1) Introduction
Many of the major problems of budgeting in
developing countries can be detected through good external auditing. For this
reason, strengthening the external audit institution must be a major component of any plan
to improve public financial management in developing countries.
However, auditors-general (AGs) often face
substantial problems in building an effective oversight institution. These include
political problems, such as inadequate independence or poor cooperation from the
executive, as well as shortages of resources and/or skilled personnel. Effecting institutional change in public finance
systems therefore demands a political approach as well as technical expertise.
Because AGs are required to remain politically neutral, their recommendations often are
not implemented by the executive and, in fact, do not go further than parliamentary
debate. This paper argues that by cooperating with institutions whose mandate
enables them to engage in the political issues from which AGs are excluded, AGs can
achieve systemic change in public financial management institutions and behaviour. Potential partners for AGs include civil society
organizations, parliament and the media, all of which share AGs’ concern with
effective budgetary oversight.
One clarification is necessary. Given the necessary independence of each of these
institutions and their complex relations with the executive branch, I am not advocating a
permanent, formal coalition. It is more realistic to think of such interactions as
informal and strategic, based on case-by-case consideration.
At other times, these institutions will be required to adopt very different
positions from one another.
2) Parliament and AGs
Best practice governs that the AG office should
be an independent institution that reports to parliament, the “keeper of the public
purse.” Within parliament, the AG’s
primary relationship is with the Public Accounts Committee or Parliamentary Audit
Commission (PAC). In many cases, AGs also establish relationships with sector
committees (such as health, education and agriculture), but these relationships are best
mediated or coordinated by the PAC.
AGs and PACs have traditionally developed a
close relationship that might be described as mutual dependence or symbiosis.
Parliament’s oversight over the budget is most effective when it can rely on
information from the AG. In turn, the AG is
most effective in improving budgetary oversight when it can rely on parliament to promote
its recommendations with the executive.
This is not to say that aims of the AG are the
same as those of PACs and parliament. The AG has to balance a complex relationship that
requires it to report to parliament while simultaneously maintaining independence and
objectivity from parliamentary concerns. Managing this relationship requires some
finesse. Too close a relationship with
parliament creates the danger that uncomfortable audit findings may be sidelined or
ignored. But too distant a relationship denies
the AG a powerful ally for effecting the recommendations emanating from the audit.
3) How does the parliament help build pressure
for change?
Traditionally, the AG presents the audit to
parliament, which then refers the matter to the PAC. Public
hearings are the principal mechanism by which the PAC examines the audit findings.
In most political systems, the constitution gives parliament the power to summon
responsible officials and other interested parties to give evidence. These can
include ministers and department staff, as well as the AG and his/her staff, specialist
committees and civil society groups.
Especially if the hearings are public and open,
they provide a powerful opportunity to hold the executive to account by testing the audit
results against the testimony of executive officials and other experts. Hearings
also can build public interest in important policy issues. In these ways, hearings
can begin to create constituencies for change within parliament, civil society and the
media. In addition, hearings create greater
understanding of the AG’s function and of oversight more generally and alert interest
groups, the rest of parliament and the public to the issues that might arise and the
problems that are on parliament’s agenda over the next year.
After completing its review and hearings, the
PAC prepares a report with comments and recommendations or formulates a draft resolution.
The information in this report greatly aids the subsequent debate in the full
parliament, which otherwise tends to be long and unfocused.
Following that debate, parliament votes to approve or reject the report.
The next stage of the parliamentary process is
to follow up on the hearings and the report to ensure that corrective action is taken.
The work of the AG and PAC only has practical value if the government implements
the committee’s recommendations. Yet this
often does not happen, particularly when the executive is dominant and parliament has
little room to maneuver.
In most countries there is some follow-up of
the audit reports by the AG and/or the PAC. In some cases, the AG is obliged to
check on the progress that has been made since the previous audit, but this generally is
the responsibility of the PAC. The
PAC can ask government bodies to report on the audit findings and recommendations. It also can adopt a resolution making specific
demands on the government to rectify certain problems and then to inform parliament about
the measures adopted and their outcome. (In some countries, the affected government
bodies are required to submit a report on the remedies that have been implemented.) The PAC report to parliament can also contain
concrete proposals for follow-up measures.
In sum, a partnership between the AG and the
PAC during the parliamentary review, hearing and follow-up stages provides a major
opportunity to enhance the external auditing function.
·
Parliament can raise issues of concern that
might be appropriate for the AG to investigate.
·
The PAC can develop the skills and knowledge
base to conduct in-depth hearings and produce substantive recommendations on auditing
issues.
Parliament can also exert pressure for
effective follow-up, both directly and indirectly.
·
Unlike the AG, which is a neutral assessor of
financial flows, parliament has the political role of keeper of the public purse and thus
can press the executive to answer for its actions.
