supply side of the practice, that is looking at how or who delivers these practices (Michelon et al., 2019). Another strand have explored the role of actors or the process of institutionalizing these practices (Hazaea, Zhu, Khatib, Bazhair, & Elamer, 2022; O’Dwyer, Owen, & Unerman, 2011). Although sustainability audits and assurance to an extent have been studied in the private sector (still at an infancy phase), public sector auditing research with respect to sustainability is still at an embryonic phase (Manetti and Toccafondi, 2012).

Our results show that the adoption of the SDGs created some challenges and precipitating jolts to the traditional performance auditing practice. This disruption led to a collective action to create a proto institution called SDG audits, which was simply a hybrid combining existing performance audits principles with those of the agenda 2030. Based on our findings we conclude that, the overall creation work of SDG audits was a performance audits maintenance work, meaning SDG audits did not replace performance audits but simply augments it to meet the challenges posed by auditing SDGs.