Improving Efficiency in Implementing Audit Recommendations: Challenges and Solutions

Author: The State Audit Office of Viet Nam

The role of audit follow-up

The successful implementation of audit recommendations serves as a key indicator of the effectiveness and efficiency of audit activities. Therefore, monitoring and inspecting the implementation of audit recommendations play a critical role in evaluating the quality, effectiveness of audit activities and impact on the management and use of public finances and assets. This process not only demonstrates the level of agreement from audited entities but also identifies reasons for any unimplemented audit recommendations.

Legal framework 

The inspection, monitoring and resolution of audit complaints and recommendations in Viet Nam adhere to provisions of State Audit Law, Decision No. 02/2022/QD-KTNN, and Decision No. 10/2023/QD issued by Auditor General. These regulations comprehensively define the responsibilities, authorities, and duties of the State Audit Office of Viet Nam (SAV), audited entities, and other relevant parties. Notably, SAV’s audit reports hold mandatory weight upon release and public disclosure. While being obligated to implement audit recommendations, audited entities also possess the right to lodge complaints or make appeals regarding audit conclusions and recommendations. SAV is responsible for monitoring, planning and organizing inspections, along with resolving complaints and appeals from audited entities.

Achievements and Challenges 

1. Achievements 

Monitoring activities indicate a generally positive trend in the implementation rate of audit recommendations by audited entities, with an increase year-on-year. Financial settlement recommendations typically achieve an implementation rate exceeding 80% within the year following the audit and continue to be implemented in subsequent years. Specifically, in 2023, the rate of implementation of financial recommendations and other recommendations reached 87.06%, a significant increase compared to previous years. Among these, the recommendations for increasing revenue and reducing expenditure reached 92% (the average for the preceding five-year period was only between 75-80%), while other recommendations reached 83%. 

2. Challenges 

However, a small number of recommendations remain incomplete or face delays, with the primary causes stemming from: Audited units (about 59%); SAV (roughly 1%); Related parties (approximately 24%) and Other causes including legal regulation (around 16%). The following causes hinder the efficient implementation of audit recommendations:

1. Audited entities: Reluctance to implement or provide timely reports and evidence; encountering financial constraints; dissolution, bankruptcy, cessation, or suspension of operations.
2. Relevant agencies, organizations, and individuals: Lack of collaboration and cooperation, alongside a failure of relevant state agencies to fulfill their responsibilities related to implementing audit recommendations adequately.
3. The State Audit Office of Viet Nam: A lack of concerned determination, and proactiveness in monitoring the implementation of audit recommendations from several subordinate units, along with the absence of audit follow-up on audit recommendations, contribute to inefficiencies. 
4. Legal regulations: Inconsistent, outdated mechanisms and policies that are not suitable for practical application or do not cover all emerging issues and the process of amending, improving policies must adhere to strict procedures and protocols.

Solutions for improved efficiency 

To enhance the efficiency of implementing audit recommendations, the following solutions are proposed:

1. Strengthening political determination and commitment: Leadership commitment plays a crucial role in improving audit quality by actively urging, monitoring and inspecting the implementation of audit recommendations. 
2. Establishing effective audit follow-up systems: Developing a robust tracking system for audit recommendations is vital. This includes researching and revising the legal framework to address outdated or unfeasible recommendations, and aligning monitoring and inspection processes with international best practices, ISSAIs and state audit standards.
3. Leveraging information technology: The promotion of information technology application and implementation of comprehensive databases fosters transparency, synchronization and effective management of audit data, meeting management requirements.
4. Enhancing collaboration: The improvement in coordination with audited entities and people-elected agencies facilitates monitoring, urging, problem-solving efforts in the process of implementing audit recommendations Additionally, fostering transparency and accountability throughout the audit process remains essential. 
5. Enforcing administrative sanctions: Utilizing the Ordinance on Sanctions of Administrative Violations in the field of State Audit on the implementation of audit conclusions and recommendations of SAV, issued by the Standing Committee of the National Assembly, strengthens compliance with audit recommendations.

Conclusion

The implementation results of audit conclusions and recommendations are the measures to evaluate the effectiveness and efficiency of audit activities. Above all, the rate and effectiveness of implementing audit conclusions and recommendations will determine the value and expected impact of each SAI on a country’s economy and social life. To achieve this, audit conclusions and recommendations must prioritize accuracy and persuasiveness.

Beyond robust internal solutions, SAIs should establish close and effective coordination with various stakeholders, including elected bodies, state management agencies, audited entities, media agencies, relevant organizations and individuals.