Challenges facing Supreme Audit Institutions

In performing their duties, SAIs face several challenges that may undermine their capacity to guarantee transparent functioning of the state and governmental accountability.

From similar perspectives, various authors have addressed the issue of SAIs’ challenges. Some of the concepts and ideas that follow have been discussed by Van Zyl, Ramkumar, and de Renzio (here); Santiso (here); Ramkumar (here); and Cornejo, Guillan-Montero, and Lavin (here). In general terms, we can group the challenges facing SAIs into four thematic areas: political, institutional, technical, and communication.

SAIs may be subject to undue political influence, particularly when SAIs lack guarantees of independence and functional autonomy. This deficiency can seriously undermine SAIs’ ability to successfully achieve their mission

A. Independence: To effectively accomplish their tasks, SAIs must be independent of the audited entity and protected from outside influence. Although some constraints have been overcome by constitutional guarantees and legal amendments, independence remains a matter of concern for most SAIs.

Appointment and removal mechanisms of SAI authorities

Will SAIs be able to impose their recommendations on the executive if their authority is discretionally appointed or removed by government? By definition, the auditor must be independent of the auditee. Discretion in appointment and removal mechanisms intended to discipline SAIs can erode their capacity to effectively develop and objectively perform their functions. Discretion in this matter seriously undermines SAIs’ credibility as an autonomous, reliable oversight agency.

Budgetary autonomy

A SAI’s budget determines the quality and extent of its work, affecting staff salaries, quantity and quality of audit processes, and even the extent to which audit reports can be disseminated, Executive and legislative control over SAIs´ budgets is a very effective measure to discipline the entity and avoid effective oversight of governmental performance.

B. Ensuring compliance by the executive: SAIs may experience constraints in ensuring that the government will address audit report observations. Lack of adequate compliance requirements may lead to ineffective responses to audit recommendations that are intended to improve state management and service delivery. Even in judicial systems, impunity can delay corrective sanctions, undermine SAI work, and erode the judicial system’s reputation.

As beneficiaries of governmental interventions, citizens and civil society organization s (CSOs) are key allies to raise public awareness of SAI work, enforcing its credibility and, most importantly, its effectiveness.

  • CSOs can help disseminate SAI recommendations and monitor any possible inability or unwillingness of government agencies to implement them.
  • By making their work visible to all stakeholders, SAIs can deepen citizens’ understanding of that work and raise support for it, thus building their reputation as a reliable source of information on public management, gaining social legitimacy, and, ultimately, strengthening their independence.
  • Citizens and CSOs can monitor transparency and merit-based selection in SAI designation processes, put pressure on the legislative body when unilateral and unjustified dismissal by the executive threatens to weaken SAIs´ ability to develop their work autonomously, and raise public awareness campaigns when SAI independence is compromised.
  • CSOs can advocate for a legislative agenda to strengthen SAIs’ autonomy by ensuring (a) the automatic appropriation and approval of its budget, and (b) reduced political interference in appointing state auditors through objective selection criteria.

Narrow mandates and weak institutional design can undermine SAIs’ capacity to promote comprehensive and effective oversight.

A. Compliance with audit recommendations: Ensuring compliance of audit observations is one of the main challenges that SAIs face. The effectiveness of their work is seriously weakened when they lack the ability to elicit a government response to their audit recommendations

B. Mandate to develop performance audit: Because of their institutional design and restrictive mandate, SAIs—mainly those based on judicial models—may lack the freedom to monitor operational efficiency and effectiveness in government programs that directly affect citizen welfare. Performance audits (or value for money [VFM] audits) are central to promoting improvement in public management and to bringing tangible social outcomes in sustainable development.

Institutional challenges often weaken the effectiveness of SAIs’ work. This is either due to impunity in judicial models, or to lack of support from legislatures in Westminster models (More information on SAIs’ institutional designs on page 29: 1.4 SAIs’ models and characteristics). Having an effective follow-up mechanism for audit recommendations is fundamental to accomplish the SAIs´ mission. Citizens and other stakeholders can become partners to help SAIs deal with those limitations.

  • CSOs can work with SAIs to gather evidence and prove government inefficiency and malpractice.
  • As long as audit reports are published and thoroughly disseminated, stakeholders can take the initiative and push for increased governmental accountability and responsiveness. CSOs, citizen groups, research centers, and other actors in the public arena can use those reports to monitor the implementation of SAI recommendations. Those stakeholders may build upon that information to trigger investigations by other control agencies or by the judiciary system.
  • Citizens and other stakeholders can advocate for reform in the public sphere to empower SAIs by gaining resources and capabilities to perform VFM audits.

Achieving efficiency in SAI work relies on several factors, both internal and external. Resources, the ability to develop VFM audits, and unrestricted access to auditees´ information are a few of the factors that are critical to improving performance in oversight duties and ensuring the effectiveness of SAI observations.

