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					          INDEPENDENCE

OF SUPREME AUDIT INSTITUTIONS (SAIS)

             PROJECT




       Final Task Force Report




           March 31, 2001
                     INDEPENDENCE OF SAIs PROJECT

                           Final Task Force Report


                           TABLE OF CONTENTS

                                                           Page


1. Background                                               1

2. Project Methodology and Implementation Process           1

3. Project Report Overview                                  2

4. Outcome of Literature Search                             2

5. Description of Survey                                    2

5.01 Survey Purpose
5.02 Survey Methodology
5.03 Target Population and Return Rates

6. Survey Findings                                          4

6.01 SAI Organisational Structure
6.02 SAI Mandate
6.03 Constitutional/Statutory Guarantees of Independence
6.04 Functional/Operational Independence
6.05 Freedom of Reporting
6.06 Financial Autonomy
6.07 Managerial/Administrative Autonomy
6.08 Status of SAI Independence
6.09 Potential/Prospects for Improvement
6.10 Recommended Actions by Survey Respondents

7. Regional Characteristics/Differences
   Derived from Survey Responses                            14

8. Outcome of Consultations                                 16

9. Overall Conclusions                                      17

10. Task Force Recommendations                              19
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Appendices


A.   Task Force Terms of Reference and Membership

B.   Survey Questionnaire

C.   Bibliography (Publications and Internet Sites of Interest)

D.   Consultations Reports

E.   Outcome of Lisbon Seminar (1998) and IVth EUROSAI Congress (1999)
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                         ACKNOWLEDGEMENTS




We would like to express our gratitude to the following organisations for their
valuable contributions to the work of the Task Force:

-   the SAIs that took the time to respond in great detail to a relatively long
    survey questionnaire and those that participated in consultation meetings;
-   the various donor organisations (the International Development Agencies
    of Canada, Denmark, Norway and Sweden; the Regional Development
    Banks of Africa, Asia and Latin America; the United Nations Development
    Program and the World Bank) for their time, comments, suggestions and
    offers of support;
-   the General Accounting Office for its important contribution to the design
    of the survey instruments and the analysis of the survey responses;
-   the IDI Secretariat for its logistical and administrative support;
-   and the Office of the Auditor General of Canada for its contributions in
    kind and for bearing a substantial portion of the costs of this project.
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                                       PREAMBLE

INDEPENDENCE AND ACCOUNTABILITY OF SUPREME AUDIT INSTITUTIONS

Supreme audit institutions (SAIs) play a vital role in holding governments accountable to
legislatures and the public for their stewardship of public funds, and helping to ensure
the transparency of government operations. They are uniquely suited to provide
independent views on the quality of public sector management and the extent to which
the bureaucracy operates within stated authorities.

It is thus very important that the main parties involved in democratic governance
(legislators, governments, public servants, civil societies and the public) understand,
acknowledge, accept and support the fundamental principles under which SAIs must
carry out their mandates, and the manner in which they should be held accountable in
doing so.

It is also essential that the mandate of SAIs and the authority and protection that they
need to discharge their responsibilities be set out clearly in the constitution and/or
legislation. This is required if SAIs are to be in a position to fulfil their mandate,
independent from undue direction or interference from government.

SAIs should also be accountable for the discharge of their legal responsibilities and for
the administration of their offices. This implies that SAIs should carry out their audit
work and report on it in a fair and objective manner and with due care. They should also
conduct themselves in a professional manner. These requisites ensure that their
independence is used in the public interest and that their integrity is preserved.

Finally, SAIs should be prepared to voluntarily submit themselves to some form of
review of their operations, appropriate to their environment and respectful of their
independence.

In these days of privatisation, decentralisation, public sector reforms and the fight
against corruption, ensuring that SAIs have the independence, competence and
resources needed to fulfil their mandates is more important than ever.

The results of the survey and consultations that we conducted among 113 SAIs, as well
as the conclusions of the Lisbon Seminar and the IVth EUROSAI Congress, and the
subsequent deliberations among Task Force members clearly reveal an urgent need for
extensive improvement in the current status of many of them. We hope that the
recommendations of the INTOSAI Task Force on SAI Independence will contribute to
the achievement of this goal.




L. Denis Desautels, FCA
Task Force Chairperson
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1. Background

At its 44th meeting in Montevideo, Uruguay, the INTOSAI Governing Board
established a task force to examine the state of independence of member
supreme audit institutions, and to make recommendations on ways and means to
bring about realistic improvements in a proactive and productive manner.

The Task Force membership and terms of reference are outlined in Appendix A.

The Task Force first met in Vienna on 27 May 1999 and agreed on the content of
a survey questionnaire, on a work plan and timetable, and on the project
methodology and implementation process outlined in Section 2 of this report.

It was agreed at that meeting that the results of the survey and consultations
would be presented in summary form only and that individual responses would
remain confidential and not be used for purposes other than those of this project.

The Task Force held two other meetings to carry out its work: one in Seoul, in
May 2000; and one in Vienna, in March 2001.

2. Project Methodology and Implementation Process

2.01 The agreed-upon methodology consisted of the following:

   -   the conduct of a literature search;
   -   the conduct of a survey of all SAIs except those of the EUROSAI region.
       (EUROSAI has already surveyed the SAIs in this region);
   -    consultations with selected SAIs in as many regions as possible as a way
       of complementing the survey results; and
   -   meetings with selected international financial institutions and technical co-
       operation agencies to inform them about the project and to become
       familiar with their policies and current or intended actions in the areas of
       public sector accountability and transparency, particularly in relation to the
       issue of SAI independence.

2.02 The agreed-upon process for the implementation of this project was as
follows :

   -   submission to the Task Force of the results of the literature search and the
       survey;
   -   review by the Task Force of the report’s draft conclusions and
       recommendations;
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   -   presentation of a draft Task Force Report to the 47th meeting of the
       INTOSAI Governing Board in Seoul in May 2000;
   -   modification of the draft Task Force report as directed by the INTOSAI
       Governing Board;
   -   submission of the final draft report to the 48th meeting of the INTOSAI
       Governing Board in Seoul in 2001; and
   -   submission of the final report to the general assembly at INCOSAI XVII
       in 2001.


3. Project Report Overview

This report contains the results of the literature search, the survey and the
consultations that were conducted and the deliberations that took place over the
period 1 June 1999 to 30 March 2001. It also contains the Task Force
recommendations to the INTOSAI Governing Board.

3.01 The outcome of the literature search is presented in Appendix C to this
report.

3.02 The findings of the SAI survey are presented in Section 6 of this report

3.03 The overall conclusions drawn from the survey and SAI consultations are
presented in Section 9 of this report.

3.04 The Task Force recommendations to the INTOSAI Governing Board are
presented in Section 10 of this report.


4. Outcome of Literature Search

A literature search was conducted on subjects related to the Independence of
SAIs. A number of publications and Internet sites of interest were inventoried
and are listed in the bibliography in Appendix C.


5. Description of Survey

5.01 Survey Purpose

The purpose of the survey was to gather data on the issue of SAI independence
and suggestions on ways to address it in a realistic, co-ordinated and productive
manner.
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As stated earlier, the SAIs of Europe were excluded from this survey, as they had
been surveyed recently by the EUROSAI regional group on the same topic (see
Appendix E). A copy of the survey report can be obtained from the EUROSAI
Secretariat. It is listed in Appendix C.

5.02 Survey Methodology

- The survey was conducted by means of a questionnaire that addressed the
following points:

    -   SAI Organisation
    -   SAI Mandate
    -   Constitutional/Statutory Guarantees of Independence
    -   Functional/operational Independence
    -   Freedom of Reporting
    -   Financial Autonomy
    -   Managerial/Administrative Autonomy
    -   Current Status of SAI Independence
    -   Potential/Prospects for Improved Independence
    -   Recommended Actions by SAI, INTOSAI and Others

-   SAIs were given a number of multiple-choice questions with the option of
    selecting more than one response. In such cases, the number of responses
    often exceeds the number of respondents (see sample questionnaire in
    Appendix B).

-   All of the SAIs surveyed belong to INTOSAI, and most of the SAIs who
    responded to the survey also belong to an INTOSAI regional group. Four
    ARABOSAI SAIs have dual membership with the AFROSAI group, and three
    with the ASOSAI group. For the purposes of the survey, all ARABOSAI SAIs
    were classified as part of the ARABOSAI group only. In other cases of dual
    membership (such as the SAIs of New Zealand and Papua New Guinea),
    which belong to both the ASOSAI and SPASAI groups), SAIs were
    considered to belong to only one of these groups, the latter in these two
    cases.

5.03 Target Population and Return Rates

    -   The survey was intended to cover all SAI members of INTOSAI except the
        SAIs of Europe.
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   -   The survey was originally addressed to 137 SAIs. It was totally impossible
       to contact 11 of them, despite repeated attempts by various means. This
       may be due to the fact that these SAIs are not functioning at the moment
       because of a breakdown in local communication systems. The survey
       reached 126 SAIs and 113 (90%) responded. The response rate by
       region was as follows:

                             A       B               C              D
                            POP. REACHED         REPLIED       RESP. RATE (C/B)
   -   AFROSAI-E            19       18              17             94%
   -   AFROSAI-F            21       16              11             69%
   -   ARABOSAI             19       17              16             94%
   -   ASOSAI               27       24              23             96%
   -   CAROSAI              15       15              13             87%
   -   OLACEFS              21       21              19             90%
   -   SPASAI               13       13              12             92%

   -   OTHERS               02            02            02           100%

   -   TOTAL              137            126           113            90%


The survey findings arising out of the 113 responses are presented in Section 6
of this report and are structured in the same fashion as the survey questionnaire
(see Section 5.02). Note that number of responses rather than percentages are
generally used because it is often difficult to distinguish between “no” responses
and responses that have been omitted.

6. Survey Findings (based on the responses of a total population of 113)

6.01 SAI Organisational Structure (QI-A.1, QI-A.6)1

The SAIs who responded to the survey have various structures: 73 have a
“monocratic” structure, for example, Auditor General, Comptroller and Auditor
General, Controller General or State Inspector; 17 have a “collegial” structure, for
example, Board of Audit, Court or Chamber of Accounts or Commission of Audit;
The rest have other forms of organisational structure such as an Audit
Department or State Committee.

