Coronavirus: How should SAIs respond?

The global coronavirus pandemic is leaving us all stunned. Each day we hear of new countries having to close borders, place citizens under lockdown, and launch major new publicly funded initiatives to ensure businesses survive and people are fed. It is easy to feel overwhelmed by the magnitude of what is happening. But one thing we can be sure of, the fraudsters and crooks will wake up faster than most of us. They will be the ones who will spot the loopholes in the hastily put together programmes of grants for small businesses, or the initiatives to procure major supplies of protective clothing for hospital staff. They will find ways of developing cartels to push up prices for badly needed ventilators, to steal medicines from hospitals to sell through friendly pharmacies and re-route international funding from the needy in the townships to offshore bank accounts.

Public auditors must wake up equally quickly and fight back to make sure waste and fraud are minimized. There will be losses, to some extent that is the price of responding rapidly, and our countries must respond rapidly, but SAIs might be able to reduce a little the volume of waste and the opportunities for fraud and corruption. A recent report commissioned by CIPFA, Tackling Fraud in the Public Sector, found that `69% of professionals, senior managers or heads of department, mostly working in finance, believe poor organisational controls leave UK local authorities vulnerable to fraud. Furthermore, almost half (49%) said staff were not adequately trained to identify fraudulent activity’.

SAIs are uniquely placed to contribute to helping strengthen financial controls during this difficult time. We have strong global and regional networks to share information quickly and to establish teleconferences and webinars to discuss key risk areas governments are likely to face in particular in the health area and in the major new initiatives aimed at protecting businesses and vulnerable people. We have expertise in procurement and know what controls should be in place and operating to make fraud more difficult, and we have the powers to access IT systems and demand to see documents. Of course it will be more difficult to exercise these powers while we ourselves are locked down but increasingly, even in the most challenging contexts, staff have access to such resources – and if not perhaps now some of the international development partners may be able to move quickly enough to help us get the tools we need to do the job everyone wants us to do. This is also a time when the world’s better resourced SAIs need to genuinely twin with those SAIs who need outside support. Opportunities should be created to discuss, on the phone or internet, what risks are being faced by Ministries of Finance, Health, Local Government and the controls which are needed.

The Latin American chapters of Transparency International are urging governments to put in place best practices for public procurement, particularly during this health emergency. One of their requests has direct relevance to SAIs as they want to encourage real-time audits for public procurement processes, precisely because of the exceptional nature of the situation and the magnitude of the emergency. This is not a time for SAIs to only focus on audits after money has been spent, and lost, but to get involved early in making sure the scope for losses is reduced at the start.

This is also a time to issue, or re-issue, good practice guidance to key people in the public sector, to remind them of the areas of risk and the controls which are needed. It will be important to make sure information is relevant and to share with them concrete examples of how fraudsters and corrupt officials have by-passed the best of controls. Oversight committees in parliaments and partners in civil society organisations should be reminded of the key risks to watch for and the controls which are needed.

For SAIs operating in challenging and complex contexts, it will be even more difficult. But as the SAIs of Sierra Leone showed during the Ebola epidemic, brave and timely action by SAIs can make a difference and can give citizens confidence that even in the most difficult of times, public financial accountability is important and is possible.