A. Institutional capacity: Limited capacity can undermine SAIs’ ability to accomplish their mission, especially when they lack sufficient financial resources, trained staff, and adequate infrastructure.

  • Sufficient financial resources

    SAIs’ budgets must be adequate enough to ensure that necessary equipment can be acquired, staff salaries can be paid, and sufficient resources can be allocated to plan and conduct audits. When SAIs are underfunded, the quality of their work can be seriously compromised.

  • Human resources

    Trained staff is central to effective management. Understaffed SAIs and lack of adequate professional competences to perform necessary duties can erode the quality of SAIs’ work.

  • Infrastructure

    Efficiency in audit work requires sufficient and suitable equipment to perform complex audit functions. Continuous developments in information and communication technology (ICT) and the move from paper-based to computerized systems, which can improve SAIs´ operations, demand considerable structural updating. Investment in technical capacity is not merely a call for benefits but an actual need to effectively carry out oversight tasks.

B. Access to information: SAIs must have unrestricted access to clear and complete information from audited agencies to properly perform their statutory responsibilities. Regardless of their mandatory powers to demand auditee’´ accountability, SAIs often encounter serious difficulties in performing their duties when governmental agencies are not responsive.

C. Follow-up mechanisms: SAIs can fully accomplish their mission when audited entities comply with recommendations. Although audit reports are SAIs´ final products, the audit cycle is not closed until governmental accountability occurs. The lack of effective follow-up mechanisms can thus minimize the effectiveness of audit work.

Low performance may discredit SAIs’ work, undermining their capacity to carry out audits efficiently and to ensure accountability, which is their core mission. When SAIs reveal to citizens the value of their work—and the ways their work facilitates improvement in the public sector—they can find partners to support and enrich their processes.

  • As SAIs engage with different stakeholders and gain visibility in the public arena, the costs of denying information increase for audited agencies because their credibility may be eroded. Therefore, considering those external actors as allies can contribute to put pressure on state agencies so that they deliver the required information.
  • Various examples show that CSOs can assist SAIs in investigating, monitoring, and evaluating state-funded community programs—especially in performance audits, an area in which SAIs in developing countries are severely challenged.
  • Citizens’ views can enrich SAI perspectives and methodologies when developing audits—especially VFM audits—and thus contribute to nurturing human capacity in oversight agencies.

Enhancing governmental accountability and the effectiveness of SAI work calls for positioning oversight institutions in the center of the scene, but most often they lack channels of communication and articulation with other stakeholders who benefit from—and can work with—SAI products.

A. Parliament: Although in Westminster models SAIs are legally linked to Parliament, interactions often are weak. That lack of communication ultimately undermines the value of the audit work and can result in limited governmental accountability.

B. Other accountability agencies: Interaction between SAIs and other state agencies (ombudsmen, transparency comissions, and so forth) that work on fostering transparency and tackling corruption often are weak or inexistent. The absence of regular channels of communication results in isolated efforts to enhance accountability. Those efforts could be maximized if SAIs engaged with other institutions pursuing a similar mission.

C. Citizens: Very often, SAIs remain unknown to the public, which limits SAIs´ capacity to effectively engage with actors who can benefit from and enrich their work and who can foster accountability. Audit reports usually are presented in complex, technical language to stakeholders from outside the accounting community. To show the value of those reports to citizens, SAIs must make sure that their products are clear, manageable, and usable by those entities who are the ultimate beneficiaries of public auditing.

D. Media: Relationships between SAIs and the media must be cultivated and deepened so that audit findings gain public attention. In communicating audit reports to the public, the media can help provide the context for the audit reports. For instance, if an audit report is about wastage of resources in the Ministry of Education, the media can write a series of stories that illustrate the way that the wastage affects students and the consequent impact on learning outcomes. The media can quote the audit report while putting a human face to the story. If audit reports are not easily understood by the general public, journalists most probably will experience difficulty communicating their findings to the public. The media can, therefore, act as a powerful replicator of SAI work—provided the message is delivered to them in a clear, effective way.

Strategies and policies coordinating the efforts of legislatures, citizens, media, and other oversight entities can help address the main challenges that SAIs face. They can also enable SAIs to deploy their full potential and enhance the effectiveness of their action. Making their work visible is a prerequisite for SAIs’ successful engagement with citizens. Building relationships with stakeholders can reinforce SAIs´credibility, legitimacy, and independence and can even strenghten SAIs’ processes and operations.

  • If audit reports are effectively communicated and disseminated, many stakeholders can build upon the information to trigger investigations by other control agencies or by the judicial system
  • Regular contact with journalists and explanation of the core aspects of audit reports can enable better communication to the wide audience and help enhance the visibility of SAIs’ work, which fosters governmental exposure and, ultimately, accountability.
  • Interaction with citizens can improve SAIs’ operations. As the ultimate beneficiaries of public policies and services, citizens can provide valuable information regarding state functioning. They can identify areas of mismanagement, take part in monitoring governmental transparency, and even monitor compliance with audit recommendations.
  • Media investigations can add significant value to audit processes, widening the scope of SAIs’ work by providing evidence of possible fraud.



