IDEAS home Printed from https://ideas.repec.org/a/spr/sjobre/v76y2024i2d10.1007_s41471-024-00179-1.html
   My bibliography  Save this article

Error Culture, Auditors’ Error Communication, and the Performance of the Auditee: A Study Among German Local Public Sector Auditors

Author

Listed:
  • David Lindermüller

    (University of the Bundeswehr Munich)

  • Irina Lindermüller

    (Carinthia University of Applied Sciences)

  • Christian Nitzl

    (University of the Bundeswehr Munich)

  • Bernhard Hirsch

    (University of the Bundeswehr Munich)

Abstract

In the course of financial and value for money audits, public sector auditors are facing different types of errors: accounting and economic errors, respectively. This study examines the relations between error culture in public sector audit organizations, auditors’ communication of accounting and economic errors, and performance of the auditee. The analyses of survey data from German local public sector auditors show that a strong error culture within the audit organization positively affect the auditors’ communication of errors to the auditee, regardless of the error type. Additionally, a strong error culture positively mediates the performance of the audited institution through the auditors’ communication of economic errors. This implies that it is important for public sector audit organizations to build a strong error culture. In addition to its practical contrition, the study provides novel theoretical insights as it demonstrates that the error management of one organization (audit entity) matters for the performance of another organization (audited entity).

