The audit expectations gap in the Maltese local government

Abstract

PURPOSE: The primary objective of this study is to establish whether there is an audit expectation gap in the Maltese Local Government. This dissertation aims to understand the distinctive perceptions of Local Government Auditors and auditees: including Members of Parliament and sixty-­‐eight local councils’ executive secretaries and councilors. Ten audit concepts were studied in relation to the local government sector. DESIGN: The objective of the research was achieved through the use of a mixture of two approaches. Semi-­‐structured interviews were conducted with Local Government Auditors and likert scale questionnaires were addressed to users of the audit reports. FINDINGS: The findings of this study present the response of the Local Government Auditors and users of the audit reports. The results suggest that an audit expectations gap does exist in the Local Government sector. It subsists in significant audit areas namely, competence, materiality, truth and fairness, auditor roles, audit reporting and accountability. CONCLUSIONS: To summarise, it results that the National Audit Office have supreme standards of procedures. Unfortunately, certain auditees do not recognize the valuable recommendations provided by Local Government Auditors. Bridging the audit expectations gap amongst Local Government Auditors and auditees requires effort from both parties. This would help local councils to reap the full benefit of the audit process. VALUE: The study seeks to shed light on audits conducted in the public sector and the erroneous expectations existing amongst the two parties. Since no similar research was conducted in Malta, this could assist Local Government Auditors and users of the audit report to reach mutual understanding.