International Journal of Government Auditing – April 2011
Ahmed El Midaoui
First President of the Court of Accounts of the Kingdom of Morocco, Chairman of the INTOSAI Capacity Building Committee
The nature of public auditing requires that SAIs be independent. SAIs face a series of challenges related not only to successful and professional auditing, but also to the whole process of public finance auditing, its related strategies and resources, as well as the capacities needed to ensure the preservation, proper use, and profitability of public funds. Within this context, building effective auditing capacity is a particularly difficult and complex task that calls for a sustainable, effective, and long-term process of a constantly improved interactive control.
SAIs must develop new methodologies and analytical capabilities to address changes in technology and management systems of public institutions. SAIs must be equipped to fully carry out their roles in assessing not only the regularity and compliance of financial transactions but also economy, efficiency, and effectiveness in the use of public resources. To build solid, accountable, legal, and compliant financial auditing, SAIs must assess and measure the public institutions’ performance on operations and projects. However, SAIs should gradually move into performance auditing in accordance with the level of their institutional development in particular, and the economic, social, and political development of their operating environment in general.
Thus, SAIs in countries with advanced economies should expand the scope of their audits to incorporate a broader and more accurate vision of public institutional management results. The development of performance auditing should be a major objective for these institutions and should be pursued along with other audit-related disciplines, such as risk management and strategic auditing, which are increasingly crucial in today’s constantly changing environment.
SAIs in emerging countries should consolidate their achievements and experience in financial auditing of regularity and compliance and undertake performance auditing that will promote sound and effective public financial management.
Finally, SAIs in developing countries must first develop effective audits of regularity and compliance. These audits are a prerequisite for developing a culture of control and accountability within public institutions and are essential to control and track financial flows. Only in this way can SAIs gradually proceed towards more expanded auditing, such as performance auditing.
An SAI can move into performance auditing without first establishing a fully developed conceptual, procedural, and organizational framework. Initial efforts in this area should be measured, the approach should be flexible, and implementation should be gradual. Obviously, permanent improvement in methodologies and procedures can continue in parallel while the SAI gains maturity.
Capacity building should not be perceived simply as a technical process of transferring knowledge or organizational structures. Rather, it must consider the context and environment within which an SAI operates.
Though internal capacity-building programs are most likely to be successful and sustainable, certain SAIs face extensive capacity-building challenges that require them to seek external support to undertake these programs. Such support, however, must not compromise their independence. In this respect, INTOSAI’s Capacity Building Committee (CBC) seeks to address this need through bilateral, regional, and multilateral efforts, seeking to ensure the possibility for each INTOSAI member to take advantage of capacity-building initiatives, according to its needs, to strengthen its independence and professionalism.
An adequate capacity-building program must result in certain basic outcomes:
Strengthening the SAI’s independence: An independent SAI must receive the resources it needs at both the institutional and professional levels.
Strengthening the SAI’s institutional status: Capacity building helps clarify the SAI’s status and relationship with other government and parliamentary institutions.
Developing highly qualified staff: Staff quality in auditing, especially for performance audits, is a key element in the success of auditing missions. SAIs’ staff profiles and competencies should reflect the diversity of the areas covered in audits of the management of public institutions. Qualified staff can be developed through both initial training in the various aspects of audit and ongoing training to ensure the constant updating of their skills and competencies.
Effective, professional, and stable SAI leadership: Leaders must develop and implement strategic plans and comprehensive, realistic action plans with particular focus on priorities. These plans must be compatible with both ongoing reforms in the nation’s public financial management and best practices (e.g., INTOSAI standards and guidelines).
Strengthening relationships with stakeholders: To be effective, an SAI should, to the extent allowed by its mandate, create close links with stakeholders. At the same time, the SAI should maintain its independence from the Parliament, the government, audited entities, the media, public opinion, and civil society.
Successful implementation of capacity building requires political support, appropriate regulation, leadership, and active involvement from SAI heads. All these elements must be joined together to ensure adequate funding and partnerships that can help strengthen institutional capacity.
Capacity building should enable SAIs to better use their existing capacities and also create new professional, organizational, and institutional capacities. To achieve this result, SAIs must adequately assess their needs and establish an appropriate schedule of planned actions to accomplish their purposes.
The success of this capacity-building process requires commitment on the part of both SAIs and the international community. Two recent developments within INTOSAI have affirmed this dual commitment:
A growing awareness of the need for professional and institutional capacity building. Capacity building must be carried out on an institutional platform. The capacity level achieved by an SAI depends in large part on the achievement of its established objectives.
SAI capacity can be defined and assessed not only by means of the legal principles governing the work performed, but also by means of the application of good practices that ensure the practical implementation of the SAI’s set objectives. Accordingly, SAIs must recognize the importance and value of strengthening their institutional capacity, as well as the benefits this increased capacity brings to their performance. Therefore, the first steps in carrying out capacity-building aims are developing the audit culture, staff motivation, and a commitment to leadership.
A global partnership strategy with donors to promote capacity-building projects through donors’ involvement in funding SAIs’ development and modernization programs. Within this context, INTOSAI and donors signed a memorandum of understanding (MOU) in October 2009 in Brussels and established governing bodies for this collaborative effect in Marrakech in February 2010. This MOU envisions that the donors’ financial support will be compatible with the conditions needed to implement development and modernization programs. These conditions may include measures that reinforce SAIs’ institutional status, improve their financial and materials means, manage their resources, set up strategic planning, improve their working methods (audit manuals and information systems), and provide appropriate training for auditors.
The development of public auditing and SAI capacity building must go hand in hand in a context that fosters the independence of these institutions. Because this process is both time-consuming and resource-intensive, SAIs should adopt a progressive approach involving the gradual implementation of a developmental audit program (that includes performance auditing, risk assessment, etc.). This process must be conducted on a reasonable scale, with specific objectives and in accordance with the resources and workforce available to the SAI.
From the very beginning, SAIs are the best qualified to identify and define their needs and objectives, as well as the means and tools necessary for the success of their missions. They are also called upon to be prepared to cope with ongoing changes in their internal and external environments and develop a culture of accountability and professional ethics that is essential to their success.