Public Accountability and Bureaucratic Discretion: Why do Internal Auditors Stretch the Boundaries of Their Role?

Our goal is to identify the factors that encourage internal auditors in the public sector to use their discretion when conducting audits. By investigating multiple relationships between principals and agents, we show how complex structural conditions and accountability pressures influence public auditors’ discretion in the choice of audits they decide to conduct. To test our theoretical model and hypotheses, we created a closed-ended questionnaire distributed to a sample group of Israeli auditors. Our findings reveal a conditional effect between the factors related to the internal and external work environments of internal auditors. Our analysis indicates that internal support for internal auditors’ professional authority is significantly related to their inclination to stretch the boundaries of their role when they strongly believe that their direct principals are concerned about the expectations of the public and the audit committee regarding accountability. Nonetheless, individual auditing experience in the public sector was not significantly related to their professional approach. Our bottom-up approach emphasizes the role of citizens’ democratic awareness and their demand to support the broad scope of gatekeepers, rather than just explanations about the role of elites. Moreover, our conclusions emphasize the role of internal support for the auditors’ professional authority and question the role of their perceived independence in the approach they adopt to auditing.