The surveillance of a supreme audit institution on related party transactions

Bibliographic Data

ID20201295
AuthorsGustavo Cesário (0000-0001-8102-5899, Escola Brasileira de Administração Pública e de Empresas), Robson Lopes Cardoso (0000-0002-0058-0063, Escola Brasileira de Administração Pública e de Empresas), Ricardo Lopes Cardoso, Renato Santos Aranha (Universidade Federal do Rio de Janeiro)
Year2020
Volume32
Issue4
Pages577-603
Publication date2020-10-19
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueJournal of Public Budgeting Accounting & Financial Management (JOURNAL)
Journal identifiersISSN: 1096-3367 • E-ISSN: 1945-1814
PublisherEmerald (PUBLISHER)
DOI10.1108/jpbafm-12-2019-0181
OpenAlexW3043744820
LanguageEN
Citations received2
References cited27

Purpose This paper aims to analyse how the supreme audit institution (SAI) monitors related party transactions (RPTs) in the Brazilian public sector. It considers definitions and disclosure policies of RPTs by international accounting and auditing standards and their evolution since 1980. Design/methodology/approach Based on archival research on international standards and using an interpretive approach, the authors investigated definitions and disclosure policies. Using a topic model based on latent Dirichlet allocation, the authors performed a content analysis on over 59,000 SAI decisions to assess how the SAI monitors RPTs. Findings The SAI investigates nepotism (a kind of RPT) and conflicts of interest up to eight times more frequently than related parties. Brazilian laws prevent nepotism and conflicts of interest, but not RPTs in general. Indeed, Brazilian public-sector accounting standards have not converged towards IPSAS 20, and ISSAI 1550 does not adjust auditing procedures to suit the public sector. Research limitations/implications The SAI follows a legalistic auditing approach, indicating a need for regulation of related public-sector parties to improve surveillance. In addition to Brazil, other code law countries might face similar circumstances. Originality/value Public-sector RPTs are an under-investigated field, calling for attention by academics and standard-setters. Text mining and latent Dirichlet allocation, while mature techniques, are underexplored in accounting and auditing studies. Additionally, the Python script created to analyse the audit reports is available at Mendeley Data and may be used to perform similar analyses with minor adaptations

Audit · Business · Latent Dirichlet allocation · Nepotism · Originality · Political science · Public relations · Public sector · Topic model · Auditing, Earnings Management, Governance · Computer Science · Corporate Finance and Governance · Corruption and Economic Development · Law · Accounting

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