U4 Helpdesk Query

U4 helpdesk reply

As the query had been submitted to both the U4 Anti-Corruption Helpdesk and DFID's GRC Helpdesk, the two teams have coordinated their responses to the query. It was agreed that the U4 Helpdesk will focus on the second part of the query, which relates to the role of oversight agencies (such as national audit offices and/or anti-corruption mechanisms) in assisting parliaments to carry out their accountability responsibilities in public budgeting and public finance management. To this extent we are happy to present you with the following guidance and resources. We would be happy to further tailor our response to your needs, should you wish to focus on any particular sub-area or issue.

Content

• Part 1 - Parliamentary oversight of public finances: the direct and indirect mechanisms
  
• Part 2 - The synergies between the direct and indirect mechanisms and their concerted role in the overall system of public financial management and accountability
  
• Summary
  

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Part 1- Parliamentary oversight of public finances: the direct and indirect mechanisms

Parliaments are generally equipped with numerous mechanisms to exercise control and/or oversight of public budgeting and public finances. The exact nature of the mechanisms will depend on the parliamentary and legal-administrative systems in place in a given country, but most commonly these mechanisms consist of direct and indirect oversight agencies.

I.1. Direct Oversight Agencies

By direct oversight agencies, we are referring to mechanisms available within the parliamentary structure itself, the roles of which include controlling and/or overseeing public finance management. Examples of such structures are:

Public Accounts Committees (PACs)
A Public Accounts Committee (PAC) is that group of parliamentarians charged with exercising parliament's oversight function over public revenues and expenditures. PAC is parliament's key mechanism for ensuring financial oversight of the Executive, and is also parliament's most relevant institution in terms of ensuring transparency and curbing corruption. PACs exist in systems that follow the Westminster parliamentary model (in other systems, such as the Napoleonic model, Supreme Audit Institutions report directly to parliament or pass directly enforceable judgements). As such, the Parliament usually refers all reports issued by the SAI to the PAC, the committee then conducts public hearings including the Auditor General, the financial heads of the institutions under investigation and other witnesses and reports its conclusions and recommendations to parliament. Often, PACs can also examine questions independently, review relevant draft legislation or ask the Supreme Audit Institution to perform specific audits.
The following resources on Public Accounts Committees may be useful:

Public Accounts Committees, Utstein Resource Centre anti-corruption FAQs series, U4, 2002
Brief description: this is a Brief on Public Accounts Committees, which gives an overview of the institution and its main functions and is a good starting reference to consult but is not intended to be an in-depth resource.

Strengthening accountability and oversight of key parliamentary committees in Kenya, Report of the workshop for Select Committees dealing in Finance, Nairobi, Kenya May 3-4, 2001
Brief description: this document consists of a report of a workshop on strengthening parliamentary committees to achieve effective surveillance over the Executive arm of the Kenyan government. The report consists of five different parts in line with the workshop sessions that range from best-practice experiences (e.g. from Ghana) to general sessions on how parliaments need to redefine their role in order to achieve good governance. The Public Accounts Committee (PAC) is an important financial committee in Kenya, mandated by the House. The main conclusions from the workshops are that in order for the PAC and other financial committees to be effective in oversight, several conditions need to be met: measures to ensure implementation of its recommendations; access to information from the Executive; capacity building for staff members and adequate structural provisions.

International Public Accounts Committees
Brief description: this is a link to Public Accounts Committee websites of different countries, presented by the Canadian Council of Public Accounts Committees.

Other Parliamentary Committees
Parliamentary committees are useful mechanisms as they possess (or at least are expected to possess) the necessary specialist skills in the specific areas of government administration that they are overseeing. Among the more prominent parliamentary oversight committees are the public accounts committees (discussed above). There can be other committees that have a role in oversight of public finances and financial management. These can be synonymous with different names in different countries. Most commonly, these are referred to as finance committees or financial-budgetary committees and can have the functions of ensuring that the budgets are presented, debated, adequately disclosed and accounted for. There can also be other committees, which, although not directly involved with budgets and accounts, can have an oversight function through other methods, So, for example, a number of African Parliaments have "Committees of Assurances" to hold ministers accountable for statements and promises they have made to the parliament, etc. A number of resources on this topic follow:

Parliament and Parliamentary Committees, Utstein Resource Centre anti-corruption FAQs series, U4, 2002
Brief description: this is a Brief on Parliament and Parliamentary Committees, looked at from the angle of their role vis-à-vis accountability and anti-corruption. The Brief follows a standard U4 FAQ series format in that it gives an overview of the issue and is intended to be a starting reference point for exploring the topic further.

Parliamentary Accountability and Good Governance: A Parliamentarian's Handbook, World Bank Institute/Parliamentary Centre, 2002
Brief description: This collection of essays focuses on parliamentary accountability as one of the institutional embodiments of ethics and good governance, particularly in developing countries. This practical guide for parliamentarians and their staff is based upon a solid conceptual foundation (chapter 1), which describes the ecology of governance and the challenges for parliamentary accountability at hand. In the subsequent chapters, parliamentary accountability is addressed at various levels and embedded in a range of applicable hands-on experiences. These levels include, among others: the level of governance structures (i.e. tension between executive and parliament), the individual parliamentarian, the level of expenditure control, and the link with civil society.

