Highlights

International Journal of Government Auditing – January 2015


Good Practice Guides

An innovative advisory tool for public managers

The German Supreme Audit Institution (SAI) has developed numerous findings that are of a representative nature beyond the individual case under audit. The guides, published since 2013, are designed to better provide public managers with useful advice. They are to contribute to improving the compliance and performance of government operations and transactions.

For this purpose, suitable findings are concisely edited and arranged in a clear format to help federal departments and agencies avoid typical irregularities. The collection of guides is to be systematically expanded in order to cover all sectors of government operations and transactions.

The collection of guides is subdivided into 14 chapters and can be accessed via the German SAI’s website (www.bundesrechnungshof.de). The publisher is the President of the German SAI, in his capacity as Federal Performance Commissioner. The German SAI already introduced the guides as an innovative advisory tool during a workshop at

Goals of the Guides

During our audits, we often uncover typical irregularities that occur government-wide; for example, in connection with efficiency/capital expenditure appraisals, contract awarding, procurement and grants, and also in the fields of organization, human resources management and information technology. These audit findings are usually only communicated to the auditees. This means that, as a rule, not all federal managers have access to the findings, and so these findings often cannot be taken into account when planning for the future.

The President of the German SAI traditionally also holds the position of the Federal Performance Commissioner (FPC). In this role, he is tasked to enhance federal government performance by putting forward proposals, reports or opinions.

It was the idea of the FPC to make audit findings of cross-cutting and/or fundamental significance available to all federal managers in a compact and clearly arranged form. For this purpose, the findings are edited and presented as Good Practice Guides. The objective of the guides is to furnish federal managers with quickly accessible information on certain issues and to help them with future decision-making. Furthermore, the FPC wishes to raise awareness concerning error-prone administrative procedures. The collection is to be continuously expanded and, as a matter of principle, cover all fields of government activity.

The guides are to be helpful tools not only for federal managers, but also for administrative staff, especially as these staff members take on new functions and need quick information on issues with which they are not familiar. The same applies to auditors of the German SAI who need to acquaint themselves with new issues.

Bases of the Guides

Suitable bases for formulating Good Practice Guides are audit findings developed by the German SAI that, to some extent, can be of general validity for government operations and transactions. This applies especially to findings generated by a cross-cutting or multi-agency audit of similar issues. It is also possible, however, that similar irregularities are uncovered by different audits. Other conceivable bases would be individual cases of fundamental significance. However, such a case has not occurred so far.

It is important that potential arguments of the auditees can be taken into account when formulating a Good Practice Guide. Therefore, the guides are usually based on completed audit assignments.

Recommendations, which include a judgment on the merits of policy decisions and which aim at amending existing legislation, are not suitable as a basis of our guides. As the guides are addressed to the public administration, they should only include recommendations which can be directly implemented by the administration itself. This is, for instance, not the case where amendments of legislation are proposed.

Structure of the Guides

The guides are structured similarly to the rulings of German courts of law. Each guide is preceded by the core recommendations made (guidelines).

Each guideline is complemented by a brief explanation on the background of the matter audited, which begins with brief elucidations on the legal situation and the audit approach. This is followed by a summary of the findings, and conclusions necessary to understand the guidelines. To help the reader get a quick grasp on which background information pertains to which recommendation, both the recommendations and the items of background information are numbered.

The guides also may include supplementary notes. Such notes may point out new developments, more recent audit findings or improvements already achieved. Advice on further information developed by the German SAI (e.g. expert opinions, guidelines or manuals) may also be useful. Where the German Parliament’s Budget Committee or Public Accounts Committee has endorsed the German SAI’s recommendations, this can be shown in the notes. Support by parliamentary bodies is important because the German SAI has no powers of enforcement vis-à-vis the audited bodies.

The structure of the guides is to be illustrated by the following extract from the guide, “Steering of Road Construction Programs:”

Guidelines

(1) Road construction programmes should include projects only where the program goals can be achieved within the scheduled programme duration.

