International Journal of Government Auditing – July 2014
The National Audit Office (NAO) of Malta hosted the 22nd Conference of Commonwealth Auditors General held March 24 - 27, 2014. The conference, entitled “Securing Independence of SAIs to Improve the Effectiveness of Reporting and Communication of Audit Findings,” brought together 87 delegates from 35 Commonwealth countries. This yearís conference theme was sub-divided into two themes:
The conference was opened by the Maltese former President H.E. Dr. George Abela, who emphasized that the supreme audit institution (SAI) is one of the key pillars of a healthy democracy. Dr. Abela said that SAIs serve as connection points in complex relationships that often involve the legislature and the executive on one side, and governments and citizens on another.
Auditor General Mr. Anthony C. Mifsud acknowledged that 2014 is the 200th anniversary of the establishment of an SAI in Malta. He described the NAOís development over the years, especially since the former Department of Audit was re-established as the National Audit Office in 1997.
Mr. Mifsud also noted the great success which had been achieved by the Commonwealth Auditors General when, as a result of their collective efforts, the communique issued by the Commonwealth Heads of Government at the end of their 2013 meeting in Sri Lanka reaffirmed the importance of strong and independent SAIs and Public Accounts Committees:
Mr. Brian Vella, Assistant Auditor General, gave a general introduction to the conference theme, saying that it concerned three key intertwined elements: 1) independence of SAIs, 2) effective SAI reporting, and 3) effective communication of SAI reporting. Mr. Vella referred to the following international documents related to the conference theme:
Mr. Vella also cited the 2011 UN Resolution on SAI Independence, which recognized that SAIs can accomplish their tasks objectively and effectively only if they are independent of the audited entity and are protected against outside influence.
The first conference subtheme, “Ensuring independence of SAIs for effective reporting,” was chaired by Mr. Thembekile Makwetu, Auditor General of South Africa. Mr. Amyas Morse, Comptroller and Auditor General of the UK, gave a keynote address, and the SAIs of Canada, Lesotho, New Zealand, and Zambia offered presentations.
Discussions focused on what delegates considered to be some of the key barriers to full independence, particularly the lack of control over financial and human resources, and weaknesses in the legislaturesí ability to hold the Executive to account.
Participants discussing this subtheme concluded that SAI independence is not a means to an end; it is a continual work in progress. Independence is conferred by the legislature and then put into effect, nurtured, and maintained by the SAI.
Most commonwealth countries appear to adhere to the core principles of SAI independence, which have been formalized in legislation and incorporated into the constitutional fabric. However, in practice, the auditors general of many jurisdictions encounter practical limitations to their independence. It seems that, within the Commonwealth at least, while constitutional and legal safeguards may focus on protecting the Office of the Auditor General and the Deputy Auditor General from undue influence, there is a far less protection for the organization itself—that is, the SAI and its staff. Independence in many jurisdictions is limited when SAIs cannot recruit and manage their own staff, where their budgets are determined by Ministries of Finance, and/or when they cannot put the results of their work into the public domain within a reasonable timeframe.
Many new issues are arising which impinge on SAIsí independence and their capacity to provide assurance to legislatures and citizens. For example, to what extent do SAIs have the right to directly audit private contractors (such as those engaged in public-private partnerships, or those providing services to the public)? Also, as governments have responded to the financial crisis of recent years, in some countries parliaments have turned to SAIs for advice and reassurance—recognizing that SAIs are often viewed as guardians of fiscal prudence. Finally, SAI independence does not mean isolation, as that could actually corrode independence; instead, independence provides a platform from which SAIs can engage actively with the apparatus of state.
The second subtheme, “Effective communication of audit findings to key audiences,” was chaired by Mr. Shashi Kant Sharma, Comptroller and Auditor General of India. Speeches on the second subtheme were delivered by the heads of SAIs, or their representatives, from Australia, Bangladesh, Cyprus, Malaysia, the Maldives, and the United Republic of Tanzania. Presentations focused on challenges associated with legal reporting obligations, audit findings reported upon by SAIs, key audiences for reports, reporting tools and techniques, audit report content, and effective reporting on follow-up audits. Discussions on this subtheme also focused on the legal and institutional impediments to reporting, the need to find improved ways of reaching different audiences, the quality and clarity of SAI messages, and the development of more systematic approaches to following up on the implementation of recommendations.
Participants discussing subtheme two concluded that, in exercising their independence, SAIs need to carefully consider the following four elements of communication:
Conclusions were also reached on new challenges in traditional and new reporting relationships. Traditional relationships are still vital, as they relate to the communication of audit results to Parliament, the Executive, and the media. New reporting relationships entail more intense interactions, and communication with auditees—some of which may be new to a SAIís jurisdiction. Other relationships SAIs must cultivate are with oversight bodies—such as regulatory organizations, central banks, and anti-corruption agencies—that need to both understand the work of the SAI as well as how their areas of interest overlap and interact.
Forms of communication, according to participants, are both formal and informal. Formal communication relates to the statutory reporting of findings, conclusions, and possibly, recommendations, whereas informal communication can entail engaging in discreet dialogue with government officials on the transparency, integrity, and performance of the nationís governance systems.
Participants also stressed that communication with external peers and donors provides opportunities for self-reflection, peer reviews, capacity building, dissemination of good practices, and the opportunity to resist isolation. Communication with a highly politicized public and media is a challenge, and an SAIís presence in this arena can be uneasy and fraught with risk. Engaging with these stakeholders is essential, however, if the SAI is to continue to be seen as relevant, in-touch, and useful.
In addition to discussing the conference themes, participants also attended presentations on state audit and good governance, reflections on experiences of SAIs, and a workshop on future directions for Commonwealth Auditors General. It was agreed that the forthcoming Commonwealth Auditors General Conference in 2017 will be hosted by the SAI of India.