Procurement Practices and the Municipality Auditing Market
44 Pages Posted: 14 Jan 2016 Last revised: 10 May 2017
Date Written: January 13, 2017
Abstract
In this article we study the determinants of (i) audit services’ public procurement criteria, and (ii) the audit fees of Portuguese municipalities. Our dataset is unique, resulting from merging new survey data with data that is not usually publicly available. We find that the majority of municipalities acquire auditing services based upon the lowest price selection criterion. However, this practice is less frequent in municipalities with higher public procurement sophistication and with higher political competition. Our analysis of the audit fees charged indicate these are higher in municipalities with more sophisticated procurement processes, higher political competition, and more citizens’ interest. Audit fess are also lower in municipalities with an internal auditing office.
Keywords: local government, political competition, lowest price selection criterion, audit fees
JEL Classification: M41, M42
Suggested Citation: Suggested Citation