Background

In the years 2008-2010, the German SAI audited several road construction programs. For these programs, extra budget funds were appropriated on top of the normal road construction budget in order to start new building projects.

(1) The selection of projects was neither transparent nor were construction periods aligned with scheduled program duration. The program goals did not significantly differ from the general goals which the authorities responsible for road construction defined under their general requirements planning. It was therefore no surprise that there was no justification for including or not a project in a program.

Notes

In its meeting of February 25, 2011, the Parliament (Public Accounts Committee – PAC) endorsed the 2010 annual report item “Targets not met, cost and time overruns in road construction programs.” The above guidelines present the Parliament’s resolution in a generalized form. ...

It is plain at first glance that the guides are not intended to pinpoint past irregularities but rather to provide proactive advice. This is one of the reasons why the guides are usually formulated in an abstract way; i.e., auditees are not mentioned in most cases. To furnish quick information on the topic in question, the guides are worded as concisely as possible. As a rule, they do not exceed three pages.

Structure of the collection of guides

The collection of guides is divided into 14 chapters. Each chapter addresses a cross-departmental issue of government operations and transactions (e.g., compliance, efficiency, staff, capital expenditure, procurement, information technology). Thus, all federal government departments and agencies can generally find suggestions for their mission performance in each chapter. It is not necessary, therefore, to rearrange the guides if departmental remits change.

Each guide is included in one chapter of the collection and is assigned a serial number. If there are doubts in which chapter a guide is to be placed, such placement is to be governed by the major issue involved. The example given above was assigned serial number 01 and included in chapter 10 (“Capital expenditure, e. g,. on construction projects”).

Procedure for drafting and publishing guides

The German SAI’s internal procedure for drafting and publishing guides is described below. It refers to the national legal bases, to the way in which the external audit function is organized in Germany and to the FPC’s special tasks. Other SAIs may have to proceed differently if they wish to formulate such guides. The procedure must be in line with the respective national circumstances.

In the German SAI, the first step for the relevant Panels of Members is to analyze whether their audit results concern typical irregularities in government operations and transactions and are therefore suitable as input for a guide. In the next step, the Panels check whether the audit results are still up to date. This is because such guides are always based on audit work done in previous years. Where essential organizational or legal changes have supervened, no guide should be issued. If, as a result of such analysis, the relevant Panel decides to work out a guide, it produces a draft. When the draft touches on the remits of other Panels, these Panels must be involved.

The FPC’s central service unit supports and advises the Panel in the formulation of guides, ensures consistency in their presentation and coordinates the procedure. It submits the draft guides to the FPC for approval.

The FPC is the guides’ publisher. Before deciding about their publication, he involves the German SAI’s Board. All audit divisions are represented on the Board, which takes the German SAI’s major decisions. The Board advises the FPC on his decision.

The guides approved by the FPC in the light of the Board’s consultation are communicated to all federal government departments and other interested federal entities by means of an electronic newsletter. In addition, they are posted on the German SAI’s website (www.bundesrechnungshof.de). This gives permanent access to the guides’ current versions.

Updating guides

Published guides need to be continuously reviewed to make sure they are still up to date. Adjustments or deletions will be necessary especially where legal bases change or audit findings are no longer up to date due to other reasons. The procedure for changing or deleting guides is similar to that for drafting and publishing. The relevant Panel suggests changing or deleting a guide. In such cases, the FPC will take his decision after consultation with the Board.

Current status of the collection of guides

In March 2013, the FPC published a first set of 22 guides. Feedback was universally positive. In November 2013 another five guides were published. In early 2015, 13 more guides were added. The intention is to continuously expand the collection, and to cover the broadest possible range of issues.

At the EUROSAI congress held in The Hague in June 2014, the German SAI presented the guides in a workshop as an innovative approach to achieving good governance. The workshop’s participants considered this tool as valuable because it provides a channel for communicating fundamental audit findings to a wide audience in a clearly arranged form. Other SAIs have access to the guides on the web. English translations will be progressively made available.