The Effect of External Auditors’ Competence and Independence on the Cost-Saving of Audit Recommendations: Evidence from Tanzanian Local Government Authorities

Authors

• Lenatusi Leonard L. Munyangabi, University of DodomaFollow
• Henry Zeno Chalu, Institute of Finance ManagementFollow
• Keregero M. Chirongo, University of DodomaFollow

Abstract

This study examined the effect of external auditors’ competence and independence on the cost-saving of audit recommendations among Tanzanian Local Government Authorities (LGAs). Persistent non-implementation of audit recommendations in developing countries raises concerns regarding the extent to which audit reports contribute to fiscal prudence and resource efficiency. Grounded in the Theory of Inspired Confidence and Stewardship Theory, the study hypothesized that competent and independent auditors enhance the cost-saving potential of audit recommendations. A descriptive-explanatory design was employed, involving 345 respondents drawn from 126 selected LGAs. Data was collected using structured questionnaires and analyzed through multiple regression analysis. Both independent variables significantly predict cost-saving of audit recommendations. The results theoretically affirm that the agency theory inspired confidence that auditors’ characteristics comprising of cognitive competence and independence influence cost saving of audit recommendations. Empirically, the study demonstrates that auditors’ technical expertise, autonomy, and operational independence improve frugality of audited entities. The study recommends that the Supreme Audit Institution strengthen continuing auditors’ cognitive attributes, maintain practical and independence among auditors. LGAs should priorities auditor-advised actions during execution of their activities while the central government should incorporate audit implementation into the national fiscal accountability framework. In addition, players associated with audits should enhance collaboration among the SAI, PO-RALG, and the Ministry of Finance as they improve cost-saving and governance recommendations in Tanzania. Limitations of this study arise from usage of a cross-sectional design and the survey approach. Similar studies using longitudinal design and other data collection approaches become the avenue for further studies. 

Recommended Citation

Munyangabi, Lenatusi Leonard L.; Chalu, Henry Zeno; and Chirongo, Keregero M. (2026) "The Effect of External Auditors’ Competence and Independence on the Cost-Saving of Audit Recommendations: Evidence from Tanzanian Local Government Authorities," Business Management Review: Vol. 29: No. 3, Article 3.
Available at: https://doi.org/10.65085/2546-213x.1320