Burdens of transparency: An analysis of public sector internal auditing

Abstract

Transparency is largely seen as essential to public sector accountability. Yet, information disclosure also generates unintended consequences that may prove detrimental to the workings of some accountability processes. In this light, we investigate the views of Canadian public sector internal auditors, a subset of professionals fulfilling an important accountability function. We show that concerns surrounding disclosure requirements are prevalent. We demonstrate that internal auditors who see public disclosure requirements as a barrier to their effectiveness are more likely to be and/or perceive their organization to be risk averse, to feel professionally isolated and to favour a greater role for data analytics in accountability processes. However, auditors who would like to see their profession play a greater advisory role in their organization view public disclosure in a more positive light. We argue that understanding who is resisting helps identify threats to accountability mechanisms, improves the design of transparency policies and facilitates implementation.

Institutional embeddedness and the language of accountability: Evidence from 20 years of Canadian public audit reports

“…These results also indicate more subservience from internal auditors, suggesting a relative lack of independence or a more general fear of being isolated within their organization as a result of criticizing colleagues and exposing them to greater reputational risks (Liston‐Heyes & Juillet, 2020). These findings give credence to the perception of internal auditors as “lapdogs,” mostly providing the illusion of assurance and oversight (Lonsdale, 1999, p. 175; Power, 2003).…”

“…While internal audits are essentially tools of management as opposed to instruments of democratic accountability, embarrassing audit reports can harm the organization if they are proactively disclosed, accessed through freedom of information (FOI), legislation or leaked to the press (Power, 2003; Rika & Jacobs, 2019). While public releases through FOI requests and leaks are likely across most jurisdictions, the Canadian government has a distinctive policy of proactive disclosure of audit reports, forcing internal auditors to be sensitive to their public reception (Liston‐Heyes & Juillet, 2020).…”

The mediating effect of data analytics on the relationship between organizational psychological safety and advisory services

“…These results support the results of a previous study conducted by Betti and Sarens (2020), which said that data analytics could help internal auditors to take a closer look at the actual condition of the organization. Even the results of a recent study by Liston-Heyes and Juillet (2020) said that data analytics could help internal auditors increase public sector organizations' transparency and accountability.…”

Internal governmental performance and accountability in Canada: Insights and lessons for post‐pandemic improvement

“…One area where improvements have been made to performance reporting has been in internal audit, which has observed its relevance for senior management decision‐making and accountability decline in recent years (Liston‐Heyes & Juillet, 2020). There are those internal auditors who see themselves playing a much greater advisory role by embracing public disclosure as a way to earn trust (Charbonneau et al, 2015).…”