The Effect of Outsourcing Public Sector Audits on Cost Efficiency

Kar-Ming Chong, Colin Dolley, Keith Houghton, Gary Monroe

    Research output: Contribution to journalArticle


    This study compares the cost-efficiency of 'in-house' and outsourced to private sector audit supplier arrangements to deliver financial audits in the public sector by examining audit cost-efficiency within the context of the public sector arrangement at one state in Australia (Western Australia). The results for 178 public agencies show that outsourced audits are, in general, more costly than in-house audits, but this result is conditional on the type and size of public agency. Specifically, outsourced audits are more costly than in-house audits for small statutory authority audits, whereas for specialist audits (i.e. hospitals) and large and complex statutory authority audits, the in-house supply is equally efficient as the outsourced service.
    Original languageEnglish
    Pages (from-to)675-695
    JournalAccounting and Finance
    Issue number4
    Publication statusPublished - 2009


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