Note 1: “Q-“ refers to the question numbers of the survey questionnaire (see
Appendix B).
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6.02 SAI Mandate (QI-A.2, QI-A.3, QI-A.4, QI-A.5)

Most of the survey respondents (at least 108 of 113) derive their mandate from
either constitutional or statutory provisions, specific legislation, or a combination
of these. For 79 respondents, their mandates are enshrined in the constitution of
their countries. Other SAIs derive their mandate from other sources, such as a
decision of the Head of State, a circular or a decree of government.

SAIs are mandated to carry out a broad range of audit work (for example,
financial, legislative compliance and performance audit or jurisdictional control)
and most do perform these types of work as illustrated in the following chart:


            Types of Auditing/Control Mandated and Performed:

      120



       80



       40



        0
             Financial    Legislative   Performance   Jurisdictional   Other
                          Compliance                     Control

                                 Mandated        Performed




The survey found that 111 SAIs audit central ministries/departments; 105 audit
other government agencies; and 96 audit state corporations/autonomous
agencies. The mandates of more than 70 of these also include the audit of
entities at the regional and/or local level.


6.03 Constitutional/Statutory Guarantees of Independence

Appointment of Head of SAI (QII-1, QII-2, QII-3)

The Head of State appoints 77 Heads of SAIs to their post. Only 34 are
appointed by the legislature. In at least 8 cases, Heads of SAIs are appointed by
joint action of the legislature and the Head of State.
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The term of office of the Head of SAI is fixed by law in 72 cases and by other
means in 19 cases. Terms of office can take the form of a fixed number of years
(from 1 to 15 years), a life appointment or can have an age limit (usually 55-65
years).

The authorities that determine the terms and conditions of the SAI Head’s
remuneration are indicated in the following chart:


                         Terms and Conditions of SAI Head’s
                            Remuneration Determined by:

         50

         40

         30

         20

         10

          0
              Const/Statutory   Legislature   Head of   Others in   Other
                Provision                      State    Executive




Removal of Head of SAI (QII-4)

SAIs were asked to indicate the circumstances under which Heads of SAIs could
be removed. Respondents often stated multiple reasons under each of the
following categories, and all reasons are reported here. The survey results are
as follows:

- Inability to perform functions                                        55
  (illness, incapacity, etc)

- Misbehaviour                                                          44
  (misconduct, irregularities, etc)

- Conviction of serious offence                                         16

- Other reasons                                                         28
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SAIs were asked who could remove Heads of SAIs. The most commonly
mentioned categories were the following:

- Head of State, Prime Minister, Executive Branch                          38
- Legislature                                                              32
- Head of State on recommendation of tribunal                              11
- Judiciary Branch                                                          8
- Combination of above                                                     23

Appointment of Deputy Head of SAI (QII-5)

Twenty-seven SAIs report that they have no Deputy Head. As for the others,
only 12 are appointed by the Legislature, 27 by the Head of State, and 16 by
“others in the Executive Branch of government”. In 31 cases, other forms of
nomination (such as appointment by the Head of the SAI or by the public service
commission) are used.

Accountability of senior officers (QII-6)

Only 15 SAIs report that their senior officers are accountable to persons or
entities external to the SAI.

Accountability of SAI (QI-B.1)

Most of the responding SAIs state that they are primarily accountable (or
subordinate) to the legislature, as the following chart indicates:

                            SAI Primary Accountability to:

          80


          60


          40


          20


           0
                   Legislature           Head of State     Others in Executive
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Decisions about internal structure of SAI (QII-7)

A majority of SAIs (84) report that they make decisions about the organisational
structure of their institutions. In 31 cases, it is the Head of State or others in the
Executive Branch of government who approve the organisational structure of
SAIs.

Audit of accounts and/or performance of SAIs (QII-8)

Forty-six SAIs report that no one audits their accounts or performance. In 39
cases, audits are carried out by either the Legislative Branch of government (12),
the Executive Branch (14) or independent non-governmental auditors (13). In 40
other cases, the audits are carried out by other entities.

Appointment of external auditors of SAIs (QII-9)

In a few cases, the external auditors of the SAI are appointed either by the
Legislature (14) or by the Executive Branch of government (8). Other cases (22)
include appointment by the Head of State or the Head of the SAI.

6.04 Functional/Operational Independence

Access to information (QII-10, QII-13)

Most SAIs (102) state that there is no restriction on their access to the
information needed to conduct their audits. About 30 SAIs report, however, that
certain government entities are excluded from their examination, usually for
reasons of national security.

Selection of audit issues, approaches and methods (QII-11, QII-12)

Almost all SAIs report that they have full discretion in the selection of issues for
audit (109) and in the selection of audit approaches and methods (110).


6.05 Freedom of Reporting (QII-14, QII-17, QII-16, QII-15)

A majority of SAIs (88) state that they present their annual and/or audit reports to
the legislature, in many cases through - or at the same time as they present them
to the Head of State (45). Most SAIs (98) include recommendations in their
reports. Only 6 SAIs report that limitations are imposed on the content of their
reports.
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Most SAIs also state that they are free to make available either their annual or
audit reports, or both in some cases, as illustrated here:


                     Annual and/or Audit Reports Available to:

        120

        100

         80

         60

         40

         20

          0
                Audited Entities             Media           General Public




6.06 Financial Autonomy (QII-18, QII-19, QII-20, QII-21)

The budget of 109 SAIs is financed directly from the national budget while 15
SAIs report that their budget is financed in whole or in part by income for services
rendered.

The annual budget of 77 SAIs is approved by the legislature, but only 69 have
the opportunity to defend their budget before the legislature or a committee
thereof.

The Head of State approves the budget for 11 SAIs, while “Others in the
Executive Branch of Government” approve the budget for 31 others.

Finally, 81 SAIs report that they manage their budget once approved and make
decisions about how to spend it “to a great or very great extent”, while 25 SAIs
report that they only manage their budget “to some extent”.
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6.07 Managerial/Administrative Autonomy (QII-22)

Recruitment, dismissal of personnel

The ability of SAIs to recruit or dismiss personnel is limited in more than half the
cases. For example, only 59 SAIs state that they have substantial authority to
recruit senior personnel, and only 41 to dismiss them. In the case of audit and
other personnel, these numbers are 69 and 54 respectively.

Job descriptions, promotions, discipline, remuneration

On the other hand, the number of SAIs that can approve job descriptions (91),
determine promotions (71) and discipline staff (73) “to a great or very great
extent” is higher. But the ability of SAIs to fully determine remuneration scales
(30) and authorise individual remuneration (36) is quite limited.

Contracting and purchasing

Sixty SAIs report that they have the authority, “to a great or very great extent”, to
recruit and dismiss consultants. And 76 state that they have the authority to buy
equipment. However, only 48 of them have the authority to dispose of
equipment.


6.08 Status of SAI Independence (Q-III)

SAIs were asked to describe the extent to which they enjoy independence under
five categories, and to state in each case whether independence is needed to
fulfil their mandate and function effectively.
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Most responding SAIs indicated that all five types of independence were needed
to a great or very extent, and that financial autonomy and
managerial/administrative autonomy were in fact enjoyed much less frequently
than the other three types. The survey results were as follows:


                        Types of Independence Enjoyed or
                       Needed to a great or very great extent

         100

          80

          60

          40

          20

           0
               Constit/       Functl/      Freedom of        Financial     Manag/
               Statutory    Operational     reporting        autonomy      admin

                           Independence needed      Independence enjoyed




6.09 Potential/Prospect for Improvement (QIV-1, QIV-2, QIV-3, QIV-4)

SAIs were asked to indicate areas where there was significant room for
improvement in their institutions under the following categories.

                                                        YES                   NO

Constitutional/statutory guarantees                     41                    59

Functional/operational independence                     42                    56

Freedom of reporting                                    33                    65

Financial autonomy                                      73                    33

Managerial/admin. autonomy                              63                    40
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SAIs were asked whether they expected significant improvements under the
following categories over the next five years. Survey results were as follows:

                                                Likely             Possible              Not likely

Constitutional/statutory guarantees             29                 30                    32

Functional/operational independence             34                 30                    28

Freedom of reporting                            36                 20                    34

Financial autonomy                              32                 38                    32

Managerial/admin. autonomy                      34                 33                    28


SAIs were asked to rate the extent to which certain factors are a significant
obstacle to achieving a realistic degree of independence. Survey results are
illustrated in the following chart:


                              Obstacles to Independence:

        80


        60


        40


        20


         0
               Const/         Political       Lack of          Auditee           Other
              Statutory      constraints     resources        resistance        factors

                   Very great/great extent      Some extent           Little/no extent
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SAIs were asked what actions were currently planned that might realistically
improve the overall degree of their independence in the foreseeable future.
Survey results follow:

   -   New or improved constitutional/statutory/legislative provisions being
       considered or implemented (46)
   -   Actions aimed at obtaining more financial autonomy and more financial
       resources (32)
   -   Actions aimed at obtaining more managerial/administrative autonomy
       (particularly in the field of personnel management) (21)
   -   Actions aimed at modernising and strengthening SAIs (and producing
       better quality work and reports) (11)


6.10 Actions Recommended by Survey Respondents (QIV-5)

SAIs were asked what actions could be taken by their institutions, their
governments, INTOSAI and others to increase their level of independence.

The main suggestions were:

By the SAIs

   -   Lobby government, legislature and individual politicians to improve
       legislation, conditions, etc. (27)
   -   Promote awareness of crucial need for SAI independence. (10)
   -   Modernise SAI, improve quality of work, reporting and work ethics. (10)

By SAI’s government

   -   Promote need for legal, operational, reporting, financial and administrative
       independence (32)
   -   Support need for specific legislation/statute covering SAI (18)
   -   Provide necessary resources and related autonomy to SAI (73)
   -   Promote a culture of transparency and accountability (6)

By INTOSAI

   -   Provide continued technical assistance, training, information exchange
       and opportunities to improve capacity of SAIs. (25)
   -   Pro-actively inform governments and other interested parties about need
       for independent SAI. (19)
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   -   Issue standards, guidelines on SAI independence and monitor their
       application. (16)

By other parties

   -   Donors/technical co-operation agencies should make existence of
       sufficiently resourced and independent SAI a condition of assistance to
       national governments (14)
   -   Donors/technical co-operation agencies should provide financial and
       technical support to SAIs to improve their audit capacity (12)
   -   Independence of SAIs should be promoted and supported by donors,
       technical co-operation agencies and advocacy organisations (11)

Other suggestions/ideas (QIV-6)

SAIs were asked whether they had other suggestions/ideas for improving their
actual independence.

