<![CDATA[Supreme Audit Institutions are expected to promote public accountability and contribute to better public service delivery. However, evidence on whether compliance with audit recommendations translates into improved service quality remains inconclusive. This study examines the relationship between audit follow-up and public service quality, and the role of Public Financial Management (PFM) quality as an intermediate governance factor. Using panel data from 38 local governments in East Java during 2020-2023, the study employs Fixed Effects and Fixed Effects Two-Stage Least Squares (FE-2SLS) estimation to address potential endogeneity concerns. The findings indicate that audit follow-up is positively associated with public service quality and more consistently associated with improvements in PFM quality. The results are broadly consistent with an indirect governance pathway in which audit follow-up strengthens financial governance capacity, which may subsequently support better public service outcomes. This relationship appears stronger in regions with higher per capita expenditure, whereas in lower-capacity regions, governance improvements are less likely to translate into service outcomes due to fiscal constraints. These findings suggest that improving public services requires not only audit compliance but also sufficient governance and fiscal capacity. This study contributes to the public-sector governance literature by highlighting PFM quality as an important institutional pathway linking audit follow-up and public service quality.]]>
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