Technical Articles



International Journal of Auditing – October 2006

Disaster-Related Aid: International Symposium on Auditing Tsunami Relief Funds

Editors Note: Following the tsunami disaster of December 00 , INTOSAI established the Task Force on Accountability and Audit of Disaster-Related Aid. The aim of the task force is to enhance accountability for and transparency of disasterrelated assistance by establishing an audit trail for tsunami-related aid and formulating best practices for SAIs and other stakeholders to establish an audit strategy prior to a disaster. This article summarizes a recent international symposium on INTOSAI's contributions to the audit of tsunami relief funds. The second article describes the use of geographical information for planning, monitoring, and auditing disaster-related aid flows.

On June 20, 2006, the Austrian Court of Audit and INTOSAI Secretariat hosted the International Symposium on Strengthening Global Government Audit: The Contribu-tion of the International Organization of Supreme Audit Institutions as Illustrated by the Audit of Tsunami Relief Funds. The conference, which was held in the Austrian Parliament building in Vienna, drew delegates from 24 countries as well as participants and observers from SAIs, the United Nations, the World Bank, the European Parlia-ment, the European Commission, the European Court of Audit, the Austrian govern-ment, and academia

Opening Ceremony

Various dignitaries welcomed the delegates to the symposium. The President of the Republic of Austria, Heinz Fischer, and the Vice Mayor of Vienna, Grete Laska, spon-sored two receptions, and Dr. Andreas Kohl, the Speaker of the Austrian Parliament, opened the symposium. In his opening address, Dr. Josef Moser, President of the Austrian Court of Audit and Secretary General of the INTOSAI, thanked Dr. Kohl for his support and thanked the participants, including the INTOSAI colleagues, for their dedicated commitment.

Dr. Moser described the background that led to the symposium—the earthquake and tsunami of 2004 and the unprecedented response to the disaster; INTOSAI’s tsunami initiative, launched in January 2005, to provide assurance to the victims and major donor countries that aid funds were being properly managed and used for intended purposes; and the establishment of the INTOSAI Task Force on Accountability and Audit of Disaster-related Aid (tsunami task force) in November 2005. Dr. Moser described the purpose of the symposium as sharing and disseminating information on the new challenges facing government audit institutions and the milestones that INTOSAI has set for the accountability and audit of disaster-related aid.

The symposium’s central theme was addressed in five broad categories: the importance of global cooperation, challenges to monitoring and evaluating relief and reconstruc-tion initiatives, the INTOSAI tsunami initiative, lessons learned, and best practices.

Importance of Global Cooperation

A number of symposium participants described how the accelerating pace of globaliza-tion in the 21st century is transforming the traditional role of the SAIs in government audit. Specifically, they noted that SAIs are facing reforms in public administration resulting from a changed perception of the role of the state and the increasingly in-ternational implications of government audit issues. The participants generally agreed that SAIs and supranational audit institutions must cooperate as they become subject to projects that require joint, multinational audit arrangements.

Gerard McGovern from the European Commission reported that with pledges from 25 member states, the commission had offered more than 2 billion euros in grant assistance and was managing 473 million euros of this assistance. In December 2005, representatives of several countries affected by the tsunami as well as representatives of the European Commission and the Council of the European Union, the United Nations, the World Bank, and European nongovernmental organizations (NGO) met for a high-level review of the European Union’s humanitarian and reconstruction aid efforts. They found that additional efforts were needed to ensure stronger coordination between multilateral and bilateral organizations that respond to disasters; the quality of leadership at all authority levels of the affected countries made a major difference in aid response; donors should minimize burdens on local actors without undermin-ing accountability; and a clear donor communication strategy is needed to manage expectations.

Dr. Shabir Cheema from the United Nations noted that INTOSAI has grown into an essential instrument of public governance on a global level. He also described the UN’s disaster-related auditing activities as follows:

  • The UN's Panel of Auditors plans to issue a report by December 2006 on the audit of tsunami relief funds. This report will compile individual audit reports by agency and will include lessons learned and recommendations for improvement.
  • The UN Board of Auditors is coordinating a comprehensive review of UN system-wide disaster-related aid activities.
  • A Tsunami Evaluation Coalition has been formed. It consists of 50 members, including UN agencies, NGOs, and the Red Cross/Red Crescent International Committee. This coalition, which is funded by donors, conducts agency-specific evaluations and joint thematic evaluations.
  • The UN Office of Internal Oversight Services has been closely involved in the oversight of humanitarian efforts in the aftermath of the tsunami disaster and coordinates its activities with the Bo

Monitoring and Evaluation of Relief and Reconstruction Initiatives

Magistrate Anton Mair of Austria’s Ministry of Foreign Affairs discussed his govern-ment’s experience in monitoring and evaluating relief and reconstruction initiatives financed by the Austrian Development Cooperation. Following his presentation, Dr. Alfred Finz, Secretary of State in Austria’s Ministry of Finance, discussed the funding of Austrian disaster-related aid and audit mechanisms.