Most of the suggestions/ideas were in support of actions recommended
previously, with emphasis on the need to "operationalise" existing
constitutional/statutory/legislative provisions, the need for financial and
administrative autonomy and the need for sufficient monetary resources.


7. Regional Characteristics/Differences Derived From Survey Responses

In interpreting the results of this survey, it is important to take into account the
key regional characteristics/differences identified in the survey. The main ones
are outlined below:


7.01 SAI Organisational Structure

In the SAIs of the AFROSAI-E, ASOSAI, CAROSAI and SPASAI regions, there is
a predominance of Auditor General or Comptroller and Auditor General Offices.
The ARABOSAI region generally has Audit Bureaus in the Arab Peninsula and
mostly Courts of Accounts and State Inspectorates (or equivalent) in North
Africa. AFROSAI-F has an equal number of Courts or Chambers of Accounts
and State Inspectorates. In OLACEFS, the Contraloria form predominates.
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7.02 SAI Mandate

Financial and legislative compliance auditing is performed in all regions, and
most SAIs state that they conduct some form of performance audit. The
jurisdictional control function, however, is mostly performed in the AFROSAI-F
region (5 SAIs), in the ARABOSAI region (5 SAIs, largely in North Africa) and in
the OLACEFS region (4 SAIs).

7.03 Constitutional and/or Statutory Guarantees of Independence

Appointments of Heads of SAIs by the legislature or by a combination of
legislature and Head of State are prevalent in the AFROSAI-E, OLACEFS and
ASOSAI regions. In the AFROSAI-F, ARABOSAI, CAROSAI and SPASAI
regions, these appointments are generally made by the Head of State.

Appointments of Deputy Heads are generally made by the Head of State or
“others in the Executive Branch” in all regions except for OLACEFS, where in
6 cases, these appointments are made by the legislature.

Most SAIs are primarily accountable to the legislature in the AFROSAI-E,
CAROSAI, OLACEFS and SPASAI regions; and to the Head of State (or others
in the Executive Branch) in the ARABOSAI, ASOSAI and AFROSAI-F regions.

7.04 Freedom of Reporting

A majority of SAIs stated that they submit their annual and/or audit reports to the
legislature. But in the ARABOSAI and AFROSAI-F regions, reports are generally
presented to the Head of State.

A majority of SAIs state that they are free to present their annual and/or audit
reports to the media or to the public, except in the ARABOSAI and AFROSAI-F
regions.

In interpreting these responses, one should take into account the fact that a
number of annual reports are activity reports and not audit reports.

7.05 Financial Autonomy

A majority of SAIs (except those of the AFROSAI-F region) state that they
manage and decide on the use of their budgets once they have been approved.

But the financial autonomy of SAIs is otherwise severely limited in most cases,
particularly in the AFROSAI-E, SPASAI, CAROSAI and AFROSAI-F regions.
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Moreover, a great number of SAIs seem to suffer from a serious lack of financial
resources, which prevents them from fulfilling their mandates adequately.

7.06 Managerial/administrative autonomy

Most SAIs state that they make decisions about their organisational structures,
except in the AFROSAI-E and AFROSAI-F regions. But the implementation of
these structures is often tied to the budgetary process, which in turn is often
controlled by the government.

In the ASOSAI, ARABOSAI, OLACEFS and SPASAI regions, most SAIs state
that they have the authority to recruit and dismiss staff “to a very great extent”.
This authority is quite limited in the other regions.

The authority to fix staff remuneration is very limited in most regions, except for
SAIs in the ARABOSAI (10 of 16) and ASOSAI (7 of 21) regions.

SAIs in the ARABOSAI, ASOSAI and OLACEFS regions state that they have the
authority to buy and dispose of equipment “to a very large extent”. This authority
is quite limited in the other regions.

The extent of managerial/administrative autonomy is particularly limited for most
SAIs in the AFROSAI-E, AFROSAI-F, CAROSAI and SPASAI regions.

8.01 Outcome of Consultations

8.01   Consultations with selected groups of SAIs were carried out to
       complement the results of the survey. Meetings with national technical co-
       operation agencies and international donor agencies were arranged to
       inform them about the project and to gain knowledge of their policy
       objectives as well as their current programs and practices in the areas of
       public-sector accountability and transparency.

8.02   For reasons of economy, consultations meetings were scheduled to
       coincide with activities that the INTOSAI Development Initiative (IDI) had
       already planned, such as attendance at regional group meetings,
       meetings of regional training committees or regional group board
       meetings.
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8.03   As of 30 April 2000, the following consultations/meetings had taken place:

   -   With selected groups of SAIs in the AFROSAI-F, AFROSAI-E, ASOSAI,
       CAROSAI, OLACEFS and SPASAI groups. (Consultations with SAIs of
       the ARABOSAI group were not carried out because they could only take
       place in late June).
   -   With the International Development Agencies of Canada, Denmark,
       Norway and Sweden.
   -   With the African, Asian and Inter-American development banks.
   -   With the United Nations Development Programme (UNDP - South Pacific)
       and the World Bank.

8.04   The outcome of the consultation meetings that had taken place as of
       30 April 2000 are outlined in Appendix D. No other consultation took
       place after that date.


9. Overall Conclusions

9.01 The concept of SAI independence in this report is generally understood to
mean the absence of undue subordination to, direction and/or interference from,
government.

The interpretation and effective application of this concept and of related
constitutional/statutory guarantees are very much affected in practice by the
particular political and civil society structures and systems of countries within
which SAIs operate. For example, SAI independence has little meaning in an
environment where proper checks and balances do not exist or are severely
limited. It is also dependent, to a considerable extent, on the degree of
democratisation of the environment in which SAIs evolve.

De facto SAI independence is also a function of the extent to which
constitutional/statutory guarantees are “operationalised” or applied in practice
and of the extent to which sufficient human, material and monetary resources are
available.
                                                                                  18
                      INDEPENDENCE OF SAIs PROJECT

                            Final Task Force Report


9.02 This being said, the current SAI situation, derived from the survey
responses and consultations outlined in sections 1 to 8 of this report, can be
summarised as follows:

1. The vast majority of SAIs derive their mandate from either constitutional or
   statutory provisions, legislation, or a combination of these, and most SAIs are
   mandated to carry out a broad range of audit work. Out of 113 respondents,
   70 SAIs state that they are accountable to the legislature, and 84 state that
   they make the necessary decisions about their organisational structures.
2. Although in a majority of cases the tenure of Heads of SAIs is determined by
   law, the appointment, remuneration and removal of Heads of SAIs are
   determined by the legislature in only about 25 percent of the cases.
3. The vast majority of SAIs state that they are not impeded in their work by
   restrictions on access to information. And most SAIs state that they have the
   authority to develop and implement their own work program.
4. Although 88 SAIs indicate that they submit their reports to the legislature, only
   about 60 have the freedom to disseminate these reports to the public.
5. Although 77 SAIs state that their budget is approved by the legislature, 55
   indicate that the lack of financial resources prevents them from fulfilling their
   mandates appropriately and is a serious obstacle to their achieving a
   reasonable degree of independence and effectiveness. Only 20 SAIs state
   that they enjoy a reasonable degree of financial autonomy. The general
   expectation is that this situation is not likely to improve in the near future.
6. An even more serious situation prevails in terms of SAI
   managerial/administrative autonomy (especially in the area of human
   resources). In this as in the preceding case, respondents see no significant
   improvements on the horizon.
7. This really means that a considerable number of SAIs do not have the means
   at their disposal to discharge their responsibilities fully.

9.03 Considering the above, it can be concluded that a considerable
number of the SAIs surveyed are not really in a position to fulfil their
mandates in a manner consistent with the requirements of the Lima
Declaration of Guidelines on Auditing Precepts.


9.04 The following core principles of SAI independence are generally
recognised in the SAI community as essential requirements of proper public
sector auditing. These include:

1. The existence of an appropriate and effective constitutional/statutory/legal
   framework and of de facto application provisions of this framework.
                                                                                     19
                      INDEPENDENCE OF SAIs PROJECT

                             Final Task Force Report


2. The independence of the SAI Head and “Members” (in collegial
   organisations), including security of tenure and legal immunity in the normal
   discharge of their duties.
3. A sufficiently broad mandate and full discretion in the discharge of SAI
   functions.
4. Unrestricted access to information.
5. The right and obligation to report on their work.
6. The freedom to decide on the content and timing of audit reports and to
   publish and disseminate them.
7. The existence of effective follow-up mechanisms on SAI recommendations.
8. Financial and managerial/administrative autonomy and the availability of
   appropriate human, material and monetary resources.

9.05 SAIs should apply the same standards to their own operations that they
apply to organisations that they audit if they are to establish and maintain their
reputation and credibility. To this effect, they should:

1. use appropriate work and audit standards as well as adhere to a code of
   ethics;
2. provide evidence of the economy, efficiency and effectiveness of their
   operations; and
3. be prepared to voluntarily submit themselves to some form of review of their
   operations, appropriate to their environment and respectful of their
   independence.

9.06 It is recognised, however, that although SAIs should have full discretion in
the discharge of their responsibilities, they should be responsive to the interests
and wishes of the legislature and should co-operate with governments that
pursue improvements in the use and management of public funds.


10. Task Force Recommendations

The following recommendations are based on the results of the survey and of the
consultations described in this report; on the conclusions of the Lisbon Seminar
(1998) and of the IVth EUROSAI Congress on SAI independence held in June
1999 (see Appendix E); and on the outcome of the deliberations of the Task
Force on SAI Independence.

