Volume 24, Number 2, Summer 2012

Determinants of Auditee Adoption of Audit Recommendations:
Local Government Auditors’ Perspectives ………….......................... 195
S. K. Aikins
Debt, Donors, and the Decision to Give ...........…………………………. 221
T. Calabrese and C. Grizzle
Budget Priorities and Community Perceptions of Service
Quality and Importance ……......................................................……… 255
K. Nollenberger, C. Maher, P. Beach & M. K. McGee
Double (Accounting) Standards: A Comparison of Public and
Private Sector Defined Benefit Pension Plans .…..…....................... 278
K. E. Easterday and T. V. Eaton
Finance Managers’ Propensity to Save .…...….….…..…..................... 313
W. B. Hildreth, S. J. Yeager, G. J. Miller, and J. Rabin

ABSTRACT. This research determines the impact of local government’s internal audit process on the audit client management’s adoption of audit recommendations. Publicity of financial and operational problems in government in recent years has led to concerns about the quality of government audits, the extent of public managers’ adoption of audit recommendations, as well as citizen demand for accountability in government. In spite of this, the importance of the government audit process in ensuring accountability has gained little attention in public management research. A survey of local government audit executives was conducted to determine various aspects of the local government internal audit process and their relationships with audit client management’s adoption of audit recommendations. Results show that client management’s adoption of audit recommendation is a function of auditor professional designation, due diligence, client relations, documentation and tracking of audit recommendations, as well as of follow-up audits to verify implementation of agreed-upon action plans.

ABSTRACT. Despite the enormous size of the nonprofit sector, there has been very little empirical research done on the capital structure of nonprofit organizations, and no one has examined the potential effects of borrowing on individual contributions. Using a representative sample of nonprofits, the empirical analysis first determines whether secured or unsecured borrowing by nonprofits influence future contributions. The results for the full sample support a “crowding-out” effect. When the analysis is repeated on a subsample of nonprofits that are older, larger, and more dependent upon donations, the results are more ambiguous: secured debt has little or no effect, while unsecured debt has a “crowd-in” effect. The empirical analysis is then expanded to test whether nonprofits with higher than average debt
levels have different results than nonprofits with below average debt levels. The results suggest that donors do remove future donations when a nonprofit is more highly leveraged compared to similar organizations.

ABSTRACT. This paper presents a model of government saving in order to examine several questions regarding the personal and professional saving preferences or inclinations of a national sample of local government finance managers. First, is personal propensity to save related to a preference for local government saving? Second, is personal propensity to spend related to the finance managers’ opinions about their local government’s spending? Third, what are the determinants of finance managers’ propensity to save or spend, both personally and for their local government? Results confirm that finance managers have a personal propensity to save and a positive view toward local government saving. The opposite, propensity to spend, is also influenced by personal preference. Determinants of these behaviors are explored.

ABSTRACT. The increasingly important issues of transparency and citizen involvement have challenged public administrators in the budget process. This paper adopts a contingent valuation approach, surveying citizens in the city of Oshkosh, Wisconsin, on their preferred allocations of both a large city budgetary increase and a large city budget reduction. The results are then used to examine how citizen assessment of service quality and importance are related to their desired changes in net budget allocations. We believe that this is a major improvement in the contingent value approach, and can serve as a useful tool to public administrators for identifying the public’s budget priorities.

ABSTRACT. We examine and compare funding status, actuarial assumptions and asset investment allocations of defined benefit pension plans in the public and private sectors across time, using information as reported under GASB and FASB. We find that pension plans in both sectors are underfunded and that inferences about pension funding in the public sector would be different if pension assets’ fair values were required in the computation of funding status. Actuarial assumptions of public employee plans appear to be both more optimistic and less variable than those of private sector plans. Finally, we document that public sector plans allocate
invested assets somewhat differently than in the private sector, although our findings do not confirm anecdotal reports of riskier pension investment strategies relative to the private sector.

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