An analysis of the effect of auditee-based, auditor-based, and audit risk factors on the discovery and reporting of compliance deficiencies and their association with single audit quality



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Texas Tech University


The Single Audit Act of 1984 was adopted by Congress to improve efficiency and effectiveness in audits of federal financial assistance administered through state and local governments (SLGs). As a result, Congress hoped to provide greater assurance as to the credibility of SLG compliance with federal assistance guidelines.

This research studied the relationships between a comprehensive set of auditee-based, auditor-based, and audit risk factors and two output indicators of single audit quality. The output indicators of quality are based on auditor findings included in single audit reports. Data were collected for 1987 and 1991. 1987 was selected in order to allow public accounting firms a one year grace period to become more familiar with the Act, since it did not take effect until 1986. Changes in the results between 1987 and 1991 were examined. This study sent out a request to all U.S. cities with a population size of at least 25,000. This request sought copies of their 1987 and 1991 single audit reports and a response to a questionnaire.

The data were analyzed using tobit and logit regression. The overall tobit models for 1987 and 1991 were highly statistically significant. All but one of the individual auditee-based, auditor-based and audit risk factors in 1987 were significantly associated with the output indicator. In 1991, only two factors were significantly associated with the output indicator.

The overall logit model results also were statistically significant. The coefficient signs for the eight factors were generally consistent with the tobit results. The statistical analyses added validity to the descriptive results. However, only one auditee-based factor was significantly associated with the output indicator of quality.