The purpose of these recommendations is to help bring about, where needed,
the independence of SAIs in accordance with the core principles listed in section
9.04 of this report. These are based on the Lima Declaration of Guidelines on
Auditing Precepts.
                                                                             20
                    INDEPENDENCE OF SAIs PROJECT

                           Final Task Force Report



10.01 The Task Force recommends that INTOSAI carry out the following
      actions:

   1. Put added emphasis on the promotion of a culture of accountability and
      transparency in public-sector management and auditing.
   2. Actively promote awareness of the need for independence and for proper
      resourcing in SAIs as essential elements of public sector reforms.
   3. Periodically provide SAIs with information and guidance on SAI
      independence and, to the extent possible, support SAIs, where
      appropriate, in their efforts to improve their status, credibility and
      independence.
   4. Determine how contacts with selected advocacy organisations,
      international financial institutions and donor agencies could usefully be
      established to promote SAI independence, within the boundaries of
      INTOSAI Statutes and in accordance with the Lima Declaration of
      Guidelines on Auditing Precepts.
   5. Encourage SAIs to continuously improve the quality of their work, reports
      and work ethic, and continue to assist them through capacity-building
      programs, including the provision of audit guidance, training, technical
      assistance and information exchange.


10.02 The Task Force recommends that a new sub-committee of the
      INTOSAI Standing Committee on Auditing Standards be established
      at INCOSAI XVII to implement the recommendations outlined in
      section 10.01 of this report, within the framework of the following
      terms of reference:

   1. Explore ways of promoting SAI independence at international, regional
      and local levels, including the development of an awareness and
      communications program on SAI independence, by means of studies,
      publications and seminars.
   2. Gather information on the status of SAI independence through periodic
      confidential surveys and develop draft guidance on SAI independence for
      the use of SAIs.
   3. Explore and propose ways and means of establishing contacts with
      external organisations for the purpose of strengthening SAI independence.
                                                                                  21
                     INDEPENDENCE OF SAIs PROJECT

                           Final Task Force Report


   In the fulfilment of these terms of reference, the Sub-Committee shall carry
   out the following:

   1. Submit detailed annual plans of activities to the INTOSAI Governing Board
      for its consideration and prior approval.
   2. Submit to the INTOSAI Governing Board an annual report of its past
      activities and achievements.
   3. Work in close co-operation with the INTOSAI General Secretariat.

10.03 Rationale for the Establishment of a Special sub-Committee on SAI
      Independence

   1. It is crucial to proactively address the issue of SAI independence now.
      Otherwise, efforts at and investments in capacity-building (through the
      work of INTOSAI committees and groups, IDI training and information
      exchange programs, IDI satellite programs and other means) in SAIs that
      have insufficient independence and inadequate resources will be in
      jeopardy.

   2. The timing is right: public sector reforms are taking place, good
      governance, including accountability and transparency, are promoted
      everywhere and there is a strong movement toward eradicating corruption.

   3. A special sub-committee would provide a focal point and the needed
      visibility to address the important issue of independence as well as
      provide support for SAIs’ efforts in their respective countries.
                                       APPENDIX A



        INDEPENDENCE OF SAIs PROJECT


             Final Task Force Report




TASK FORCE TERMS OF REFERENCE AND MEMBERSHIP
                                                                           APPENDIX A-1


                        INDEPENDENCE OF SAIs PROJECT

                                Final Task Force Report


                Task Force Terms of Reference of the Task Force



1.     Carry out a survey in each region to determine the current situation and the extent
       to which the lack of independence is seen as a problem in the INTOSAI
       community.

2.     Consult SAIs in the different regions of INTOSAI as to their suggestions for
       ways in which INTOSAI could support and assist them in strengthening their
       independence in their respective jurisdictions.

3.     Develop a set of basic application provisions or criteria, based on the Lima
       Declaration and the INTOSAI Auditing Standards, that reflect the essential
       elements of SAI independence and that also take into account the particularities of
       the different systems of public-sector auditing and the realities of the various
       regions of INTOSAI.

4.     Develop recommendations and strategies to help SAIs achieve or maintain a
       realistic level of independence.

5.     Present a final draft report of the results of its work at the 2000 INTOSAI
       Governing Board meeting.




In the conduct of its work, the Task Force will consult with EUROSAI to take full
advantage of the research that will have been done on the topic of SAI independence in
the European context.

The identification of suggestions to be retained and of the organisation of its work is left
to the discretion of the Task Force.

The Task Force will start its work any time after January 1, 1999.
                                                               APPENDIX A-2


                  INDEPENDENCE OF SAIs PROJECT

                      Final Task Force Report


                      Task Force Membership



CANADA    Chair       Mr. L. D. Desautels, FCA, Head of SAI of Canada


INTOSAI   Secretary   Dr. F. Fiedler, Head of SAI of Austria


AFROSAI   Member      H.E. Ms. Lucy Gwanmesia, Head of SAI of
                      Cameroon

ARABOSAI Member       Dr. Gawdat El-Malt, Head of SAI of
                      Egypt

ASOSAI    Member      H.E. Mr. T. Ibrahim Tawfik, , Head of SAI of Saudi
                      Arabia

CAROSAI   Member      Ms. A. Armstrong, Head of SAI of Antigua and
                      Barbuda

EUROSAI   Member      Dr. A. José de Sousa, Head of SAI of Portugal


OLACEFS   Member      Cont. Gral. G. Ramirez Rodriguez, Head of SAI of
                      Uruguay

SPASAI    Member      Mr. Pohiva Tu’i’Onetoa, Head of SAI of Tonga
                               APPENDIX B


INDEPENDENCE OF SAIs PROJECT


    Final Task Force Report




   SURVEY QUESTIONNAIRE
                                                                             APPENDIX B


  SURVEY ON THE INDEPENDENCE OF SUPREME AUDIT INSTITUTIONS

Purpose of the Survey
At its 44th meeting in Montevideo, Uruguay, the INTOSAI Governing Board established
a task force to examine the state of independence of member Supreme audit institutions
(SAIs). This survey is the first step in this undertaking, and its purpose is to gather data
on the issue of SAI independence and suggestions as to ways to address it in a realistic,
co-ordinated and productive manner.

This survey, which is being sent to all SAIs that are members of INTOSAI (except those
belonging to EUROSAI who were previously surveyed), will be followed by a number of
consultations with selected respondents (individual SAIs or groups of SAIs) to
complement its results. These results will be compiled and presented in summary form
only as part of a report by the INTOSAI Task Force on SAI independence. The report
will be submitted to the INTOSAI Governing Board at its 47th meeting in Seoul, in the
year 2000.

Individual survey responses will remain confidential to the Task Force and will not be
used for purposes other than this report.

Instructions
This questionnaire is addressed to you as the Head of your SAI. You are kindly requested
to specify below the name of the person(s) completing this questionnaire on your behalf,
if applicable. Completing this questionnaire should take approximately 60 minutes. If
clarification is required, do not hesitate to communicate with Yvan Gaudette (see address
below).

You are requested to send the completed questionnaire to the following addressee, no
later than September 30, preferably by fax or e-mail. Your cooperation is greatly
appreciated.

           Yvan Gaudette
           Room 1145, 240 Sparks St
           Ottawa, ON K1A OG6, Canada
           Tel: 1-613-9953708 ext. 6274
           Fax: 1-613-9413587
           Email: gaudety@oag-bvg.gc.ca

Identification of respondent
Name of Institution: ______________________________________________________
Name/Title of Head of SAI: ________________________________________________
Name/title of person(s) completing the questionnaire: ____________________________
Telephone: _______________         Fax: ________________ Email: _______________
Mailing Address: _________________________________________________________



                                                                                               1
                                                                        APPENDIX B


I. Information on your SAI

A. Background of your SAI

1. To which INTOSAI regional group(s) does your SAI belong? ___________________

2. From where does your SAI derive its audit mandate? (Check all that apply.)

   1. ! Constitution
   2. ! Statutes/laws - specify: __________________________________
   3. ! Other - specify: _______________________________________

3. In column “A” below, indicate which of the following activities your SAI is
   mandated or authorized to perform; and in column “B” below, indicate which of those
   activities your SAI actually performs.
   (For each row, check one box under columns A and B, as applicable.)

                                               A.                            B.
                                   Is your SAI mandated (by       If you answered YES in
                                   constitution or statute) or          column “A”:
                                  authorized (by legislature or
                                  government) to perform this     Does your SAI actually
                                            activity?             perform this activity?
  Activity                             Yes              No         Does        Does NOT
                                                                  perform       perform
  a. Financial audits

  b. Performance audits

  c. Legislative
      compliance/regularity
      audits
  d. Jurisdictional control
      (for Courts of Accounts,
      etc.)
  e. Other activities – specify
     (including “pre-audit”
      work and other direct
     involvement in
     government processes):




                                                                                    2
                                                                         APPENDIX B


4. For whatever type(s) of work your SAI carries out (as reported in question 3 above),
   which of the following entities does your SAI audit? (Check one box in each row.)

    Institutions                                      Yes    No

    a. Central ministries and/or departments

    b. Other government agencies

    c. State corporations/autonomous agencies

    d. Other, at regional level (province, state or
       district) - specify type(s):
    e. Other, at local (municipal, urban) level -
       specify type(s):
    f. All other - specify type:



5. If your SAI does not audit state corporations/autonomous agencies, who does?
   (Check all that apply.)

   1. ! Another government body - specify: __________________________________
   2. ! Private sector audit firms: __________________________________________
   3. ! Other - specify: __________________________________________________

6. Which one of the following best describes your institution? (Check one box.)

    Single head

    1. !   Auditor General Office
    2. !   Comptroller General/Comptroller and Auditor General Office
    3. !   Contraloria/Contaduria (in Latin America)
    4. !   Inspectorate

    Collegial

    5. ! Court, Chamber of Accounts
    6. ! Board or Commission of Audit
    7. ! Other – specify: __________________________________________




                                                                                          3
                                                                           APPENDIX B


B. Your SAI’s environment

1. To which of the following bodies/persons is your SAI primarily accountable (or
   subordinate)?
   (Check one box in each row.)

    Body                                                          Yes           No

    a. Legislative

    b. Judiciary

    c. Head of State

    d. Other part of Executive Branch - specify:


    e. None of the above - specify:



2. To what extent does your SAI rely in its work on each of the following institutions?
   (Check one box in each row.)

    Your SAI relies on each of the following:           To a      To some     To little
                                                       great       extent      or no
                                                       extent                  extent
    a.   Government internal audit groups
    b.   Other government audit organizations
    c.   Private sector audit firms
    d.   Other – specify:



3. Does your SAI, acting within its statutory authority, do any of the following in regard
   to other public/private-sector audit bodies? (Check one box in each row.)

    Does your SAI:                                                   Yes         No

    a. Exchange information with other audit bodies
    b. Use internal audit reports from other audit bodies
    c. Carry out joint audits with other audit bodies




                                                                                          4
                                                                           APPENDIX B


4. Does your SAI carry out audits of development projects financed by major donor
   organizations? (Check one box.)

   1. ! No – GO TO SECTION II

   2. ! Yes - A. Do your audits meet the audit requirements of these donor
                 organizations?
                 (Check one box below.)

                    1. ! Yes
                    2. ! No

                  B. Do you carry out audits of development projects on behalf of the
                     major donor organizations that finance them? (Check one box.)

                    1. ! Yes
                    2. ! No


II. How your SAI operates

1. By whom is the head of your SAI appointed? (Check all that apply.)

   1.   !   By Legislature (Senate, House of representatives, other)
   2.   !   By the Head of State
   3.   !   By others in Executive Branch - specify: _____________________________
   4.   !   By the Judiciary
   5.   !   Elected by peers who are “members” of SAI (as in a collegial organization)
   6.   !   Other forms of nomination - specify: _________________________________

2. Is the term of office of the head of your SAI fixed: (Check all that apply.)

   1. ! By law? - Specify length of term of office: _____________________________
   2. ! By other means? - Specify means and length of term of office: _____________

3. Who determines the terms and conditions of the remuneration of the Head of your
   SAI? (Check all that apply.)

   1. ! Constitutional or statutory provision
   2. ! The Legislature
   3. ! The Head of State
   4. ! Others in Executive Branch
   5. ! The Judiciary
   6. ! Others - specify: ___________________________________________




                                                                                        5
                                                                           APPENDIX B


4. Under what circumstances, if any, and by whom, can the head of your SAI be
   removed or his/her term of office interrupted?

   Circumstances:                                      Who can remove:
      ____________________________                    _____________________________

        ____________________________                  _____________________________

5. By whom is the Deputy-Head (with delegated authority in the absence of the Head) of
   your SAI appointed? (Check all that apply.)

   1.   !   No Deputy/Not applicable
   2.   !   By Legislature (Senate, House of representatives, other)
   3.   !   By the Head of State
   4.   !   By others in Executive Branch - specify: ______________________________
   5.   !   By the Judiciary
   6.   !   Elected by peers who are “members” of SAI (as in a collegial organization)
   7.   !   Other forms of nomination - specify: _________________________________

6. Are any of the senior officers in your SAI accountable to persons or entities other than
   you or your SAI?

   1. ! Yes - specify: ___________________________________________
   2. ! No

7. Who makes decisions about the internal organizational structure of your SAI? (Check
   all that apply.)

   1. ! SAI
   2. ! Legislature
   3. ! Head of State
   4. ! Others in Executive Branch
   5. ! Judiciary
   6. ! Other - specify: __________________________________________________

8. Who, if anyone, audits the accounts and/or the performance of your SAI? (Check all
   that apply.)

   1. ! No one/Not applicable
   2. ! Independent non-government auditing organization (i.e. public accounting
        firms, etc.)
   3. ! Executive Branch or agent thereof
   4. ! Legislative Branch or agent thereof
   5. ! Judiciary Branch or agent thereof
   6. ! Other - specify: ___________________________________________________



                                                                                          6
                                                                          APPENDIX B


9. Who, if anyone, appoints the external auditor of the accounts of your SAI?
   (Check all that apply.)

   1. ! No one/Not applicable
   2. ! Independent non-government auditing organization (i.e. public accounting firm,
        etc.)
   3. ! Executive Branch or agent thereof
   4. ! Legislative Branch or agent thereof
   5. ! Judiciary Branch or agent thereof
   6. ! Other - specify: ___________________________________________________

10. Are there any restrictions on your SAI’s access to the information needed to conduct
     its audits?
    (Check one box.)

   1. ! No
   2. ! Yes - specify and state why: _________________________________________

11. Does your SAI have full discretion (or the freedom) to select issues for audit and
    determine the scope of its work within its mandate? (Check one box.)

    1. ! Yes
    2. ! No

12. Does your SAI have full discretion in the choice of audit approaches and methods
    used in its work? (Check one box.)

     1. ! Yes
     2. ! No

13. Within your audit mandate, are there any specific entities your SAI cannot audit (for
    security reasons for example)? (Check one box.)

     1. ! No
     2. ! Yes - specify and state why: ________________________________________

14. To whom does your SAI present its audit reports? (Check all that apply)

   1. ! Legislature (if reports are referred to committee of legislature, please explain
        in 5).
   2. ! Head of State
   3. ! Other parts of Executive Branch - specify: _____________________________
   4. ! Judiciary Branch
   5. ! Other - specify: __________________________________________________




                                                                                         7
                                                                          APPENDIX B


15. Does your SAI have the freedom to make its audit reports available to any of the
    following parties? (Check all that apply)

                                  Yes       No                    IF YES:
                                                    Describe the nature of those reports:*
     a. Audited entities

     b. The media

     c. The general public


* For example, annual activity report, audit reports.

16. Is there any kind of limitation imposed on the content of your SAI’s audit reports?
   (Check one box.)

     1. ! No
     2. ! Yes - specify and state why: _______________________________________

17. Does your SAI only report audit findings, or does it also make recommendations for
    improvements in its audit reports? (Check one box.)

     1. ! Only reports audit findings
     2. ! Also makes recommendations
     3. ! Other - specify: __________________________________________________

18. Who approves your SAI’s budget? (Check all that apply.)

     1. !   Legislative Branch (or committee thereof)
     2. !   Head of State
     3. !   Others in Executive Branch - specify: __________________________
     4. !   Judiciary Branch
     5. !   Other - specify: ______________________________________________

19. Does your SAI have the opportunity to defend its budget in front of the legislature or
    a committee thereof? (Check one box.)

     1. ! Yes
     2. ! No

20. How is your SAI’s budget financed? (Check all that apply.)
    1. ! From the national budget directly
    2. ! From income for services rendered
    3. ! Other - specify: ______________________________________________


                                                                                          8
                                                                     APPENDIX B


21. To what extent does your SAI manage and make decisions about spending its own
    budget during the year? (Check one box.)
    1. ! To a very great or great extent
    2. ! To some extent
    3. ! To little or no extent

22. To what extent does your SAI have the authority to perform the following activities?
    (Check one box in each row.)
                                       To a very great To some or little To no extent
                                       or great extent          extent
   a. Recruit senior personnel

   b. Recruit audit/other staff

   c. Dismiss senior personnel

   d. Dismiss audit/other staff

   e. Discipline personnel

   f. Approve job descriptions

   g. Determine remuneration
      scales/levels

   h. Determine individual
      remuneration

   i. Determine promotions

   j. Recruit consultants

   k. Dismiss consultants/end
      contracts

   l. Acquire/buy equipment

   m. Sell/dispose of equipment




                                                                                    9
                                                                         APPENDIX B


III. The independence of your SAI


The “Lima Declaration of Guidelines on Auditing Precepts” outlines broad basic tenets of
public sector auditing relating to, among other things, the nature of public-sector
auditing, the need for independence for SAIs, the audit powers of SAIs, their
relationships with the Legislative Branch and the Executive Branch (including
administration), as well as the nature of their reporting.

1. Based on the Lima guidelines but also taking into account the particular environment
in which your SAI currently operates and the nature of the audit system that your SAI is
part of, to what extent do you feel that (A) your SAI enjoys independence under the
categories listed below (“a” to “e”), and (B) to what extent having independence under
these categories is particularly important to fulfil your SAI’s mandate and function
effectively? (Check one box under both the A and B columns for each row.)


                                             A.                               B.
                                      Your SAI enjoys             Having independence in
                                    independence in this         this category is needed for
Categories of independence               category:                  your SAI to fulfil its
                                                                   mandate and function
                                                                         effectively:
                                 To a     To some    To little     To a        To        To
                               great or    extent     or no      great or    some      little
                                 very                 extent       very      extent    or no
                                great                             great               extent
                                extent                            extent
a. Constitutional/statutory
   guarantees of
   independence

b. Functional/operational
   independence (in SAI
   work)

c. Reporting independence
   (freedom of reporting)

d. Financial independence


e. Managerial/administrative
   independence (Personnel,
   administration, etc.)



                                                                                      10
                                                                         APPENDIX B


IV. Potential for improvement and suggestions for change

1. For each of the five categories of independence listed in the matrix you have just
   completed in Section III, please indicate whether there are any specific areas where
   you believe there is significant room for improvement in your SAI. (Check one box
   in each row.)
                                                                            Room for
                                                                         improvement?
    Categories of independence:                                           No       Yes

    a. Constitutional/statutory guarantees of independence

    b. Functional/operational independence

    c. Reporting independence

    d. Financial independence

    e. Managerial/administrative independence



2. How likely is it that your SAI will experience any significant improvements in the
   next five years in each of these five categories of independence? (Check one box in
   each row.)

                                                    Likelihood of experiencing significant
    Categories of independence                      improvements in the next five years:
                                                     Likely       As likely as    Unlikely
                                                                    unlikely
    a. Constitutional/statutory guarantees of
       independence
    b. Functional/operational independence

    c. Reporting independence

    d. Financial independence

    e. Managerial/administrative
       independence




                                                                                      11
                                                                           APPENDIX B


3. What actions, if any, are currently planned which may, in your opinion, realistically
   improve the overall degree of independence of your SAI over the next five years or
   so?    (Please describe up to 4 different actions below.)

          Action
     a.

     b.

     c.

     d.



4. To what extent is each of the following factors a significant obstacle to the
   achievement of a realistic level of independence in your SAI? (Check one box in
   each row.)


