The influence of public sector audit digitalisation on local government budget planning: evidence from Brazil

Purpose –This article analysed how data collection systems (DCS) developed by governmental audit organizations (Court of Accounts) affect budgetary planning within local governments. Methodology – Eighteen semi-structured interviews complemented by six time-lagged interviews via Whatsapp were carried out with the actors involved in the preparation and auditing of the Medium-Term Expenditure Framework in Brazilian local governments. Documents such as the structured layouts of Courts' DCS and the publicised Medium-Term Expenditure Framework (MTEF) prepared by local governments were also analysed. Findings - Our findings indicate that Courts' DCS structured layouts reduce local governments' budgetary planning autonomy in elaborating their MTEF. It happens as the Courts’ main driver is to make MTEF information auditable and not to improve the usefulness of information by governments. As a result, the planning choices of the local governments end up limited, not by the general legislation but by the rules established by the computerized systems of the Courts. Originality – Our paper’s originality relies on demonstrating that the digitalisation of audit processes ultimately affects local governments' practices through structured layouts for the data collection on MTEF information - that impose rigidity on the budget planning process of local governments. We highlight the role of public sector auditing organisations as potential catalysts of reforms; however, this should be considered cautiously since the drivers and motivations of the organisation that sponsors public financial management reforms matter for overall reform effectiveness.