Page 53 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.79, # 2, 2022, pp. 51-63

The lack of good governance and accountability and the waste of public resources are
the main problems facing public institutions in Ethiopia. These will result in political,
economic, and social instabilities unless they are addressed properly.

Research questions
To what extent do the factors of auditor competence, organizational and auditor
independence, audit legal frameworks, and government support affect the audit
quality of OFAG of Ethiopia?

LITERATURE REVIEW
The Concepts of public Sector and Public Sector Audit
Defining the public sector is difficult due to the complexity of the delineation. However,
the literature suggests that the public sector can be defined in terms of source of funding,
ownership and control, direction or regulation, or the provision of social services
(Danescu, 2011). In general, the public sector consists of governments and any publicly
controlled or publicly funded entities, corporations, and other entities that provide public
programs, goods, or services.

Traditionally, the independent external auditor's function has been to assure the legislature
that the financial statements that the government has provided abide by relevant accounting
standards. The legislature needs confirmation from a recognized professional organization
that the administration has not "cooked the books." This assurance has expanded over time
to also include assurance that the existing financial systems are following the standards. The
external auditor is regarded as playing a crucial role in the accountability process in this
function. Since it is an attested audit, the auditor's "report" is formally a part of the public
accountability process between the government and the legislature and is included in the
government's reporting to the legislature. It is also part of the official record (Mayne, 2006).
The external auditor continues to provide legislative assurance through performance audits.
Instead of focusing on the government's financial records, it is important to consider how
effectively and efficiently it is achieving its goals. Most reporting is straightforward, with
the auditor's report being presented to the legislature and made available to the public. Since
reporting is required by law, it is an integral part of the accountability system. Compared to
the financial audit job, the performance audit job for external auditors is a significantly more
recent development.

There are two types of audits in the public sector: financial audits (including compliance)
and performance audits (Dwiputrianti, 2011). Compliance auditing refers to the traditional
forms of audit that, next to financial auditing, have been known since Ancient Egypt and
China. Defining the public sector is difficult due to the complexity of the delineation.

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