·
Parliament’s examination of the audit
findings and recommendations places auditing concerns in the public domain, making them
more accessible to civil society, the media and the public.
This substantially broadens the constituencies that can push for
improvements in financial management.
4) Civil society and AGs
Despite the best efforts of parliament, the AG
and even the executive, ensuring that good auditing recommendations are translated into
effective policy and behavioral change has proven extremely difficult. Co-operation with civil society organizations
provides a further opportunity to help make this happen.
Recently, civil society’s engagement with
government budgeting has grown dramatically. This activity tends to focus on the
legislative stage of the budget process, although budget groups are also active, where
possible, in the drafting stage and in monitoring implementation. To date, civil
society groups have been least involved in the auditing stage of the budget process, but
there are some signs that this is changing. Although cooperation between civil
society and the AG is in its early phases, it presents several innovative possibilities
for improving the auditing function and civil society oversight. Several ideas and
examples of this developing cooperation are presented below.
Building audit literacy: One
reason why audit findings might not have greater resonance with the public is that people
are often unaware of the role of the AG and its potential impact on their lives. To
build an engaged citizenry interested in holding the government to account, it is
necessary to raise the level of budget and audit literacy in the population. The AG can fulfill this function itself, by
developing an outreach campaign, or it can contract with budget groups (and the media) to
assist. Budget groups and the media have expertise in
translating complex materials into timely, accessible documents and in designing and
delivering training courses specifically targeted at non-technical audiences.
Suggesting sites for audits: The
most common way for the AG to open a dialogue with civil society is to create a mechanism
for civil society to alert the AG to potential problems and request that an audit be
performed. These requests may be made directly
to the AG (as in Colombia) or indirectly, through the legislature and a
review board (as in California). Either
way, these requests enable AGs to benefit from the contact that civil society
organizations have with citizens throughout the country. To take two examples:
·
The Uganda Debt Network, a coalition of civil
society organizations, was approached by the Justice and Peace Commission of the Catholic
Church about the government’s repeated awarding of contracts to a private firm
(Amuria Farmers) that had been producing poor-quality work. Following complaints
from the Uganda Debt Network, the AG and the Office of the Prime Minister investigated the
situation and corroborated these claims, as well as identifying a skewed tendering
process. As a result, the disbursement of funds to the district was suspended until
evidence of remedial action was provided.
·
Recently, professors at a California state university were concerned that the
university administration had diverted resources intended for teaching into current
expenditures. Working through the legislature, faculty at the university asked
the audit review committee to conduct an audit. The audit was conducted and found
that, indeed, significant resources had been diverted from teaching funds; the audit also
uncovered conflicts of interest and spending overruns. Advocacy groups used these
findings in their work with the media to force the university to correct these
problems. (See the California Budget Project.)
Tracking expenditures: The Uganda Debt Network has helped to monitor and correct
serious leakages that were occurring in the transfer of funds from the National Ministry
of Finance to individual schools. A system has now been established to involve the
community and civil society organizations in tracking funds.
First, the amounts that each school should receive are posted on a signboard
or tree in the village. The Uganda Debt
Network then follows up with the Parent Teachers Association in each school to ascertain
whether it has received the correct amount. Finally,
the Network compares this information to the official Central Bank releases of
expenditures at the national level and reports its findings to the Ministry of Finance.
Tracking follow-up to the AG’s report: The
Public Sector Accountability Monitor (PSAM) in South Africa works closely with the legislature to track
the executive branch’s response to allegations of misconduct contained in the
AG’s report. One of the PSAM’s activities is to follow up reported cases
of government corruption and misconduct. Once the relevant details of the case have
been established, the PSAM faxes a summary of these, together with a list of potential
breaches in regulations, to the head of the relevant department. One month later the
PSAM interviews that official to find out what disciplinary action was taken and posts
that interview (in text and audio format) on the internet. In the event of a
non-response, the PSAM formally requests this information under the Promotion of Access to
Information Act. The success of the initiative demonstrates how civil society can
complement scrutiny by parliament.
Measuring program performance: As part of the Poverty Reduction Strategy Paper
process, civil society groups in several countries, including Malawi, Uganda and Zambia, have begun to measure the performance and
impact of government programs. This might be a
valuable contribution to AGs’ efforts to include value-for-money and performance
auditing at the local government and village levels, enabling AGs to obtain information
cost-effectively without establishing large offices of auditors. This initiative has measurably improved the quality
of service delivery, such as the availability of medicines and syringes in hospitals and
the prompt payment of teachers.
