From Lapdog to the Watchdog: The influence of Auditors’ perceived independence on the Relevance of External Auditors’ Recommendations

Abstract

The relevance of external auditors’ recommendations is crucial for promoting transparency, accountability and effective governance in public sector entities. However, limited implementation of audit recommendations globally and in Africa, including Tanzania, raises concerns about their practical usefulness and decision-making value. This study investigates the effect of external auditors’ perceived independence on the relevance of audit recommendations in Tanzanian Local Government Authorities (LGAs). Guided by Agency Theory, the study adopts a positivist research philosophy, employing a quantitative approach and Structural Equation Modeling (SEM) to analyse survey data from 345 audit and governance stakeholders across 126 sampled LGAs. Descriptive analysis indicated that respondents recognised auditors’ perceived independence particularly freedom from managerial interference, operational autonomy, access to information and adequate logistical support as critical for relevant recommendations. Regression results revealed a positive and statistically significant relationship between auditors’ perceived independence and relevance of audit recommendations (P<.001, F=34.860, t=5.904, β=.304 and Adjusted R-square =9%) and confirms that perceived independence has the modest explanatory power on the relevance of audit recommendations. The findings show the importance of institutional and regulatory frameworks that safeguard auditors perceived independence, while highlighting that perceived independence alone is insufficient without management responsiveness and effective follow-up mechanisms. By focusing on auditor’s   perceived independence as a determinant of relevance of audit recommendations, this study fills both theoretical and empirical gaps in public sector auditing literature, providing actionable insights for improving audit relevance and governance in Tanzanian LGAs.