I.2. Indirect Oversight Agencies

By indirect oversight agencies, we are referring to mechanisms that are not an integral part of the parliament, but which, either through their reporting lines to the parliament or through other routes, facilitate parliament's oversight of public budgeting, allocation and spending of public finances and other issues falling within the spectrum of public finance management and accountability. Examples of such structures are:

National Audit Offices
There are different names for these agencies in different countries (such as Auditor-General, Comptroller-General, etc.). For the purposes of the query and ease of reference, we will refer to these as the supreme audit institutions (SAIs). The SAIs are the primary mechanisms for ensuring government's budgeting and public finance management is thoroughly scrutinised and are parliament's key vehicle for assessing and enforcing this. As such, the SAIs stand at the pinnacle of financial accountability.

There is a substantial body of literature available on SAIs and their functions; SAIs' relation to the Parliament as one of its key oversight agencies over the Executive's financial management; as well as on prerequisites for success of SAIs in their oversight role and challenges to their effectiveness. We would like to recommend a few such resources, which have a stronger emphasis on SAIs role as pillars of accountability, integrity and transparency:

The Auditor-General (Who should guard the guardians?), Chapter 9, TI Source Book by J. Pope and Transparency International, Berlin 2000
Brief description: this Chapter discusses the role of Auditor-Generals (SAIs) in driving forward accountability, oversight and anti-corruption efforts. The insitution and the prerequisites for its effective operation are discussed, along with its status and relations with the Parliament and other oversight agencies.

Auditor-General and National Audit Offices, Utstein Resource Centre anti-corruption FAQs series, U4, 2002
Brief description: this is a Brief on the Auditor-General and the National Audit Offices, giving an overview of the institution and its role in furthering accountability and anti-corruption. The Brief follows the standard U4 FAQs series format.

Selected Readings on Supreme Audit Institutions, Utstein Resource Centre selected readings series, U4, 2003
Brief description: this is a collection of selected readings on the SAIs consisting of five annotated titles, as recommended by international anti-corruption practitioners.

In addition, the International Organisation of Supreme Audit Institutions is a good general point of reference. The "International Journal of Government Auditing", INTOSAIs' regular publication with archives and current issues along with INTOSAI's other web resources, such as materials from regional organisations of Supreme Audit Institutions organisations and INTOSAIs various working groups examining particular aspects of SAIs work and functions are useful reference points.

Ombudsman and other Inspectorates of Government
As the structure and mandate of Ombudsman's offices vary largely from country to country, it is not possible to clearly define the role that Ombudsmen can play in the financial accountability chain. This role, more often than not, will extend to encompass oversight of executive's mal-administration, misallocation and/or misuse of public finances. Some Ombudsmen have restrictions as to the types of investigations they can carry out and some can only initiate such enquiries and investigations upon receipt of specific complaints, whereas others have more flexible mandates allowing them to initiate enquiries once they have reasonable grounds for concern but without necessarily having specific complaints. As is the case with SAIs, there is in general substantial body of literature and information available on the Ombudsman, its functions and roles. We would like to recommend some resources on this, most of which provide discussions of the office of Ombudsmen specifically against the context of accountability, anti-corruption and transparency and should thus be of closer relevance to this query.

Using an Ombudsman to Oversee Public Officials, PREM Note (19), World Bank, 1999
Brief description: In addition to discussing the functions of ombudsmen and prerequisites for their effectiveness, the PREM Note also discusses how an ombudsman fits with other autonomous regulators, such as courts and audit bodies.

The Ombudsman and Inspectorates of Government, Utstein Resource Centre anti-corruption FAQs series, U4, 2002
Brief description: this a Brief on the Ombudsman and other Inspectorates of Government, looked at from the angle of their role vis-à-vis accountability and anti-corruption. The Brief follows a standard U4 FAQ series format in that it gives an overview of the issue and is intended to be a starting reference point for exploring the topic further.

Ombudsman and Inspectorates of Government, Utstein Resource Centre selected readings series, U4, 2003
Brief description: this is a collection of selected readings on the Ombudsman and Inspectorates of Government comprised of five annotated titles, as recommended by international anti-corruption practitioners.

The Ombudsman, Chapter 10, TI Source Book by J. Pope and Transparency International, Berlin, 2000
Brief description: The Chapter discusses the institution of the Ombudsman, its structure and prerequisites for success. It examines the institution's role in furthering accountability and overseeing the government's actions and services and thus its role as one of the pillars of the national integrity system.

Modelled largely on the successful model of Hong Kong's Independent Commission Against Corruption (ICAC), such agencies seek to reduce corruption through a three-pronged approach consisting of prevention, investigation and public education. In the context of public finances, an ACA's role can be important particularly in the areas of:

• Investigation. ACAs typically have the power to investigate allegations of corrupt conduct, both by (elected and appointed) public officials and members of the public using a wide array of powers at their disposal for this purpose.
  