The Colombia AG probably has the most
comprehensive program to involve citizens in corruption monitoring. Its program
includes forums to receive complaints from citizens and public hearings to create a
dialogue with citizens on their needs and the work of the AG. One of the most
innovative parts of the program is the establishment of "Citizen Watchdog
Committees" to monitor high-impact projects. Each committee is formed at the
initiative of citizens around a particular project and signs an agreement with the AG to
monitor the project. To be eligible, each committee must include members with
sufficient skills to monitor all aspects of the project, such as architects to examine the
contracts, construction specialists to review the buildings, media to keep citizens
informed of the project, and NGOs to monitor the fulfillment of the agreements.
To summarize: Civil society groups can assist
the AG in several ways, most of which are not yet in widespread use.
·
Civil society can help build citizen literacy
on the AG’s function and on issues of financial management and oversight.
·
Civil society and the media can raise issues
for the AG to investigate based on their close contact with citizens.
·
Civil society and the media can conduct initial
investigations into financial mismanagement or further investigate the issues that arise
from an audit report.
·
Civil society can help monitor the
executive’s follow-up to an audit report and parliamentary hearings. Together with attention from the media, this can
place pressure on the executive to take corrective action.
·
Civil society can directly assist the AG’s
work through its involvement in tracking expenditure, assisting with local auditing and
measuring program performance.
5) What can AGs do to obtain
maximum external support?
Parliament and civil society generally are
overworked, with many competing committee, campaign and political commitments. To obtain these groups’ fullest possible
contribution toward improving financial management, AGs should think carefully about the
kinds of information they distribute. The following are some ways AGs can engage
parliament and civil society in the priorities of the AG office. (See OECD SIGMA reference
below.)
·
AGs should be selective about which audits they
send to parliament in order not to overburden parliament’s limited capacity.
Most parliaments in Africa and the candidate countries for the EU do not
act on more than half of the audit reports they receive. Choosing which audits truly
warrant parliamentary attention is crucial.
·
AGs should make every effort to present reports
in a timely fashion. A recent study of five African Commonwealth countries showed
that audit reports are, on average, received by the legislature two years or more after
the end of the financial year, even though by law they should be received within six to
eleven months from that date. Delays such as
this make audits less relevant and effective.
·
To generate interest among readers, reports
should be clear and concise and written in a fair and factual manner, with sufficient but
not overwhelming detail.
·
AGs should make the results of previous audits
available to PACs in their annual report, especially if the problems described in them
persist. Conversely, AGs should note cases in
which problems have been corrected to identify what has worked.
General references on the
auditor-general
·
Lima Declaration of Guidelines for Auditing Precepts.
·
Stapenhurst, Rick (2001). Features and functions of
supreme audit institutions. Premnotes: No. 59, World Bank Institute.
References on the relationship
between legislatures and the auditor-general
·
McGee, QC, David G., (2002). The Overseers: Public
Accounts Committees and Public Spending. Commonwealth Parliamentary Association,
London. Results of a Commonwealth Parliamentary
Association study group on the relationship between parliamentary accounts committees and
public spending.
·
SIGMA (2002). Relations Between Supreme Audit
Institutions and Parliamentary Committees. SIGMA paper No.33, OECD and European
Union. Survey of parliamentary and external
auditing institutions in European Union candidate countries.
·
Wehner, Joachim, (2002). Best Practices of Public Accounts
Committees. Paper for the Handbook for Public Accounts Committees commissioned
by the Association of Public Accounts Committees in South Africa.
Whom to contact on the relationship
between civil society organizations and the auditor-general
As this is a very new area of engagement, there
are few resources available on the relationship between civil society organizations and
the auditor-general. The best way to gather information on this issue is to consult
the websites or contact persons of involved civil society organizations and
auditors-general, including the following:
CIVIL SOCIETY:
·
California Budget Project, based in California, United States – contact Jean Ross
·
Public
Sector Accountability Monitor (PSAM), based in South Africa – contact Colm Allan (c.allan@ru.ac.za)
·
Uganda Debt
Network – contact Zie Gariyo (ZGariyo@udn.or.ug)
·
Zambia Catholic Commission for Justice and
Peace – contact Mulima Kufekisa (akakapelwa@zec.org.zm)
AUDITORS GENERAL:
Africa
·
Auditor-General of Uganda
·
Auditor-General
of South Africa
·
Auditor-General of Botswana
·
Auditor-General of the Republic of Guyana
Europe
·
Auditor-General of the United Kingdom (National Audit Office)
·
Auditor-General of
Sweden
Latin America (in Spanish):
·
Auditor-General of Argentina
·
Auditor-General of Chile
·
Auditor-General of Colombia and Comptroller of
Colombia
·
Auditor-General of Costa Rica
·
Auditor-General of Ecuador
·
Auditor-General of Nicaragua
·
Auditor-General of Panama
South and Southeast Asia:
