Patrizio Monfardini,Patrick von Maravic - Municipal Auditing in the Managerial State

In the last decade, has the ‘audit game’ changed? Or its operating context? Or both? These questions lie at the core of the discussion on the relationship between public management reform and public sector auditing (Pollitt, 2002). Devolution of powers and tasks (Gruening, 2001) and new managerialism introduced by the reforms have changed the environmental and legal framework in which municipalities operate. A popular argument is that these developments have also affected how audits, internal and external, are conducted (Hoggett, 1996).

This research analyses the link between public management reforms and public auditing in German and Italian municipalities in recent decades. By tracing changes and constancies of the audit institutions in countries so fundamentally different with respect to administrative culture, political systems, and legal traditions, the developments in the two countries that are similar will be significant. Furthermore, the study of local audit systems in Germany and Italy highlights the institutional conditions of reform paths by describing (1) the historical process of institutional survival of auditors through adaptation of new tasks in Italy and (2) the relative ‘decline’ of auditors in Germany due to institutional resistance. It therefore describes the different functions local auditors play during restructuring processes. Interestingly, audit reform doctrines in both countries have been similar. Both envisioned a kind of consultant role for the auditor. In the Italian case the role of local auditors changed towards being a ‘Trojan reform horse’ within local government. German auditors actively opposed such a notion.

One widely accepted argument is that New Public Management (NPM) triggers change in public auditing. This argument builds on an institutional theoretical perspective that changing institutional environments lead to reaction of those operating within them. Central (and presumably municipal) auditing bodies respond to NPM as the paradigm of public sector management in Anglo-Saxon countries by institutional, procedural, and cultural acclimation (OECD, 1996). The introduction of performance audits is for example seen to be one consequence of administrative reform though it has been mainly discussed with regard to supreme audit institutions, meaning that local auditors have thus far not been in the limelight (Pollitt & Summa, 2002, Power, 1997, Barzelay, 1996, OECD, 1996).

Monfardini Von Maravic - Municipal Auditing in the Managerial State

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