State audit have a long tradition in the Nordic countries. Big welfare states and a corporative model of organising society have prompted an important role for public sector control functions. Different from the Anglo-Saxon tradition the state audit have however not always been organised in the form of an independent national audit office (NAO). Sweden, for instance had two national audit offices until 2003, one controlled by the government and the other by the parliament. Recently however, all Nordic countries have established independent national audit offices influenced by the Anglo-Saxon model.
The NAO:s of the Nordic countries nonetheless show some interesting organisational differences between themselves. As an example, the office of the Rigsrevisor (chief audit officer) is in Denmark a lifetime appointment occupied by one person. In Sweden, there are three chief audit officers appointed for a seven-year term that cannot be renewed or extended. All in all, the NAOs in the Nordic countries show substantial variation within the Anglo-Saxon model of state audit. But do these organisational differences matter?
The quality of an audit function is often described in terms of independence and competence. The organisation of a NAO could affect its independence in at least four ways. First, there is the structural independence. Who hires and fires the auditor? To whom does the NAO report? And who initiates an audit? Second, there is the financial independence. How big is the NAO staff? What is the size of its budget? Who decides the budget? And are some or all money earmarked for different audits or other objectives? Third, there is the investigative independence. Is the NAO free to perform the audit in the way it seem suitable? Is it allowed access to the records and interview the people it want? Fourth and finally, does the NAO have the independence to report?
They way the NAO is organised could also affect the competence of the NAO in several ways. First, the organising of the NAO affects the human capital within the organisation. What is the educational level of the people employed at the NAO? What types of educational background do the auditors have (i.e., what subjects did they study at school/university)? Is the state audit staff required, or voluntary seek, to be authorised? Second, the organising of the NAO affects its structural capital. Do the NAOs comply with some form of standard of performance (e.g. the IPSASs)? Is there some form of quality control? Do the NAOs have continuous education requirements?
The first objective of this study is to outline the organisational differences between the NAOs in Denmark, Finland, Norway and Sweden. Auditing is however an essentially obscure activity. This makes audit quality difficult to gauge and put a question mark after the importance the way an NAO is organised. Instead, this obscurity highlights the importance of the perception of the audit. If the users of the audit do not trust the auditor, the organisational aspects of the audit make little difference. Hence, the second objective of this study is to analyse the perception of the NAOs in terms of independence and competence.