Procurement practices and the municipality auditing market

Ana Marques, Ana Pinto

Research output: Contribution to journalArticlepeer-review

6 Citations (Scopus)
23 Downloads (Pure)


In this study, we perform a comprehensive analysis of municipal auditing, exploring its several steps: procurement, decision on selection criteria, selection, render and payment of services, and opinion provided. Our setting is Portugal, where external auditing of municipalities’ accounts has recently been introduced. Our dataset is unique, resulting from merging new survey data with data that are not publicly available. We find that the majority of municipalities acquire auditing services through direct selection and choose their auditors based upon the lowest price selection criterion. However, municipalities which employ a more sophisticated procurement process, where political competition is lower and where citizens’ interest is higher, employ the lowest price selection criterion less frequently. The auditor selected is usually a firm (instead of an individual Certified Public Accounting [CPA]) but never one of the Big 4 companies. The audit fee paid for the auditing services is higher when the level of citizens’ interest increases, and lower when the municipality has an internal auditing office. Finally, when the auditor issues a qualified opinion, the auditor fee is also higher.

Original languageEnglish
Pages (from-to)524-545
JournalJournal of Accounting, Auditing and Finance
Issue number4
Publication statusPublished - Oct 2019


  • audit fees
  • local government
  • lowest price selection criterion
  • political competition
  • Portugal


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