External Accountability Supreme Audit Institutions

1
External Accountability Supreme Audit
Institutions
Budget Execution Course January 10-11, 2004 Anne
Mondoloni, OPCFM-AFTFM
2
Overview

• What is an SAI ?
• The Lima Declaration theory and practices
• Regional perspectives
• What is INTOSAI ?
• World Bank Strategy to support and strengthen
  SAIs

3
What is a Supreme Audit Institution ?

• The national audit body, independent of the
  executive, that issues reports on the use of
  public funds for the Legislature and Public

4
Financial accountability scheme
Citizens-Public Legislature
Financial accountability
Reports to
SAI
MOF
Audits accounts and management
5
Three Different institutional models

• Westminster model
• UK most commonwealth countries including in Sub
  Saharan anglophone Africa
• SAI work intrinsically linked to the system of
  parliamentary accountability
• Judicial / Napoleonic model
• Latin countries in Europe / Turkey / Francophone
  countries in Africa and Asia / Several Latin
  American countries
• SAI integral part of the judicial system. Often
  goes with the personal and financial
  responsibility of government officials
• Board model
• Asian countries including Indonesia / Philippines
• Institution positioning similar to that of
  Westminster model but internal organization is
  collegial with of Board of auditors

6
Different types of audit

• Compliance audits
• Reviewing compliance with financial laws and
  regulation
• Financial audits
• Providing an annual opinion on the fairness of
  the information presented in State financial
  statements or government agencies statements
• Performance audits (value for money)
• May vary significantly in scope

7
The Lima Declaration - Independence
8
The Lima Declaration - Capacity
9
The Lima Declaration - Impact
10
Regional Perspective

• ECA SAI in EU candidate countries have made
  important progress (e.g. Poland) / others have
  difficulties reaching an adequate institutional
  positioning
• AFR-MNA In francophone countries scattered
  auditing resource / and limited access to the
  general public / In anglophone South Africa as
  example of best practice
• LAC SAI could potentially benefit from well
  developed PFM system in Ministries of Finance but
  very low impact due to limited access to the
  general public
• SAR EAP Longer tradition of external oversight
  but weaknesses in terms of audit content,
  staffing and therefore impact / India as example
  best practice and initiating changes

11
Identification of stages Possible steps to take

• CASE I Start
• No external audit institution in place or very
  recently created
• CASE II Low PFM Capacity environment
• When quality of State Accounting system is very
  low
• CASE III Intermediate
• Heterogenous staffing - Inadequate scope or
  institutional position Confidentiality of
  reports
•  
• CASE IV Advanced
• Sufficient and skilled staff / but limited range
  activities
• Free Disclosure of reports to the public but no
  follow-up

12
What is INTOSAI ?

• INTOSAI
• International Organization of Supreme Audit
  Institutions
• For experience sharing and cooperation
• Regional organizations
• AFROSAI / ARABOSAI
• OLACEFS / CAROSAI /
• EUROSAI / ASOSAI / SPASAI
• Congress every 3 years
• last Congress in Budapest October 2004

13
Outcomes of 2004 XVIII INTOSAI Congress

• INTOSAI has adopted a Strategic Plan, that
  include a mission statement, a vision and a set
  of goals among which
• Accountability and Professional Standards as Goal
  1
• Institutional capacity building as Goal 2
• Creation of a Working Group or Committee on SAI
  capacity building
• Full alignment with Banks SAI approach

14
Strategy paper Objective

• Provide an overarching framework on how to make
  the most out of the commonality of interests
  between SAIs and donor agencies which is based
  on ensuring that public / development funds are
  used in an effective manner to reduce poverty and
  are properly accounted for.

15
Strategy Paper key ideas (1/2)

• Dealing with SAIs as potential partners in
  bringing about results, rather than as remote
  oversight institutions
• Advocacy / Policy dialogue
• need to work on acceptance by the executive
  branch / government of a relevant independent
  external scrutiny of its management of public
  funds
• Leveraging the Banks portfolio
• acceptability issue to be used as opportunity
  to engage dialogue / training program for
  enhancement of audit capacity

16
Strategy Paper key ideas (2/2)

• Draw on external expertise through partnerships
  with INTOSAI and its members
• Build on on-going initiatives within the SAI
  community that deal with SAI capacity building
  Large amount of on-going bilateral cooperation
  among SAIs
• Support SAI capacity to audit budget execution
• On area of particular interest SAI as the sole
  public auditor for annual state budgets is the
  main source of information for citizens, the
  legislature, the government and ultimately for
  development partners.
• In line with new OP 8.60 need for specific
  support in carrying out Financial Audit of State
  Accounts (Budget execution)
•  

17
Lessons learned

• The need for a comprehensive approach of Public
  financial management
• Freedom of disclosure of reports as a necessary
  condition for having impact
•  
• Role of the Ministry of Finance and importance of
  the accounting system

18
For your consideration

• Financial accountability and Rule of Law ?
• Financial Accountability and Corrupt
  environment ?
• Financial accountability and .. Authoritarian
  regimes ?

19
Thank you for your attention !