Dr. Josef Isensee, a professor of public law from Germany, discussed the challenges facing government audits where cross-border funding is involved. He noted that donor countries’ SAIs face a barrier in international law—territorial sovereignty—because the funds are being expended outside the sovereign limits of those countries. In such situations, an audit institution cannot impose its own national law and standards; rather, it must respect the unique characteristics of the organization being audited. He stated that this area is so new that no legal framework or established practice exists to guide auditors. He stressed that the more difficult the control problems are in a target location, the greater the need for the donor country to establish preventive measures. According to Dr. Isensee, national law expects auditors to apply their intuition, imagi-nation, wisdom, gut instinct, and—above all—alertness and vigilance to recognize deception and ensure regularity and rationality in the use of funds.

INTOSAI Tsunami Initiative

Dr. Arpád Kovács, the auditor general of Hungary and chair of the INTOSAI Gov-erning Board, cited the tsunami initiative as an example of how INTOSAI’s strategic plan for 2005 to 2010 is being translated into concrete action. Specifically, he reported approaching the SAIs of the countries most severely affected by the disaster, as well as the major donor countries, to set up a joint international platform to pool capacities and technical expertise in international government audit. Subsequently, delegates participating in the International Conference on Promoting Financial Accountability in Managing Funds, cohosted by the SAI of Indonesia and the Asian Development Bank, endorsed the INTOSAI initiative in April 2005. This led to the establishment of the INTOSAI tsunami task force.

Dr. Hubert Weber, president of the European Court of Auditors, expressed his support for INTOSAI and discussed the court’s role in auditing disaster-related aid, including its participation in the INTOSAI tsunami task force. He identified a study that the court had just completed on the European Commission’s humanitarian aid response to the tsunami,1 which is available on the court’s Web site (www.eca.eu.int).

Saskia Stuiveling, chair of the INTOSAI tsunami task force, reported on the task force’s activities. It currently comprises representatives of 17 SAIs (Austria, Australia, Denmark, France, Indonesia, Japan, Kenya, Korea, Malaysia, Netherlands, Norway, the Philippines, South Africa, Sri Lanka, Sweden, the United Kingdom, and the United States) and the European Court of Auditors. Its aim is to establish an audit trail for tsunami aid and then, based on lessons learned, to establish a potential audit trail for future disaster-related aid and formulate guidelines for SAIs.

The chair is assisted by two vice-chairs: the SAI of Indonesia, which is responsible for identifying lessons learned and shared, and the SAI of Korea, which is responsible for transforming these lessons into guidelines and best practices. The exchange of informa-tion will be facilitated through meetings and the Web site the task force established (www.intosai-tsunami.org). The task force plans to present its interim report at the INTOSAI Governing Board meeting in November 2006 and at the 19th INCOSAI in 2007.

Dr. Anwar Nasution, chairman of the Audit Board of Indonesia and vice-chair of the INTOSAI tsunami task force, reported on the activities of the BPK, the SAI of Indonesia. He estimated that donor aid for the rehabilitation and construction of the tsunami-affected regions was US$6 billion, of which 96 percent came from the inter-national community. The BPK established two teams in 2005 to conduct a financial audit of the relief phase. The audit, completed in April 2006, found many deficien-cies, including ineffective coordination and weaknesses in organizational structures, implementation, monitoring, evaluation, and accountability reporting. The BPK also identified a lack of proper accounting systems to record and report the money and logistics coming from local and international donors. Dr. Nasution highlighted the BPK’s critical role in the effectiveness of rehabilitation and reconstruction efforts and advocated closer cooperation between various SAIs to exchange experiences.

Lessons Learned

Recent disasters have prompted SAIs in donor and recipient countries, along with national and multinational institutions, to undertake studies or audits. David Walker, comptroller general of the United States, reported on (1) the findings in recent U.S. Government Accountability Office (GAO) reports on tsunami relief to South Asia and hurricane relief to the U.S. Gulf Coast, (2) the need for governments and SAIs to join together, share their expertise, and develop new approaches and solutions to complex issues, and (3) additional steps that can be taken to ensure that donations are being well spent. He emphasized that from rebuilding Banda Aceh to rebuilding New Orleans, success depends on a strong set of incentives, transparency, and accountability mechanisms. GAO’s work, along with studies by other SAIs, has identified the need for detailed national disaster plans as well as measures for rapid government action in case of emergencies. From its preliminary findings and observations, the INTOSAI tsunami task force has identified examples of overall problems with harmonization (e.g., a wide range of definitions, accountability, and audit arrangements), coordina-tion (e.g., international intervention without coordination), and cooperation (e.g., fierce competition among the donor community for funds).

Best Practices

To summarize the symposium’s findings, the Austrian Court of Audit and the INTOSAI General Secretariat prepared the Vienna Declaration. The document pro-posed best practices in three sectors: international coordination; internal controls and governance; and awards of contracts and management and monitoring of aid projects.

For additional information on the symposium, including the papers presented, see the INTOSAI Web site: www.intosai.org, under International Symposium—2006.

 

 

 


1 Special Report No 3/2006 Concerning the European Commission Humanitarian Aid Response to the Tsunami Together with the Commission’s Replies (European Court of Auditors: 2006/C 170/01).