Case Study III: SAI Afghanistan – Work in Progress
Professionalising the SAI
In early 2019, with the appointment of a new Auditor General, SAI Afghanistan began a major programme of reform aimed at fully professionalising the audit staff in general and especially the financial auditor cohort. The professionalisation effort of the SAI is based on a multi-pronged strategy recommended in the INTOSAI-CBC Capacity Building Guide 2007, which includes: regular in-house and external training with the help of other SAIs and IDI as well as continuing professional education (CPE); setting up a Training and Professional Development Centre (TPDC); conducting an annual certification course for newly recruited and existing staff; encouraging staff to obtain internationally recognised professional qualifications / certification; and recruiting already professionally qualified candidates. All components of the strategy are being implemented.
With the support of the President of Afghanistan and with funding from the World Bank under the Taghir or Change project, the first stage of this reform involved the open competitive recruitment of seven Directors as a new senior management team. These posts were either vacant or were internally adjusted by re-deploying existing personnel. This process enabled the SAI to recruit professionally qualified people from the market and the diaspora with qualifications in financial audit, IT audit, management, etc; and who had a command of English. In addition to being merit based, a key criterion was willingness and commitment to serve the SAI.
As salaries in the SAI are too low to attract qualified professionals, the President authorised higher rates of pay for these senior posts. The funding for this came from the World Bank under the Taghir project. The funding will continue until at least 2022, during this period there is an expectation that these payments will be tapered down and the contribution from the Afghan state will be progressively increased to facilitate retention of the qualified personnel.
In parallel, the SAI has introduced measures to increase the number of professionally qualified personnel. Starting in 2020, it is providing a one-year programme, at its newly established TPDC, to upgrade the auditing skills of existing and newly recruited staff who understand English. The syllabus content has been reviewed by the IDI. The one-year course covers Financial Audit, Public Financial Management, Law and Accountancy, IS Audit and CAATs application, and the ISSAIs. In the end those staff who pass will receive a Certificate of Public Sector Auditor. The SAI is currently also working with the national accountancy organisation and the Ministry of Higher Education to have the qualification recognised locally. Secondly, staff are being identified and encouraged, including through government or donor sponsored financial support, to obtain internationally recognised professional certification with ACCA, FIA, CIA, CISA, PMP, PFM, IPSASs, etc.
The SAI has been able to recruit new trainees, who are listed as SAI officials under the civil service structure (called Tashkeel). World Bank funding will cover the costs of the training, especially for the instructors, and the SAI is providing other facilities internally.
For those staff seeking to obtain internationally recognised professional certification, the costs are only reimbursed if the trainee passes exams in their first two attempts. If they fail and have to do further re-sits, the individual staff member will bear the costs of re-sitting.
Mounting a case for salary increases
The SAI is conscious that it may have difficulty retaining these qualified staff when they complete their training or obtain international certification unless salaries are substantially improved. To mitigate this challenge, the SAI is proposing a separate cadre-based remuneration for the professionally qualified staffs and seeking to have this recognised in revisions to the Audit Law which are currently under consideration.
Staff turnover is currently low because existing staff are mostly unqualified, not be in high demand externally and value the non-financial benefits offered in the public sector, such as job security, and pensions. Overall, there is a lack of qualified accountants in Afghanistan due to the under-developed state of the private sector and professional accountants trained by the SAI will be highly sought after. Where the SAI has employed qualified specialists in the past, these have proven difficult to retain.
Currently, the civil service starting salary for auditors is $150 a month, and the SAI is trying to increase this to at least $500 a month, with commensurate increases for higher grades. The new salary scale will be applicable for all auditors and directors, other than those being paid through the Taghir project, and will be linked to qualifications and experience. The Afghan government is implementing a framework of recruiting and deploying National Technical Advisor (NTAs), who are Afghan nationals recruited as per specified qualifications and years of experience with specified salary scale. The SAI’s proposal is seeking to imitate the incentivised scale under this scheme.
The SAI is working with the Administrative Reform and Civil Service Commission, which oversees all appointments to the public sector and determines salaries and terms and conditions, to obtain an improved package for qualified SAI staff. The SAI has presidential support and is keeping parliament informed but still needs to make the case to the Commission and to the Ministry of Finance. It is seeking to justify the wage increase based on the gains which will emerge in terms of more effective audits, the fight against corruption, and increased efficiency of the audits i.e cost/audit and value added. The SAI is about to publish its first Annual Report and has calculated that for each Afghan Afghani (Afs) spent the SAI’s financial and compliance audit recommendations will return 24.5 Afs to the public treasury through its identification of ineligible, irregular or inadmissible expenditure, and revenues wrongly foregone or recoverable.
The SAI is also stressing that while the increase is substantial for the individuals concerned, in terms of the overall state wage bill it is miniscule; the SAI’s operating expenditure in 2019 was only 0.041 per cent of the total Government expenditure. The SAI is also basing its request on the rates paid to other professional staff in the public sector, for instance lawyers, and staff working in financial roles in the state- owned enterprises or parastatals as well as certain independent agencies of the Government such as the Attorney General Office and the Supreme Court. Part of the case being made is also linked to recommendations in an EU funded functional review which demonstrated the need for the SAI to be re-organised and become a more effective institution.
In determining, the revised figure, the SAI does not consider that it needs to match private sector professional financial auditor rates because of the non-financial benefits provided. These include the ability to reimburse initial training expenses, the on-going training opportunities, the exposure to the international community of SAIs, and job security, particularly important during periods of conflict and/or epidemics, such as the coronavirus.
The immediate challenge facing the SAI is the completion of the initial professionalisation programme and the achievement of this initial salary increase. As part of this, they face the challenge of getting the pay scale right, so they do not lose staff, and keeping it right overtime by having the capacity to provide incremental increases linked to inflation and/or general changes in the demand for and rewards paid to, qualified professional financial auditors in Afghanistan.