Determinants of Audit Opinion in Local Government Authorities in Tanzania

Authors

  • Shufaa Albeity Institute of Finance Management
  • Hamis Sinde Institute of Finance Management

Keywords:

Opinion, audit, accountability, local government, internal control

Abstract

This study identifies the determinants of audit opinion in Tanzanian Local Government Authorities (LGAs). Tanzania has been implementing Decentralization by Devolution reform since 1998. One of its objectives is to strengthen the financial management capacity and practices of LGAs to improve their ability to deliver services to the citizens. As a monitoring mechanism, an external auditor produces an audit report to show whether they comply with Generally Accepted Accounting Principles (GAAP) and are free from material misstatement. This paper uses secondary data extracted from the Controller and Auditor General (CAG) in Tanzania for one hundred eighty-five (185) LGAs, for six (6) financial years (FY) from 2013/14 to 2018/19. The study uses random effect logistic regression analysis to estimate the determinants of audit opinion. The results show that internal control weaknesses (ICWs) increase the likelihood of receiving a modified audit opinion. In contrast, the inadequate performance of the internal audit (IAIP) unit in terms of resource availability, size (SIZE), financial independence (INDEP), and Urban LGAs (TYPE), decreases the likelihood of receiving a modified audit opinion. This study has policy implications for addressing financial accountability issues in Tanzania and other developing countries with a similar context. Identifying the determinants of audit opinion, for addressing financial management and accountability issues that LGAs in developing countries are experiencing, is vital. This study provides new insight into understanding the determinants of LGAs’ audit opinions, which is vital for addressing financial management and accountability issues.

Author Biography

Hamis Sinde, Institute of Finance Management

Lecturer,

Department of Accounting and Finance,

Institute of Finance Management (IFM), Dar es Salaam

Tanzania

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Published

2023-03-30

How to Cite

Albeity, S., & Sinde, H. (2023). Determinants of Audit Opinion in Local Government Authorities in Tanzania. Local Administration Journal, 16(1), 23–40. Retrieved from https://so04.tci-thaijo.org/index.php/colakkujournals/article/view/262218