Suggested Citation

  • David Lindermüller & Irina Lindermüller & Christian Nitzl & Bernhard Hirsch, 2024. "Error Culture, Auditors’ Error Communication, and the Performance of the Auditee: A Study Among German Local Public Sector Auditors," Schmalenbach Journal of Business Research, Springer, vol. 76(2), pages 245-266, June.
    • Handle: RePEc:spr:sjobre:v:76:y:2024:i:2:d:10.1007_s41471-024-00179-1
    DOI: 10.1007/s41471-024-00179-1
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s41471-024-00179-1
    File Function: Abstract
    Download Restriction: no
    File URL: https://libkey.io/10.1007/s41471-024-00179-1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Pollitt, Christopher & Girre, Xavier & Lonsdale, Jeremy & Mul, Robert & Summa, Hilkka & Waerness, Marit, 1999. "Performance or Compliance?: Performance Audit and Public Management in Five Countries," OUP Catalogue, Oxford University Press, number 9780198296003, Decembrie.
    2. Hair, Joe F. & Howard, Matt C. & Nitzl, Christian, 2020. "Assessing measurement model quality in PLS-SEM using confirmatory composite analysis," Journal of Business Research, Elsevier, vol. 109(C), pages 101-110.
    3. Mark L. DeFond & K. Raghunandan & K.R. Subramanyam, 2002. "Do Non–Audit Service Fees Impair Auditor Independence? Evidence from Going Concern Audit Opinions," Journal of Accounting Research, Wiley Blackwell, vol. 40(4), pages 1247-1274, September.
    4. Nitzl, Christian, 2016. "The use of partial least squares structural equation modelling (PLS-SEM) in management accounting research: Directions for future theory development," Journal of Accounting Literature, Elsevier, vol. 37(C), pages 19-35.
    5. Christian Nitzl, 2016. "The use of partial least squares structural equation modelling (PLS-SEM) in management accounting research: Directions for future theory development," Journal of Accounting Literature, Emerald Group Publishing Limited, vol. 37(1), pages 19-35, October.
    6. Homsma, Gert J. & Van Dyck, Cathy & De Gilder, Dick & Koopman, Paul L. & Elfring, Tom, 2009. "Learning from error: The influence of error incident characteristics," Journal of Business Research, Elsevier, vol. 62(1), pages 115-122, January.
    7. Clinton Free & Vaughan Radcliffe & Brent White, 2013. "Crisis, Committees and Consultants: The Rise of Value-For-Money Auditing in the Federal Public Sector in Canada," Journal of Business Ethics, Springer, vol. 113(3), pages 441-459, March.
    8. Gendron, Yves & Cooper, David J. & Townley, Barbara, 2007. "The construction of auditing expertise in measuring government performance," Accounting, Organizations and Society, Elsevier, vol. 32(1-2), pages 101-129.
    9. Tim Rosengart & Bernhard Hirsch & Christian Nitzl, 2019. "The effects of legal versus business education on decision making in public administrations with a Weberian tradition," Business Research, Springer;German Academic Association for Business Research, vol. 12(2), pages 455-478, December.
    10. Ulfert Gronewold & Anna Gold & Steven Salterio, 2013. "Reporting Self-Made Errors: The Impact of Organizational Error-Management Climate and Error Type," Journal of Business Ethics, Springer, vol. 117(1), pages 189-208, September.
    11. Dale Flesher & Marilyn Zarzeski, 2002. "The roots of operational (value-for-money) auditing in English-speaking nations," Accounting and Business Research, Taylor & Francis Journals, vol. 32(2), pages 93-104.
    12. Gudergan, Siegfried P. & Ringle, Christian M. & Wende, Sven & Will, Alexander, 2008. "Confirmatory tetrad analysis in PLS path modeling," Journal of Business Research, Elsevier, vol. 61(12), pages 1238-1249, December.
    13. David Lindermüller & Matthias Sohn & Bernhard Hirsch, 2022. "Negative media reporting and its effects on performance information use in public spending," Public Management Review, Taylor & Francis Journals, vol. 24(7), pages 1024-1047, July.
    14. Frans L. Leeuw, 1996. "Performance auditing, new public management and performance improvement: questions and answers," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 9(2), pages 92-102, May.
    15. Jan van Helden, 2016. "Literature review and challenging research agenda on politicians’ use of accounting information," Public Money & Management, Taylor & Francis Journals, vol. 36(7), pages 531-538, November.
    16. Janet L. Colbert, 2002. "Corporate governance: communications from internal and external auditors," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 17(3), pages 147-152, April.
    17. Xinshu Zhao & John G. Lynch & Qimei Chen, 2010. "Reconsidering Baron and Kenny: Myths and Truths about Mediation Analysis," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 37(2), pages 197-206, August.
    18. Harzing, Anne-Wil, 1997. "Response rates in international mail surveys: Results of a 22-country study," International Business Review, Elsevier, vol. 6(6), pages 641-665, December.
    19. Evans, Jh & Patton, Jm, 1987. "Signaling And Monitoring In Public-Sector Accounting," Journal of Accounting Research, Wiley Blackwell, vol. 25, pages 130-164.
    20. Christian Nitzl & Wynne W. Chin, 2017. "The case of partial least squares (PLS) path modeling in managerial accounting research," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 28(2), pages 137-156, May.
    21. Christopher Hood & Oliver James & George Jones & Colin Scott & Tony Travers, 1998. "Regulation Inside Government: Where New Public Management Meets the Audit Explosion," Public Money & Management, Taylor & Francis Journals, vol. 18(2), pages 61-68, April.
    22. Sarstedt, Marko & Hair, Joseph F. & Ringle, Christian M. & Thiele, Kai O. & Gudergan, Siegfried P., 2016. "Estimation issues with PLS and CBSEM: Where the bias lies!," Journal of Business Research, Elsevier, vol. 69(10), pages 3998-4010.