    Factor                                             Very great      Some       Little or
                                                        or great       extent     no extent
                                                         extent
    a. Constitutional/statutory issues

    b. Political constraints

    c. Lack of resources (monetary, human,
       material)

    d. Resistance from audited entities

    e. Other - specify:




                                                                                       12
                                                                          APPENDIX B


5. What actions, if any, could be taken by each of the following parties to increase the
   level of independence in your SAI? (Describe possible actions, or write “none” in
   each box.)

    Party                           Possible actions
    a. By your SAI

    b. By INTOSAI

    c. By the government of
       your country

    d. By other parties (e.g.
       donors, etc) – specify:



6. Do you have other specific ideas/suggestions for improving the actual independence
   of your SAI? If so, please provide them below or on separate sheets of paper.




                                                                                       13
1
                                                APPENDIX C


   INDEPENDENCE OF SAIs PROJECT


         Final Task Force Report




              BIBLIOGRAPHY

(Publications and Internet Sites of Interest)
                                                                              1
                                                                   APPENDIX C-1


                      INDEPENDENCE OF SAIs PROJECT

                             Final Task Force Report


                                Literature Search


Publications of Interest

2000

New Zealand. Office of the Controller and Auditor-General. Role & function.
January 2000 <http://www.oag.govt.nz>.



1999

Australasian Council of Auditors-General. Statement of Principles :
Independence of the Auditor-General. 24 August 1999 last update
<http://www.acag.org.au/indep297.htm>.

Boorman, Jack. Transparency, Standards, and CCL. International Monetary
Fund press briefing, Monday, 26 April 1999
<http://www.imf.org/external/np/tr/1999/tr990426.htm>.

Flizoit, Stéphanie. Les relations entre les institutions supérieures de contrôle
financier et les pouvoirs publics dans les pays de l’Union Europénne. Paris :
Université Jean Moulin Lyon III, 1999.

L’indépendance des cours des comptes en Europe, 4ème congrès de
l’Organisation des institutions supérieurs de contrôle des finances publiques
d’Europe (EUROSAI), Paris 31 mai–3 juin 1999.” Revue française
d’administration publique 90 (avril-juin 1999).

International Monetary Fund. Fiscal Transparency. 1999 last update
<http://www.imf.org/external/np/fad/trans/index.htm>.

International Monetary Fund. Code of Good Practices on Transparency in
Monetary and Financial Policies. 26 September 1999.
 <http://www.imf.org/external/np/mae/mft/index.htm>.

International Monetary Fund. Communiqué of the Interim Committee of the Board
of Governors of the International Monetary Fund, 27 April 27 1999
<http://www.imf.org/external/np/cm/1999/042799A.HTM>.
                                                                            2
                                                                 APPENDIX C-1


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                            Final Task Force Report


International Monetary Fund. Communiqué of the Interim Committee of the Board
of Governors of the International Monetary Fund, 26 September 1999
<http://www.imf.org/external/np/cm/1999/092699A.HTM>.

SADCOSAI. The Blantyre Declaration of the SADCOSAI Congress in Malawi.
1999.

Saudi Arabia. General Auditing Bureau. The Independence of SAIs. Working
paper. 1999.



1998

British Columbia. Legislative Assembly. Statutory Officers of the British Columbia
Legislature : Fundamental Operating Principles and Related Legislation.
Vancouver, B.C. : The Office, 1998 <http://www.aud.gov.bc.ca/PUBS/pubs.htm>.

Corruption & Integrity Improvement Initiatives in Developing Countries. 1998
<http://magnet.undp.org/Docs/efa/corruption/Corrupti.htm>.

Documents. [Theme: Independence of SAIs]. Lisboa EUROSAI Seminar, 24-26
June 1998. Portugal : Tribunal de Contas.

Dye, Kenneth M. and Rick Stapenhurst. Pillars of Integrity : The Importance of
Supreme Audit Institutions in Curbing Corruption. Washington, D.C.: Economic
Development Institute of the World Bank, 1998.
<http://www.worldbank.org/wbi/governance/working_papers.htm>.

Gray, Cheryl W. and Daniel Kaufmann. “Corruption and Development.” Finance
& development (March 1998): 7-10
<http://www.worldbank.org/wbi/governance/working_papers.htm or
http://www.worldbank.org/fandd/english/0398/articles/020398.htm>.

International Federation of Accountants. Code of Ethics for Professional
Accountants. Issued July 1996, revised January 1998
<http://www.ifac.org/StandardsAndGuidance/Ethics/CodeOfEthicsForProfAccnts.
html>.
                                                                           3
                                                                APPENDIX C-1


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                           Final Task Force Report


Kaufmann, Daniel. Challenges in the next stage of anti-corruption. In New
perspectives on combating corruption. Washington, D.C. : Transparency
International and the Economic Development Institute of the World Bank, 1998.

Kaufmann, Daniel. New Frontiers in Diagnosing and Combating Corruption.
Prem notes. Public sector 7 (October 1998). 6 p.

Kpundeh, Sahr J. Political Will : The Core of Anti-Corruption Reforms. Paper
presented at National and International Approaches to Improving Integrity and
Transparency in Government, Paris, 15-16 July 1998
<http://www.oecd.org/daf/nocorruption/pdf/KPUNDEH.pdf>.

New Zealand. Finance and Expenditure Committee. Inquiry into Audit Office
Legislation. David Carter, chairperson, 1998
<http://www.netlink.co.nz/~oag/Reports/FEC/fec_all.html>.



1997

Corruption and Good Governance. New York : Management Development and
Governance Division, Bureau for Policy and Programme Support, United Nations
Development Programme, 1997.
<http://magnet.undp.org/docs/efa/corruption3/corruption3.htm>.

Funnell, Warwick. The Curse of Sisyphus : Public Sector Audit Independence in
an Age of Economic Rationalism. Australian journal of public administration 56:4
(December 1997): 87-105.

Henderson, Hazel. Good Governance and Participatory Development. Paper
presented at the International Conference on Governance for Sustainable
Growth and Equity, Special plenary session, United Nations, New York, 28-30
July 1997 <http://magnet.undp.org/Docs/speeches/Hender.htm>.

International Monetary Fund. Good Governance : The IMF's Role. Washington,
D.C. : International Monetary Fund, 1997
<http://www.imf.org/external/pubs/ft/exrp/govern/govern.pdf>.

Langseth, Petter and Rick Stapenhurst. National Integrity System Country
Studies. Washington, D.C. : Economic Development Institute of the World Bank,
1997 <http://www.worldbank.org/wbi/governance/working_papers.htm>.
                                                                           4
                                                                APPENDIX C-1


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                           Final Task Force Report


Langseth, Petter. Good Governance in Africa : A Case Study from Uganda.
Washington, D.C. : Economic Development Institute of the World Bank, 1997
<http://www.worldbank.org/wbi/governance/working_papers.htm>.

Langseth, Petter, Rick Stapenhurst and Jeremy Pope. The Role of a National
Integrity System in fighting corruption. Washington, D.C. : Economic
Development Institute of the World Bank, 1997
<http://www.worldbank.org/wbi/governance/working_papers.htm>.

McCrae, Michael and Henni Vada. Performance Audit Scope and the
Independence of the Australian Commonwealth Auditor General. Financial
accountability & management 13:3 (August 1997): 203-223.

Pollitt, Christopher and Hilkka Summa. Reflexive Watchdogs? How Supreme
Audit Institutions Account for Themselves. Public administration 75:2 (summer
1997): 313-336.

Richardson, Ruth. Governing Within Limits. Paper presented at the International
Conference on Governance for Sustainable Growth and Equity, Ministerial/Senior
Officials Forum, Session 1, Re-defining the Frontier of the Public Sector, United
Nations, New York, 28-30 July 1997
<http://magnet.undp.org/Docs/speeches/Richard.htm>.

U.S. Securities and Exchange Commission. Policy Statement : The
Establishment and Improvement of Standards related to Auditor Independence.
09/19/97 last update. Release no.33-7507 <http://www.sec.gov/rules/concept/33-
7507.htm>.



1996

Australia. Parliament. Joint Committee of Public Accounts. Guarding the
Independence of the Auditor-General. Canberra : Australian Government
Publishing Service, 1996. Report ; 346.

Barrett, P. Some Thoughts about the Roles, Responsibilities and Future Scope
of Auditors-General. Australian journal of public administration 55:4 (December
1996): 137-146.
                                                                           5
                                                                APPENDIX C-1


                     INDEPENDENCE OF SAIs PROJECT

                           Final Task Force Report


Funnell, Warwick. Executive Encroachments on the Independence of the
Commonwealth Auditor-General. Australian journal of public administration 55:4
(December 1996): 109-123.

Pope, Jeremy, ed. National Integrity Systems : the TI source book. September
18, 1996 last update <http://www.transparency.de/documents/source-
book/index.html>.

Spending Public Money: Governance and Audit Issues. London, UK : Dept. of
the Treasury, 1996. Cm 3179.

State Audit in the European Union. [London, Eng.] : National Audit Office, c1996
<http://www.nao.gov.uk/publications/state_audit/state.htm>.

Taylor, J. What Should be the Role of the Auditor-General in the Context of
Managerialist Government and New Public Management? Australian Journal of
Public Administration 55:4 (December 1996): 147-156.

Washington, Sally and Elia Armstrong. Ethics in the Public Service: Current
Issues and Practice. Paris : Organisation for Economic Co-operation and
Development, 1996. Public Management Occasional Papers ; no. 14
<http://www.oecd.org/puma/gvrnance/ethics/pubs/eip96>.



1995

Gaudette, Yvan. The SAI : Building Capacity for Good Governance. Paper
presented to the Conference for Supreme Audit Institutions and International
Donors in Latin America and the Caribbean, San José, Costa Rica, May 8-11,
1995 - La EFS fortalecimiento de la capacidad para un buen gobierno.
Conferencia para entidades fiscalizadoras superiores y los donantes
internacionales en América Latina y el Caribe, San José, Costa Rica, 8-11 de
Mayo de 1995.

