SAI´s (financial) independence – a pie in the sky?

Sep 26, 2017

Supreme Audit Institutions (SAIs) could count, without any doubt, among the most important pillars in national democratic systems. According to ISSAI 1 (the Lima Declaration), ISSAI 10 (the Mexico Declaration) and UN General Assembly Resolutions A/66/209 (adopted in 2011) and A/69/228 (adopted in 2014), only truly independent SAIs can provide independent, objective and reliable information. The results of the IDI Global Survey 2014 stated that over 40 % of INTOSAI member SAIs reported restricted independence ranging from undue interference in the budget process by the executive to not being free to publish any reports.

Against this background, the Austrian Court of Audit (ACA) in its capacity as INTOSAI General Secretariat,(IGS) has initiated an INTOSAI global peer review project on independence together with the Austrian Development Agency (ADA). The project inception was announced at the 66th INTOSAI Governing Board Meeting in Vienna, Austria in 2014, with the ADA providing the project financial cover. The project objective was to enhance transparency and accountability of public finances by focusing on independence of seven SAIs in seven INTOSAI regions while identifying problems and recommendations related to eight principles of independence as defined in the Mexico Declaration. According to the terms of ADA, every project or programme funded by them must be evaluated or reviewed. The project review was performed by NKU SR (SAI of Slovakia) and OAGN (SAI of Norway). The author was lucky enough to be a member of the project reviewing team.

Although there are no international standards for this type of review (evaluation), it was agreed the project review to be performed using the ISSAI framework, notably ISSAI 5600 and the OECD/DAC evaluation criteria, as far as applicable, and as stated in Guidelines for Project and Programme Evaluation 2009. The project review was performed as meta-evaluation (documents review of almost 400 pages). The evaluation also comprised of interviews with the peer reviewing teams´ members and representatives from the peer reviewed SAIs. The project peer review team concluded its work in mid-June 2017 after several months of intensive work and presented its report to the IGS and to ADA on 26 June 2017.

The project review team’s observations (and ensuing conclusions and recommendations) were manifold, but one observation in general was protruding out like a sore thumb – the most injuries were inflicted to the Mexico Declaration principle 8 (the financial and managerial/administrative autonomy and the availability of appropriate human, material and monetary resources), expecially in the monetary aspects. A legal or constitutional framework on financial autonomy was not in place for all SAIs reviewed within the project, they did not have full discretion over the budget allocation, the executive (in most cases via the Ministry of Finance) regulated or controlled the access to the SAIs resources, only one (out of seven) SAIs received its budget in the form of a lump sum, etc. That, of course, had impact on the SAIs maneouvrability and overall performance. Very shortly and bluntly – no money, now show.

The peer reviewing team recommended in its report, inter alia, that INTOSAI could consider developing a general formula to define the appropriate level of proportion of the state budget to be allocated to finance the SAI(s). Tall order, but nevertheless, worth a try.

There must be some telepathy in the air on the subject, as the author, while reading the PASAI Annual Report for the year ended 30 June 2017), found in its part on Strategic Plan 1, that: “…The SAI of Tuvalu has significantly increased its statutory independence with the recent passing of its new Audit Act 2016. The new Act meets many of the principles of SAI independence under the Mexico Declaration on SAI Independence (ISSAI 10). In particular, it provides financial independence for the Tuvalu Office of the Auditor-General (TOAG) through a mechanism that places the funding of the SAI under the control of the Parliament – a significant achievement for both Tuvalu and the Pacific SAI community. Additionally, to further ensure the independence of the TOAG, there is a requirement that a minimum of 0.7% of the total annual appropriation (Parliament approved expenditure for the year) is to be provided to the TOAG.” The roadmap achieving such success is described further: “… A key objective is to ensure that the review of the Act is part of the strategic plans of both the SAI and the Government, and therefore aligned with Government priorities. … Secondly, without the support of the Attorney-General, it was unlikely the revised legislation would be supported. … Thirdly, working collaboratively is the best approach as it means working as one team rather than against each other.”

This is indeed a great success-story in securing financial independence by our colleagues from the smallest (in membership) but the most spread out INTOSAI region. The goal and pathway to it were shown by TOAG. Yes, it cannot be applied blanketly and suddenly, but the timing and managerial manoeuvring certainly could help. And yes, as Aristotle said: “One swallow does not make summer”, but it is a good start, and one swallow could become a flock in some time. Let’s keep our fingers crossed, there is already some light at the end of the tunnel and it is not an approaching train.










Imrich Gál

International Relations Division, SAI Slovakia