Innovation Prospects in Public Enterprise Audit Performance: Challenges to Achieving Unqualified Reports in Namibia

Abstract

This study identifies and analyzes the institutional, governance, and systemic factors that impact the achievement of unqualified (“clean”) audit reports among public enterprises (PEs) in Namibia. Audit reports are vital tools for ensuring financial accountability, transparency, and stakeholder trust. Nevertheless, the majority of Namibian PEs frequently fail to secure clean audit opinions. Grounded in the agency, stewardship institutional theories, the study adopts a qualitative, interpretivist approach, utilising secondary data from Auditor-General reports, policy documents, and legislative frameworks. Thematic analysis identifies ongoing and recurring challenges. These include weak internal controls, chronic delays in financial reporting, lack of International Public Sector Accounting Standards compliance, ineffective or non-functional internal audit units, failure to reconcile key financial accounts, and reliance on external consultants for financial statement preparation as an emerging institutional vulnerability that undermines long-term capacity. Political interference, inadequate board governance, and poor documentation and information system practices further contribute to material misstatements and adverse audit outcomes. These findings demonstrate that audit shortcomings are not isolated technical issues, but manifestations of deeper institutional and governance failures. The study also examines strategic interventions aimed at enhancing audit performance. These include targeted capacity building, digitisation of financial management processes, professionalisation of accounting personnel, strengthened audit committees, governance reforms, and stricter enforcement of reporting requirements. Such interventions highlight the potential for public-sector innovation, particularly through the adoption of financial management information systems, structured peer-learning mechanisms, and performance benchmarking tools that can modernize accountability practices. This study contributes to the audit and public finance literature by focusing on audit quality in a developing-country context, offering both theoretical and policy insights. The findings emphasize the need for systemic reform and institutional innovation to improve financial governance in PEs, suggesting that clean audits are attainable through sustained capacity enhancement, regulatory enforcement, and the innovative redesign of accountability systems.