    23. Marika Arena & Kim Klarskov Jeppesen, 2016. "Practice Variation in Public Sector Internal Auditing: An Institutional Analysis," European Accounting Review, Taylor & Francis Journals, vol. 25(2), pages 319-345, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Scott C. Manley & Joseph F. Hair & Ralph I. Williams & William C. McDowell, 2021. "Essential new PLS-SEM analysis methods for your entrepreneurship analytical toolbox," International Entrepreneurship and Management Journal, Springer, vol. 17(4), pages 1805-1825, December.
    2. Scott C. Manley & Joseph F. Hair & Ralph I. Williams & William C. McDowell, 0. "Essential new PLS-SEM analysis methods for your entrepreneurship analytical toolbox," International Entrepreneurship and Management Journal, Springer, vol. 0, pages 1-21.
    3. Christian Nitzl & Dennis Hilgers & Bernhard Hirsch & David Lindermüller, 2020. "The Influence of the Organizational Structure, Environment, and Resource Provision on the Use of Accrual Accounting in Municipalities," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 72(2), pages 271-298, April.
    4. Henda Omri & Anis Omri & Abdessalem Abbassi, 2024. "Macro-level determinants of entrepreneurial behavior and motivation," International Entrepreneurship and Management Journal, Springer, vol. 20(4), pages 2629-2667, December.
    5. Hidayah, Nunung Nurul & Amyar, Firdaus & Lowe, Alan, 2024. "Therapeutic governance: The art of mediating shame and blame and quasi-judicial pragmatic technologies in Indonesian government auditor-auditee engagements," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 100(C).
    6. Jun-Hwa Cheah & Hiram Ting & T. Ramayah & Mumtaz Ali Memon & Tat-Huei Cham & Enrico Ciavolino, 2019. "A comparison of five reflective–formative estimation approaches: reconsideration and recommendations for tourism research," Quality & Quantity: International Journal of Methodology, Springer, vol. 53(3), pages 1421-1458, May.
    7. Gudergan, Siegfried P. & Moisescu, Ovidiu I. & Radomir, Lăcrămioara & Ringle, Christian M. & Sarstedt, Marko, 2025. "Special issue editorial: Advanced partial least squares structural equation modeling (PLS-SEM) applications in business research," Journal of Business Research, Elsevier, vol. 188(C).
    8. Mehran Nejati & Azadeh Shafaei, 2023. "Why do employees respond differently to corporate social responsibility? A study of substantive and symbolic corporate social responsibility," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(4), pages 2066-2080, July.
    9. El Baz, Jamal & Ruel, Salomée, 2021. "Can supply chain risk management practices mitigate the disruption impacts on supply chains’ resilience and robustness? Evidence from an empirical survey in a COVID-19 outbreak era," International Journal of Production Economics, Elsevier, vol. 233(C).
    10. Jessica Braojos & Jose Benitez & Javier Llorens & Laura Ruiz, 2020. "Impact of IT integration on the firm’s knowledge absorption and desorption," Post-Print hal-03160729, HAL.
    11. Troiville, Julien, 2024. "Connecting the dots between brand equity and brand loyalty for retailers: The mediating roles of brand attitudes and word-of-mouth communication," Journal of Business Research, Elsevier, vol. 177(C).
    12. Bernhard Hirsch & Fabienne-Sophie Schäfer & Aleksander Aristovnik & Polonca Kovač & Dejan Ravšelj, 2023. "The impact of Digitalized Communication on the effectiveness of Local Administrative Authorities – Findings from Central European Countries in the COVID-19 Crisis," Journal of Business Economics, Springer, vol. 93(1), pages 173-192, January.
    13. Clinton Free & Vaughan S. Radcliffe & Crawford Spence & Mitchell J. Stein, 2020. "Auditing and the Development of the Modern State," Contemporary Accounting Research, John Wiley & Sons, vol. 37(1), pages 485-513, March.
    14. Telma Mendes & Vítor Braga & Carina Silva & Alexandra Braga, 2025. "The speed of internationalization in regionally clustered family firms: a deeper understanding of innovation activities and cluster affiliation," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 45(1), pages 51-108, March.
    15. Tim Rosengart & Bernhard Hirsch & Christian Nitzl, 2020. "Self-selection and socialisation effects of business and legal studies," Journal of Business Economics, Springer, vol. 90(8), pages 1127-1145, September.
    16. Shafaqat Mehmood & Changyong Liang & Dongxiao Gu, 2018. "Heritage Image and Attitudes toward a Heritage Site: Do They Really Mediate the Relationship between User-Generated Content and Travel Intentions toward a Heritage Site?," Sustainability, MDPI, vol. 10(12), pages 1-26, November.
    17. Ji, Elena & Mahmudur Rahman, Syed & Wilden, Ralf & Lin, Nidthida & Harrison, Norma, 2024. "Leveraging customer knowledge obtained through social media: The roles of R&D intensity and absorptive capacity," Journal of Business Research, Elsevier, vol. 182(C).
    18. Christina Boedker & Kar Ming Chong, 2022. "The mediating role of accounting controls between supervisors' empowering leadership style and subordinates' creativity and goal productivity," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(4), pages 4587-4614, December.
    19. Azad Moghddam, Hamed & Carlson, Jamie & Wyllie, Jessica & Mahmudur Rahman, Syed, 2024. "Scroll, Stop, Shop: Decoding impulsive buying in social commerce," Journal of Business Research, Elsevier, vol. 182(C).
    20. Manzi-Puertas, Mario A. & Agirre-Aramburu, Izaskun & López-Pérez, Sain, 2024. "Navigating the student entrepreneurial journey: Dynamics and interplay of resourceful and innovative behavior," Journal of Business Research, Elsevier, vol. 174(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:sjobre:v:76:y:2024:i:2:d:10.1007_s41471-024-00179-1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.