Hengstschläger, Johannes und Janko Andreas. Der Rechnungshof – Organ des
Nationalrates oder Instrument der Opposition? in 75 Jahre Bundesverfassung.
[Wien?] : Österreichische Parlamentarische Gesellschaft (Hrsg.), 1995.
                                                                            6
                                                                 APPENDIX C-1


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                            Final Task Force Report


International Organization of Supreme Audit Institutions. Auditing Standards
Committee. Auditing standards. Sections 53-81. [Washington?] : INTOSAI, 1995
<http://www.intosai.org/3_AUDSTe.html>.

Sahgal, Vinod. Strengthening Legislative Audit Institutions in Developing
Countries: A Catalyst to Enhance Good Governance. Ottawa: INTOSAI
Development Initiative, 1995.

Wilkins, Peter. Performing Auditors? Assessing and Reporting the Performance
of National Audit Offices : aThree-Country Comparison. Australian Journal of
Public Administration 54:4 (December 1995): 421-430.



1994

The Importance of the Role of Independent Auditors-General. Melbourne :
Australian Society of CPAs, 1994. Discussion paper ; 8.

Mazur, Jacek. The SAI's Right to Select Audit Topics. International Journal of
Government Auditing 21:2 (April 1994): 13-15.

Tuionetoa, Pohiva. Public Accountability : Tongan People Perceptions of
Independent Auditor General. [Melbourne, Aust.] : Syme Dept. of Accounting,
Faculty of Business & Economics, Monash University, 1994.



1993

Fiedler, Franz. Staatspolitische Funktionen des Rechnungshofes. Schriftenreihe
des Rechnungshofes 1993, 6. [Wien: Rechnungshof, 1993].

XIV INCOSAI: Cooperation Produces Results. International Journal of
Government Auditing 20:1 (January 1993): 2-21.
                                                                               7
                                                                    APPENDIX C-1


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                             Final Task Force Report


1992

Australia. Parliament. Joint Committee of Public Accounts. Review of the
Independent Auditor : Watching the Watchdog. Canberra : Australian
Government Publishing Service, c1992. Report ; 319.

Fundamental Audit Challenges. International Journal of Government Auditing
19:2 (April 1992): 1.



1991

Mair, Burkhard. Die Stellung des Rechnungshofes im Staatsgefüge Österreichs
unter Besonderer Berücksichtigung des Bundesstaatlichen Prinzipes. Wien :
Eigenverl, 1991. Univ., Innsbruck, Dipl. Arb., 1991.

Western Australia. Office of the Auditor General. Recommendations on
Independence of the Auditor General and the Office of the Auditor General. May
1991.



1990

Western Australia. Office of the Auditor General. Independence of the Auditor
General and the Office of the Auditor General . September 1990.



1989

Uher, Thomas. Die Verantwortlichkeit des Präsidenten des Rechnungshofes und
seiner Mitarbeiter in Staatsrechtlicher und Zivilrechtlicher Sicht. Wien : Eigenverl,
1989. Univ., Wien, Diss., 1989.
                                                                            8
                                                                 APPENDIX C-1


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                            Final Task Force Report


1988

Asian Organization of Supreme Audit Institutions. The Bali Declaration on the
Role of Audit in Promoting Reforms for Efficient Public Administration and
Corporate Management. Bali : Secretariat General of Bepeka R.I., 1988.

Dewar, David A. Independence of State Audit. International journal of
government auditing 15:3 (July 1988): 10-12.



1982

International Organization of Supreme Audit Institutions. Lima Declaration of
Guidelines on Auditing Precepts, October 1977. Vienna, Austria : INTOSAI
General Secretariat <http://www.intosai.org/2_LIMADE.html>.



1975

Independence and the Government Auditor.” International Journal of
Government Auditing 2:1 (January 1975): 1.
                                                                           1
                                                                APPENDIX C-2


                     INDEPENDENCE OF SAIS REPORT

                             Final Task Force Report


                                Literature Search


Internet Sites of Interest

African Development Bank
http://www.imf.org/external/np/sec/decdo/afdb.htm

African Development Bank Group
http://www.afdb.org

American Institute of Certified Public Accountants (AICPA)
http://www.aicpa.org/index.htm

Asian Development Bank
http://www.adb.org

Bank of Canada
http://www.bank-banque-canada.ca/english/intro-e.htm

Canadian Institute of Chartered Accountants
http://www.cica.ca/cica/cicawebsite.nsf/public/homepage

Canadian International Development Agency
http://www.acdi-cida.gc.ca/index.htm

Caribbean Development Bank
http://www.imf.org/external/np/sec/decdo/cdb.htm

European Bank for Reconstruction and Development
http://www.ebrd.com/english/index.htm

FinanceNet : financial management in government
http://www.financenet.gov

FinanceNet. International financial management associations / organizations
http://www.financenet.gov/financenet/inter/int_org.htm

Governance Institute
http://www.governanceinstitute.com/index.html
                                                                          2
                                                               APPENDIX C-2


                     INDEPENDENCE OF SAIS REPORT

                           Final Task Force Report


                               Literature Search



Governmental Accounting Standards Board. Links to useful and relevant web
sites
http://www.rutgers.edu/Accounting/raw/gasb/rlinks/index.html

Institute of Chartered Accountants in England and Wales
http://www.icaew.co.uk

Institute of Chartered Accountants of Ontario
http://www.icao.on.ca

Institute of Chartered Accountants of Ontario. Inquiries about CA members and
students
http://www.icao.on.ca/public/public/inquiry.html

Inter-American Development Bank
http://www.iadb.org/exr/english/index_english.htm

International Federation of Accountants
http://www.ifac.org/home.html

International Finance Corporation
http://www.ifc.org

International Fund for Agricultural Development
http://www.ifad.org/home.html

International Monetary Fund
http://www.imf.org

International Monetary Fund. Directory of Economic, Commodity and
Development Organizations.
http://www.imf.org/external/np/sec/decdo/contents.htm

Korea Development Bank
http://www.kdb.co.kr
                                                                                 3
                                                                      APPENDIX C-2


                      INDEPENDENCE OF SAIS REPORT

                            Final Task Force Report


                                Literature Search


Microcredit Summit. Council of International Financial Institutions
http://www.microcreditsummit.org/campaigns/ifi.htm

Nanyang Technological University Library. Accounting and auditing resources
http://www.ntu.edu.sg/library/acc/acct.htm

National and International Approaches to Improve Integrity and Transparency in
Government, OECD-OSCE Conference Paris, 15/16 July 1998
http://www.oecd.org/daf/nocorruption/pariscon.htm

Office of the Auditor General of Canada and the Commissioner of the
Environment and Sustainable Development
http://www.oag-bvg.gc.ca

Organisation for Economic Co-operation and Development
http://www.oecd.org

South Pacific Forum Secretariat (Password required)
http://www.forumsec.org.fj/default1.htm

Standards Council of Canada
http://www.scc.ca

Transparency International
http://www.transparency.de/mission.html

United Kingdom Open Government
http://www.open.gov.uk

United Nations
http://www.un.org

United Nations Development Programme
http://www.undp.org/indexalt.html
                                                                        4
                                                             APPENDIX C-2


                    INDEPENDENCE OF SAIS REPORT

                           Final Task Force Report


                              Literature Search


United Nations High Commissioner for Human Rights, International Human
Rights Instruments
http://www.unhchr.ch/html/intlinst.htm

United Nations System of Organizations
http://www.unsystem.org

World Bank
http://www.ciesin.org/datasets/wbank/WBank-home.html

World Bank Group
http://www.worldbank.org
                                     APPENDIX D


   INDEPENDENCE OF SAIs PROJECT


        Final Task Force Report




CONSULTATIONS AND MEETINGS REPORTS
                                                                              1
                                                                   APPENDIX D-1


                      INDEPENDENCE OF SAIs PROJECT

                             Final Task Force Report


                  Consultations with Selected Groups of SAIs


Consultations were held with selected groups of SAIs to complement the survey
results. These consultations were scheduled to coincide with already planned
IDI activities, such as regional group meetings, regional committee meetings and
regional group Board meetings (see section 8 of Task Force Report for more
detailed information).

The results of these consultations are presented in the form of comments and
suggestions made by individual SAIs in the course of consultation meetings.


General Comments

-   Independence is the cornerstone of SAI practice but it must be coupled with
    sufficient resources, which is often not the case.
-   Some SAIs see the Independence project as the catalyst for a “quiet
    revolution” of legislative auditing.
-   All SAIs are very supportive of the independence project. They expect
    tangible results from its implementation.
-   SAIs should submit the final Task Force report to the legislative and executive
    branches of their governments
-   SAIs should make full use of opportunities resulting from public-sector
    reforms as they pursue reasonable independence for their offices. The
    existence or threat of an economic crisis is also an argument to be used for
    better accountability and transparency, including better public-sector auditing.
-   Generally, SAIs feel that INTOSAI should play a proactive, advocacy role and
    should speak out at large for the INTOSAI community on the subject of
    independence.
-   INTOSAI and individual SAIs should establish and maintain contacts with
    advocacy organisations such as Transparency International and the Institute
    for Governance (see Appendix C).
-   Generally, SAIs feel that donor influence is very important and that donors
    should be encouraged to take steps to ensure the presence of adequate
    public-sector auditing in recipient countries.
-   The Task Force recommendations should be practical, realistic and of a long-
    term, sustainable nature.
                                                                                2
                                                                     APPENDIX D-1


                      INDEPENDENCE OF SAIs PROJECT

                             Final Task Force Report


                  Consultations with Selected Groups of SAIs


Specific Comments


SAI Mandate

-   For many SAIs, the most serious obstacles to the fulfilment of their audit
    mandates are the lack of adequate financial and human resources and the
    lack of autonomy.

Constitutional Guarantees of Independence

-   De facto guarantees are often quite different from de jure guarantees. Legal
    texts are often not fully “operationalised” or are ignored in whole or in part in
    certain countries.
-   Heads of SAIs should have a minimum term of office of about 5 years to
    enable them to fully address and pursue important issues during their tenure.
    But life appointments are not necessarily beneficial to SAIs. A term of 10 to
    15 years seems to be favoured.
-   Heads of SAIs should be appointed on the basis of the relevancy of their
    competence and experience.
-   Personal protection (in law) is necessary for Heads of SAIs, and objective
    criteria for removal from office should be embedded in law.
-   In a number of countries there is no functioning or effective legislature, so all
    powers reside with the Head of State.

