International Journal of Government Auditing–January 2013
The VII EUROSAI-OLACEFS conference was held in Tbilisi, Georgia, September 17–19, 2012. Its theme, Good Governance in Public Sector: Role of SAIs, addressed citizens' increasing demands for better public administration and funds management during times of financial hardship for governments. The theme also highlighted the possibilities for SAI contributions to better accountability, transparency, and efficiency in government activities. There were two subthemes that are pivotal for SAIs carrying out their functions effectively: (1) Enhancing Management Integrity, Accountability, and Tone at the Top and (2) Facilitating Public Financial Management Reform.
Since 2000, representatives of EUROSAI and OLACEFS have met in a series of conferences designed to facilitate the sharing of experiences and best practices on important public audit issues to foster continuous improvement in the quality of SAI work. The most recent conference coincided with the 20th anniversary of the State Audit Office of Georgia. Hosting the event gave the SAI of Georgia the opportunity to share its own experiences and challenges in establishing itself as an important player in public financial management
Session I: Enhancing Stakeholder Confidence: Auditing Management Integrity, Accountability, and Tone at the Top
SAIs can achieve credibility by enhancing accountability, transparency, integrity, and tone at the top within their organizations. The SAI of Portugal, as president of EUROSAI, presided over the session dealing with this topic.
At the last EUROSAI congress in Lisbon, participants affirmed the following: "Transparency and accountability are both democratic values and are fundamental for good governance. Accountability is a broad concept including a wide range of responsibilities for public managers, such as professional and management skills, compliance with financial and other regulations, meeting performance expectations and ethical conduct."
The presentation of the SAI of Portugal highlighted the importance of having a methodological base consisting of an audit manual that describes strategies and rules for ethical behavior to help ensure that behavior. ISSAI 30, the INTOSAI Code of Ethics, is also an important point of reference for auditors. It is not enough for SAIs to have provisions for ethical behavior: they also need to have implementation measures. The SAI of Portugal identified guidance, management, and control as three aspects that need to be addressed to ensure ethical behavior. Guidance can be reinforced by providing detailed information about the code of ethics and training. Management should favor ethical behavior for its employees and incorporate ethical criteria in annual performance evaluations. Checklists and internal audits should be developed to promote control measures.
In response to proposals of the Portuguese SAI, the EUROSAI Governing Board agreed to set up a task force to promote ethical conduct and integrity in both SAIs and public organizations. For SAIs, the goal of the task force is to reinforce and frame the management of ethical conduct and make it more robust by providing practical and feasible tools to help SAIs in their everyday work.
The Spanish Court of Audit presented an interesting case demonstrating the positive contribution an SAI can have to public sector accountability. In 2003, the court reported to the Spanish Parliament on problems with the accountability of local governments and identified possible legal and administrative solutions that could be adopted to render local entities' accounts complete within legally established deadlines. In response to this, information and communication technology was introduced that significantly improved the reporting and reviewing activities for local governments. After successfully establishing this electronic reporting system, the Spanish Court of Accounts made the reports and accounts of local governments publicly available. In addition to facilitating audit activities, this increased transparency and accountability to the citizens.
The presentation of the Turkish Court of Accounts (TCA) emphasized the importance of the high quality of its work and the need to follow high moral values to complete it. The TCA recently established an audit management software program that enables it to organize audit work and gives management the opportunity to monitor findings and working documents.
The Brazilian Court of Accounts discussed the benefits of the recent peer review carried out by the Organization for Economic Cooperation and Development that assessed the audit of the annual financial statements of the Brazilian federal government. In reviews such as this one, the report is prepared by a multilateral institution with broad knowledge of factors such as planning, budget, finances, accounting, governance, transparency, and accountability. Multidisciplinary teams from different countries are involved.
Session II: Facilitating Public Finance Management Reform
Carlos Pólit Faggioni, Controller General of Ecuador and President of OLACEFS, presided over the second session on public finance management reform. To live up to the high expectations of society and further reinforce the principles of good governance, many governments are embarking on significant modifications of their public financial management systems (PFM). The PFM serves as an overarching framework under which many facets of public financial administration can be improved. The PFM is concerned with such vital issues as budget planning and execution, establishing internal controls and internal audit, procurement, accounting and IT systems, and treasury. These issues constitute the very core of public financial management and, ultimately, good governance.
Within EUROSAI, countries share a number of similarities in implementing PFM reform as they aspire to fully implement common guidelines and best practices. Countries are at different stages in the process, and there is a significant potential for state agencies as well as SAIs to gain from each other's experience. SAIs are one of the key players in implementing PFM reform. They participate in the formulation and refinement of clear budgetary, financial, accounting, internal controls, and related legislation; by auditing PFM reform as a whole or separate parts of the PFM system and key issues, SAIs spark national debates on many pressing issues related to the management of public funds.
Recent developments have clearly demonstrated the importance of reasonably planned and executed fiscal policy over the mid and long term. Consequently, the role of SAIs has increased significantly from specific audits to fiscal discipline and sustainability issues such as the following:
SAIs contribute to PFM reform through legislative initiatives to improve the country's main regulatory PFM framework. A comprehensive legal framework for PFM should be structured according to the country's system and have simple and transparent regulations that avoid redundant bureaucracy, promote accountability, and make cooperation with the SAI obligatory.
For additional information, please see the "Conferences" section of the EUROSAI website: http://www.eurosai.org.