Evaluating the Effectiveness of Auditing in Local Municipalities using Analytic Hierarchy Process (AHP): A General Model and the Israeli Example.

This paper suggests a method for evaluating the effectiveness of auditing, and more specifically, develops measurement tools for evaluating the effectiveness of auditing in local municipalities. Auditing effectiveness is defined basically as the number and scope of deficiencies corrected following the auditing process. Given the relatively scant literature about the measurement of auditing effectiveness in the public sector, this study attempts to bring the issue to the forefront and provide systematic tools for such a measurement. The method suggested in this paper is based on the Analytic Hierarchy Process (AHP) methodology, which is usually used for grading multi-criteria alternatives where a subjective (expert) comparison between alternatives is required. In our context, this methodology helps rank the relative importance of each deficiency in the auditing report by assigning weights to each deficiency. Applying this method to auditing in local municipalities, the paper develops measurement tools for evaluating their effectiveness based on questionnaires distributed among experts and illustrates their applicability in three local municipalities in Israel.