What Factors Influence Municipality External Compliance Costs? A Focus on Connecticut Municipalities

Authors

Jacqueline T. Jamsheed, Florida International UniversityFollow

Document Type

Dissertation

Degree

Doctor of Business Administration

Major/Program

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First Advisor's Name

George Marakas

First Advisor's Committee Title

Committee Chair

Second Advisor's Name

Min Chen

Second Advisor's Committee Title

Committee Member

Third Advisor's Name

Sheng Guo

Third Advisor's Committee Title

Committee Member

Fourth Advisor's Name

Yan Chen

Fourth Advisor's Committee Title

Committee Member

Keywords

Business

Date of Defense

5-15-2021

Abstract

As local governments assess the financial impact of recent pressures on their financial stability, identifying possible opportunities for cost avoidance is of interest to town management, elected officials and taxpayers. The cost of compliance, and the drivers contributing to this cost, have been largely overlooked in the study of local governments, resulting in little awareness of the cost to taxpayers for municipal assurance services. This study focuses on an area of expenditure that is linked to a required component of a locality’s daily operations, the financial statement external audit.

There is a paucity of databases capturing town finances, which would support quantitative research on municipal financial management and reporting. This lack of easily accessible state and local fiscal data has limited academic research in the municipal sector, even though it represents a large portion of the United States economy. To fill the gap in the current literature, this study has both developed a database consisting of independent variables on key financial indicators that impact a town’s fiscal health and operational efficiency and contacted each town’s financial leader to validate the dependent variable data source of audit fees for accuracy and completeness. The study also utilized this contact point to gain insight into each town’s audit fees and gather the most recent audit fee data; thus, eliminating reliance on third party sources that have the potential of inadvertently eliminating or adding reported fees that are not considered part of the core audit fee cost structure. An interview protocol of subject matter experts (SME) was used to collect independent variables potentially linked to the cost of external compliance. The SME list supplements the listing gathered from the literature review, and further strengthens the external validity of the model.

The novelty of this research is of interest to reader and the community: it not only analyzes the factors impacting external compliance cost, but also creates the database needed for such analysis. A detailed examination of each town’s Comprehensive Annual Financial Report (CAFR), state-wide town-specific databases and supplementary finance staff interviews form the core of the database.

Identifier

FIDC010296

Recommended Citation

Jamsheed, Jacqueline T., "What Factors Influence Municipality External Compliance Costs? A Focus on Connecticut Municipalities" (2021). FIU Electronic Theses and Dissertations. 4801.
https://digitalcommons.fiu.edu/etd/4801