Evidence shows that SAIs’ openness to citizens provides an effective vehicle for responding to those critical challenges. Learn more about the enabling environment, instruments, mechanisms, and costs of SAIs’ engagement from the stocktaking report developed by the Organisation for Economic Co-operation and Development (OECD).
OECD. 2013. “Supreme Audit Institutions and Stakeholder Engagement Practices. A Stocktaking Report”.

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CHALLENGES

BENEFITS

ENTRY POINT

POLITICAL

Independence

  • By making their work visible to all stakeholders, SAIs can deepen citizens’ understanding of that work and raise support for it, thus building their reputation as a reliable source of information on public management, gaining social legitimacy, and, ultimately, strengthening their independence.

  • Citizens and CSOs can monitor transparency and merit-based selection in SAI designation processes, put pressure on the legislative body when unilateral and unjustified dismissal by the executive threatens to weaken SAIs´ ability to develop their work autonomously, and raise public awareness campaigns when SAI independence is compromised.

  • CSOs can advocate for a legislative agenda to strengthen SAIs’ autonomy by ensuring the automatic appropriation and approval of its budget and reduced political interference in appointing state auditors through objective selection criteria.

  • Citizen engagement in the appointment process of SAI authorities.

  • Citizen engagement in promoting legislative reform.

  • Citizen engagement in disseminating audit findings and information about follow-up.

Compliance by the executive

  • CSOs can help disseminate SAI recommendations and monitor any possible inability or unwillingness of government agencies to implement them.

  • Citizen engagement in disseminating audit findings and information about follow-up.

 

Compliance with audit recommendations

  • CSOs can work with SAIs to gather evidence and prove government inefficiency and malpractice.

  • If audit reports are published and thoroughly disseminated, stakeholders can take the initiative and push for increased governmental accountability and responsiveness. CSOs, groups of citizens, research centers, and other actors in the public arena can use those reports to monitor the implementation of SAI recommendations, and they may build upon that information to trigger investigations by other control agencies or by the judiciary.

  • Citizen engagement in disseminating audit findings and information about follow-up.

Mandate to develop VFM audits

  • Citizens and other stakeholders can advocate for reform in the public sphere to empower SAIs by gaining resources and capabilities to perform VFM audits.

  • Citizen engagement in promoting legislative reform.

TECHNICAL

Institutional capacity

  • Various examples show that CSOs can assist SAIs in investigating, monitoring, and evaluating state-funded community programs—especially in performance audit, an area in which SAIs in developing countries are severely challenged.

  • Citizens’ views can enrich SAI perspectives and methodologies when developing audits—especially in VFM audits—and thus contribute to nurturing human capacity in oversight agencies.

  • Citizen engagement in audit planning.

  • Citizen engagement in the audit process.

  • Citizen engagement in disseminating audit findings and information about follow-up.

Access to information

  • As SAIs engage with various stakeholders and gain visibility in the public arena, the costs of denying information increase for audited agencies because their credibility may be eroded. Therefore, considering those external actors as allies can contribute to put pressure on state agencies so that they deliver the required information.

  • Citizen engagement in the audit process through pressure on external stakeholders (auditees).

Follow-up mechanisms

  • Citizens and CSOs can put pressure on the legislature and executive agencies to take and enforce corrective actions, as well as help monitor the executive´s follow-up to audit reports and subsequent decisions taken by parliamentary committees.

  • Citizen engagement in disseminating audit findings and information about follow-up.

COMMUNICATION

Communication with external stakeholders

  • If audit reports are effectively communicated and disseminated, stakeholders can build upon that information to trigger investigations by other control agencies or by the judiciary.

  • Regular contact with journalists and explanation of the core aspects of audit reports can enable better communication to the wide audience and help enhance the visibility of SAIs’ work, which fosters governmental exposure and, ultimately, accountability.

  • Interaction with citizens can improve SAIs’ operations. As the ultimate beneficiaries of public policies and services, citizens can provide valuable information regarding state functioning. They can identify areas of mismanagement, take part in monitoring governmental transparency, and even monitor compliance with audit recommendations.

  • Media investigations can add significant value to audit processes, widening the scope of SAIs’ work by providing evidence about possible fraud.

  • Citizen engagement depends heavily on SAI openness and transparency toward enhancing communication with external stakeholders (which can engage at all stages of the audit cycle).

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Bibliography

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TPA Initiative – ACIJ (2013): “Audit Institutions in Latin America. Transparency, Citizen Participation and Accountability Indicators”.

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INTOSAI (2010):“Principles of Transparency and Accountability - Principles and Good Practices”, ISSAI 21.

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