International Journal of Government Auditing – July 2013

PASAI 2011 Study of Accountability and Transparency of Auditing Institutions in the Pacific Region

In 2012, the Pacific Association of Supreme Audit Institutions (PASAI) released a report related to its 2011 study of the state of accountability and transparency of government auditing institutions or SAIs in the Pacific region. The study builds on the findings of some work completed in 2009, although this recent project was much broader and undertaken in greater depth than the original.

The project provides particular insight into public sector administration across the Pacific region. Its findings will be used to inform regional governments of the significance of good accountability and transparency practice and to advocate widely on the importance of government auditing institutions and the use of related governance tools.

The Pacific Regional Audit Initiative (PRAI) guides the work of PASAI and was adopted as PASAI’s strategic plan. This study is in accord with one of the goals of the PRAI, which is in part to “advocate enhanced accountability and transparency.”

The study was designed as a learning tool to identify good practices in the field and to promote these across jurisdictions. It was not intended to provide a basis for comparison of accountability and transparency performance between jurisdictions. The findings from the study will provide a benchmark for future follow-up work.

The study was based on a range of international and regional benchmarks and good practice principles. These were drawn from INTOSAI, the International Monetary Fund, the World Bank, and the Pacific Islands Forum, among others. It also looked at measures such as the Transparency International Global Corruption index and the Public Expenditure and Financial Accountability (PEFA) Indicators.

Focus of the Study

Nine focus areas were identified as the basis for the study. These fell into three broad categories of benchmarks: those affecting the government auditing institution or SAI and its work, those affecting the public sector that the auditing institution/SAI operates in, and those affecting wider civil society and how it interacts with the SAI and the government itself. These focus areas were as follows.

The SAI and its work:

  • the independence of the SAI,
  • open budget preparation, and
  • the scrutiny role of the legislature and its committees.

Public sector transparency and accountability:

  • the legal and ethical framework of the public sector,
  • control of corruption,
  • public availability of information, and
  • corporate governance in the public sector.

Civil society and its interface with government and the SAI:

  • community participation in society and
  • media freedom.

There were two components of the research: a questionnaire completed by 20 SAIs, or 80 percent of the PASAI membership, and an in-depth study of six jurisdictions selected from across the region: the Federated States of Micronesia, Guam, New Caledonia, Samoa, the Solomon Islands, and Tonga.

The questionnaire for the SAIs was in three parts. The first explored each institution’s mandate, operations, and accountability. The second looked at the public financial management framework in the institution’s jurisdiction. The final part considered ethics, governance, and corruption control.

The in-depth studies focused on each SAI and its operations and also included interviews with members, officials, or representatives from the legislature, government agencies, international organizations, the private sector, civil society, and the media.

The Findings

The Pacific region includes some of the smallest countries in the world. The study identified a mixed picture of accountability and transparency, with many strengths but also difficulties arising from under-resourcing and limited country systems.

Of the 20 SAIs surveyed, 90 percent made their governing legislation available to the public either online or in hard copy. Just over half are subject to a practice or peer review.

An SAI, as a nation’s public sector auditing body, needs to be fully independent of the government. Methods of appointing the SAI head that operate free from any political interference and influence provide a higher level of confidence and assurance to the citizens of those jurisdictions about the SAI’s independence.

In 80 percent of the jurisdictions there is a legal requirement to publish information before or at the time of the budget process and to present an end-of-year report about the budget outcomes by a specified time. Only 30 percent of jurisdictions require their audit bodies to review budget controls and comment on the budget process. The level of civil society and private sector engagement with the budget process generally requires strengthening.

Some political systems have a specific committee of the legislature that is responsible for reviewing the public accounts and audit reports. This is the case in 65 percent of the Pacific jurisdictions surveyed. In the other jurisdictions, this role is taken on mainly by the SAI.

Parliamentary scrutiny of public accounts and audit reports can only be effective if timely accounts have been provided to the auditing institution and if the audit has been completed in a timely manner. Audit bodies that reported directly to the public were more likely to be up to date with their audits, as were those that outsourced financial audits.

Three-quarters of jurisdictions have a standard of ethical practice or guidelines for the civil service. Only one directly provides these guidelines on ethics and standards to the civil service.

The study suggests that the level of corruption can be influenced by the development of transparency legislation. Anticorruption institutions exist in 50 percent of the jurisdictions surveyed. Political commitment to establishing and adequately resourcing such institutions is essential to controlling corruption.

In the jurisdictions surveyed, 75 percent of the SAIs have identified weaknesses in their public sector control systems. Less than half of the jurisdictions have conflict of interest disclosure laws for civil servants and government officials. The independence of bodies such as the SAI and the prosecutor’s office is crucial.

Access to public information was found to be fairly limited and an area requiring much work. Good corporate governance in the public sector is still at the developmental stage in many Pacific states. The study also found that a close working relationship between the private and public sectors is important to the economic health of Pacific countries.

Only 25 percent of the surveyed SAIs have developed their own standards, guidelines, and indicators for assessing the compliance of public entities with the principles and practice of corporate governance.

According to the study, including civil society and nongovernmental organizations in government decision making and public management is still at the developmental stage in many jurisdictions. Transparency International was seen as important to the region in providing public education on accountability and transparency in the use of public funds.

The media plays an active role in the promotion of accountability and transparency in the use of public funds. Some 65 percent of surveyed audit bodies have direct working relationships with media organizations through media releases, conferences, and circulation of audit reports.

Future Action

The report contained 17 recommendations, spread across all of the focus areas, that urged the SAI community to promote changes in the public financial management environment. At the national level, SAIs are urged to encourage their governments and legislatures to improve SAI legislation where necessary and to take action in areas such as civil service ethics and corruption control. PASAI, as the regional body, has developed resources and materials to assist its members in this work as part of its advocacy role under the PRAI. One of the region’s SAIs reported to PASAI’s annual congress in October 2012 on the steps it had taken to brief its government on the report and outline possible areas for future work to improve accountability systems.

Besides the recommendations addressed to the SAI community, the report also identified a number of “good practice” indicators that governments, nongovernmental organizations, and civil society groups could embrace—in, for example, the areas of public access to information and the adoption of principles of corporate governance by public sector organizations. The report also contains information about a number of positive practices the study identified (in, for example, the area of public participation in budget preparation) that could be adapted elsewhere in the region.

Making progress will not be easy. The report calls for a “concerted and well-co-ordinated effort” by PASAI and its member SAIs, and from other Pacific region institutions with an interest in good governance, to work together to promote improvements across the “accountability chain.” PASAI intends to follow up the report with a further study in 2014.

A full copy of the report, including its extensive recommendations for improvement and useful good practice indicators, can be found under “Resources” on the PASAI website at http://www.pasai.org.