Municipal accountability : should regulations similar to the Sarbanes-Oxley Act apply to the local sector?

Authors

Douglas Ray Fink, Florida International University

Document Type

Dissertation

Degree

Doctor of Philosophy (PhD)

Major/Program

Public Administration

First Advisor's Name

Howard A. Frank

First Advisor's Committee Title

Committee Chair

Second Advisor's Name

Keith D. Revell

Third Advisor's Name

Eric F. Wagner

Fourth Advisor's Name

Sukumar Ganapati

Date of Defense

11-10-2008

Abstract

As America moved into the 21" century financial scandals associated with large publicly traded corporations brougt widespread concern about the reliability of financial reporting. In response the U.S. Congress adopted the Sarbanes-Oxley Act of 2002 (SOX). Undergirding SOX was the belief that improvements in the reliability of an organization's financial disclosures would lead to increased trust in the issuing organization.

While SOX is aimed at publicly traded private sector organizations, the value of adopting SOX-like practices in the public and the nonprofit sectors have been recognized. Although SOX-like auditing practices have not at the time of this research become part of the auditing regime for municipalities, the results of this research provide a baseline "read" of municipal finance officers' perceptions of the value and obstacles associated with adoption of two major components of SOX: Principal Officer(s) Certification (POC) and the Independent Audit Committee (IAC) requirements.

The author mailed surveys to all finance officers of municipalities in Florida and Ohio with populations of 10,000 or greater which did not contract out the operation of their finance departments. Post-survey "elite" interviews were conducted in an effort to obtain a deeper understanding of revealed issues and contradictions found in the analysis of the results of the mails survey.

The findings suggest municipal finance officers are willing to adopt POC but have reservations about implementing IAC. With both POC and IAC the respondents appeared to consider intangible, non-pecuniary consequences as much or more than tangible, pecuniary consequences. Consistent with prior research, attitudes regarding POC and IAC were found to be unrelated to prior adoptive behavior, or personal and organizational demographic variables. Although accounting and auditing are inexorably intertwined, views of the recently implemented GASB 34 reporting model were found to be unrelated to the willingness to adopt POC or IAC.

Findings dovetail with current discourse in public sector accounting suggesting local finance professionals may see benefits both tangible and intangible - to some but not all accounting practices adopted in the private sector. This is consistent with the commonly accepted belief that public sector accounting maintains fundamental differences from its private counterpart.

Identifier

FI15101401

Recommended Citation

Fink, Douglas Ray, "Municipal accountability : should regulations similar to the Sarbanes-Oxley Act apply to the local sector?" (2008). FIU Electronic Theses and Dissertations. 3325.
https://digitalcommons.fiu.edu/etd/3325