• Monitoring of assets. While this function serves predominately the purpose of early identification and thereby prevention of conflicts of interest, it also helps to uncover inconsistencies which may point to the use of illicit practices in public finances.
  
• Prevention. ACAs often have the task to review practices and procedures in the public service in order to identify opportunities for corrupt activities, and to make recommendations for improvement. This can extend to examination of public budgeting and financial management.

The way ACAs report on the outcome of their activity depends on the respective national and institutional context. While many report their findings directly to the head of state or government, others, such as New South Wales' ICAC and Ecuador's CCCC, report to parliament. This latter set-up is more relevant when discussing the role of ACAs vis-à-vis furthering Parliament's oversight of public financial management.

There is a considerable amount of literature available on anti-corruption agencies, focussing in particular on the successful Hong Kong, Singapore and New South Wales models. The following recommendations go beyond the focus on individual agencies and include more general discussions of ACAs' functions and may thus be useful. But first, see in particular this U4 special web page on African Anti-Corruption Commissions.

Independent Anti-Corruption Agencies, Chapter 11, TI Source Book by J. Pope and Transparency International, Berlin, 2000
Brief description: the Chapter discusses the prerequisites for the successful establishment and operation of an ACA, including its powers and its relationship with other existing institutions.

Anti-Corruption Agencies: A review of Experience, by Patrick Meagher, IRIS-Centre, University of Maryland, 2002.
Brief description: This is a comprehensive paper that links methodological problems in assessing the performance of an Anti-Corruption Agency (ACA) with examples and structures of existing ACAs.

Independent Anti-Corruption Agencies / Commissions, Utstein Resource Centre anti-corruption FAQs series, U4, 2002
Brief description: this Brief, which follows the standard U4 FAQ series format, discusses issues associated with the establishment and operation of anti-corruption agencies and their role.

Other mechanisms
Depending on particular country's governance and oversight structures, there may be other "watchdogs" and oversight mechanisms, which may directly or indirectly assist the Parliament to exercise its oversight of public budgeting and finance management. These can vary from citizen-led initiatives to formal structures, such as Commissions of Enquiry that are independent of the Executive and report on their findings to the Parliament. Judicial commissions of enquiry have been deployed widely in various countries to look into corruption, financial mal-administration and fraud. Such examples include Kenya's judicial commission of enquiry (set up in 2003) to look into the multibillion-shilling Goldenberg export fraud of nineties, and many others. For further information on commissions of enquiry, please contact the U4 helpdesk by emailing ahakobyan@transparency.org.

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Part 2 - The synergies between the direct and indirect mechanisms and their concerted role in the overall system of public financial management and accountability

The direct and indirect oversight mechanisms and agencies have to work together in a concerted manner, as there are a number of areas where their work and functions intersect. The closest synergies can probably be drawn between the SAIs and the Parliamentary Committees (particularly the PACs or the synonymous committees in the non-Westminster systems). Examples of such areas include:

• PACs design the recommendations for actions following up on audit and investigation reports by SAIs and present them to Parliament. The PACs and SAIs should cooperate in both promptly presenting the findings as well as ensuring credible and effective follow-up activities after the discovery of inefficiencies or fraud. These are indispensable for actual reforms of the system and for the credibility of the parliamentary system of control.
  
• PACs provide control and scrutiny over the actions of the SAIs. By conducting public hearings to verify the reports, in which witnesses from all stakeholder groups are called, the system of auditing itself becomes more transparent and the objectivity and thus legitimacy of the reports is increased.
  
• PACs also play an important role by publicising the results of audits and inquiries. Ensuring public debate about audit reports not only reinforces the institutional framework, but also creates the public pressure to follow up on these reports. So, the cooperation of SAIs, PACs and other relevant oversight agencies is important in this regard as well.

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Summary

There are various mechanisms through which Parliaments can exercise their oversight function over the Executive in areas of public finance management and accountability. These mechanisms vary based on individual country's parliamentary structure and the legal and administrative system in place. In most countries, there are both direct and indirect mechanisms of oversight.

The direct mechanisms consist primarily of parliament's own structures - that is the relevant parliamentary committees entrusted with the function of financial oversight of public finances, such as finance committees, public accounts committees and others.

The indirect mechanisms consist of such institutions as the national audit offices (SAIs), the ombudsman and similar inspectorates of government and public enquiries into government mal-administration (such as judicial commissions of enquiry). In addition, certain anti-corruption bodies (such as the independent anti-corruption agencies) can be instrumental in assisting the parliaments in their oversight function over government's public financial management, as they can report to the Parliament relevant findings of their investigative and other work related to public finance misappropriation and mismanagement. This is particularly applicable in the context of those anti-corruption agencies that are truly independent in their structure and governance from the Executive.

Finally, in order to achieve a balanced and effective system of parliamentary oversight of executive's public finance management, the relationships between all the agencies involved in the process, whether directly or indirectly, should be examined and appropriately structured to achieve a well-functioning and efficient system of oversight.