SAI Accounts and Performance Reviews

-   SAIs must do their utmost to build up their credibility in the eyes of their
    respective governments and of the public.
-   SAIs should establish a formal process to ensure that their accounts and
    performance are subjected to independent reviews comparable to those
    imposed on other public sector bodies
                                                                               3
                                                                    APPENDIX D-1


                      INDEPENDENCE OF SAIs PROJECT

                             Final Task Force Report


                  Consultations with Selected Groups of SAIs


Freedom of Reporting

-   In many countries, only the annual report (basically an activity report) can be
    released by the SAI. Audit reports proper cannot be released without prior
    authorisation
-   Where it does not exist, there should be a law compelling the SAI to table its
    reports in the legislature.
-   In many countries, there is no formal and effective scrutiny or follow-up
    mechanism (such as a Public Accounts Committee) to ensure that the
    observations and recommendations contained in the SAI’s report are taken
    into account.

Financial Autonomy

-   In many countries, despite constitutional guarantees and because of a lack of
    competent research staff, legislatures turn to the executive branch of
    government to carry out reviews of budgetary estimates of the SAI
-   A great number of SAIs have insufficient financial resources.

Managerial/Administrative Autonomy

-   Autonomy in personnel management is extremely important. It is lacking in
    many SAIs
-   In many countries, decisions regarding the organisational structure of the SAI
    are tied to a budgetary process that is subject to executive review
-   Independence in this area is also severely jeopardised in many SAIs by
    insufficient human resources.
                                                                               1
                                                                    APPENDIX D-2


                      INDEPENDENCE OF SAIs PROJECT

                             Final Task Force Report


                      Meeting with International Agencies


Meetings with national technical co-operation agencies and international donor
agencies were held to inform them about the independence project and in turn
become familiar with their policy objectives and their current programs and
practices in the areas of public-sector accountability and transparency (see
Section 8 of this report for additional details).

The outcome of these meetings is presented hereafter in the form or key points
made by staff present at the meetings. These were not cleared with the
organisations concerned, and should not be construed as official statements.

National Technical Co-operation Agencies

1. Agencies are currently promoting good governance and the establishment of
   democratic institutions (including SAIs).
2. Public finance management is a priority in fighting corruption and poverty.
3. Generally, assistance is given through national institutions in the form of
   national budget support and through sector programs.
4. Agencies are generally not happy about the quality of governance, including
   the degree of transparency and accountability, or about the quality of
   reporting by beneficiaries on aid projects.
5. Agencies are also trying to improve the quality of statistical data that recipient
   countries produce. The issue of proper records management is often
   neglected in the design of assistance projects.
6. Donors need to address governance issues as part of a co-ordinated and
   comprehensive approach.
7. Quality public-sector auditing is an important component of good governance.
   SAIs can play an important role in the pursuit of accountability and
   transparency as well as in the fight against corruption.
8. Some agencies support some SAIs directly and could make the issue of
   independence a key part of their dialogue with recipient countries (Note that,
   for example, incoming EU member nations are required to demonstrate that
   they have an independent national public-sector auditor).
9. There is a crucial need for scrutiny and follow-up mechanisms, to ensure that
   SAI reports are taken into account and that recommendations are followed
                                                                               2
                                                                    APPENDIX D-2


                      INDEPENDENCE OF SAIs PROJECT

                             Final Task Force Report


                      Meeting with International Agencies


10. The recommendations in the Task Force report should address all key issues
    of SAI effectiveness and institutional strengthening (proper mandate, proper
    resourcing, technical competence, adequate tools, etc.), in addition to the
    issue of independence. Issuing standards is not enough: measures to
    ensure compliance are needed.
11. The Task Force recommendations should be practical, so that donors can
    easily identify areas where they can support INTOSAI/SAI undertakings.
12. All agencies are very much interested in the independence project, and are
    looking forward to a copy of the report. They will support its
    recommendations to the extent possible.

International Financial Institutions

General comments

1. International Financial Institutions (IFIs) are very interested in and supportive
   of the independence project.
2. The independence issue must be clearly identified as a distinct element in the
   implementation of donor policy objectives. This project is a practical
   application of those objectives
3. Funding could be made available for this project and/or the implementation of
   its recommendations
4. Strong audit requires a strong legislature. IFIs are promoting the latter and
   SAI independence is a complementary element.


Specific comments

Asian Development Bank

1. The possibility of specifically including the SAI independence issue in an
   upcoming Executive Directors donor report (in a chapter on governance) will
   be considered seriously.
                                                                              3
                                                                   APPENDIX D-2


                      INDEPENDENCE OF SAIs PROJECT

                            Final Task Force Report


                      Meeting with International Agencies


2. The possibility of raising the issue of SAI independence at an upcoming
   APEC meeting on accounting initiatives (Economic Committee of APEC
   forum) will be considered seriously. The forum was established by Heads of
   State, and they are serious about bringing about change: reforms are taking
   place in Vanuatu, Fiji, Solomon, PNG and other countries. INTOSAI should
   contact the Canadian member of this group.
3. The adoption of eight principles of accountability including two specific
   references to the need for adequate public-sector audit (principles 2 and 7) by
   the Economic Ministers of the South Pacific is a step in the right direction (see
   bibliography in Appendix C).

African Development Bank

1. The Bank has a policy on governance that clearly underlines the importance
   of an independent and well-resourced national public-sector auditing
   institution.
2. The Bank now has technical assistance funds for regional and bilateral
   projects that meet the objectives of that policy.
3. The Bank will encourage its regional directors to establish contacts with
   AFROSAI and SAIs of that region.

Inter-American Development Bank

1. The Bank is supportive of INTOSAI’s project and is looking forward to
   receiving a copy of the Task Force report to determine how best to support its
   recommendations.

World Bank

1. The Bank is currently promoting both private-sector and public-sector
   governance. In doing so, it has identified a number of elements needed to
   ensure a sound public-sector governance “architecture”. This architecture
   includes, among other things, the existence of proper financial management
   and controls, quality accounting and setting of auditing standards, compliance
   mechanisms and proper reporting, to ensure that public funds are used and
   managed properly. The Bank will use these elements as criteria for assessing
   the situation in beneficiary countries.
                                                                           4
                                                                APPENDIX D-2


                     INDEPENDENCE OF SAIs PROJECT

                           Final Task Force Report


                     Meeting with International Agencies


2. Implementing such an architecture implies the existence of, among other
   things, an adequately professional, independent and resourced SAI.
3. The Bank is interested in discussing these and other related issues with
   INTOSAI in due time.

United Nations Development Programme (South Pacific regional office)

1. The UNDP is very much involved in governance issues and will consider
   including the issue of SAI independence in upcoming conferences with
   ministers and parliamentarians of island states
2. The UNDP would consider co-funding related projects.
                                APPENDIX E


INDEPENDENCE OF SAIs PROJECT


    Final Task Force Report




         OUTCOME OF

    LISBON SEMINAR (1998)

             AND

 IVTH EUROSAI CONGRESS (1999)
                                                                               1
                                                                      APPENDIX E

                       INDEPENDENCE OF SAIs PROJECT

                              Final Task Force Report


    Outcome of the Lisbon Seminar (1998) and IVth EUROSAI Congress (1999)


OUTCOME OF THE LISBON SEMINAR (1998)

In June 1998, EUROSAI held a seminar in Lisbon, Portugal, on The
Independence of SAIs in relation to the Legislative, Executive and Judicial
Branches of Governments. The purpose of this seminar was to identify key
independence issues to be addressed at the subsequent IVth EUROSAI
congress, in Paris, in June 1999. The seminar was organised and hosted by the
SAI of Portugal.

In preparation for the Lisbon Seminar, a survey of European SAIs was conducted
by the SAI of Portugal. Out of 39 SAIs surveyed, 32 responded - an 87 percent
return rate.

The survey was conducted by means of a questionnaire that addressed the
following key points:

-     SAI Organisation
-     SAI Mandate
-     Constitutional/Statutory Guarantees of Independence
-     Functional/Operational Independence
-     Freedom of Reporting
-     Financial Autonomy
-     Managerial/Administrative Autonomy
-     Co-operation with Internal Control Bodies
-     Co-operation with the Legislative, Executive and Judicial Branches of
      Government.

The detailed survey results were compiled in a document entitled Basic Report
and in a volume entitled The Relations between the SAIs Members of EUROSAI
and the Legislative, Executive and Judicial Powers. These two publications can
be obtained from the Secretariat of EUROSAI.

In summary, the survey indicated:

1. That the SAIs of EUROSAI have, as a rule, their legal basis laid out in the
   Constitution or in law.
2. That in 56 percent of the cases, the Heads of SAIs are appointed by the
   legislature.
                                                                                2
                                                                       APPENDIX E

                      INDEPENDENCE OF SAIs PROJECT

                             Final Task Force Report


 Outcome of the Lisbon Seminar (1998) and IVth EUROSAI Congress (1999)


3. That a large number of SAIs focus their work on the legality, regularity and
    value for money of the operations of audited organizations.
4. In most cases, SAIs develop and decide upon their own program of activities.
5. The main addressees of the reports of the SAIs are the legislatures.
6. In 88 percent of the cases, the budgets of the SAIs are approved by the
    legislature and, in most cases, SAI activities are not subject to financial
    resource constraints.
7. Co-operation with the Legislative Branch of government is significant.
8. A substantial number of SAIs co-operate with the Executive Branch of
    government through the issue of advice, recommendations and reports;
    consultancy in the field of public finance; and by carrying out “extraordinary”
    audits.
9. One of the main preoccupations of SAIs seems to be that of independence
    from political powers.
10. SAIs must assume the “control” (audit) of public finance as a priority issue in
    all societies.

The seminar held following that survey led to the following “Lisbon Declaration”:

1. The capacity for independent action is an essential guarantee for the proper
   functioning of SAIs. This capacity should mean that, among other things, it
   should be impossible to remove SAI heads and members, irrespective of
   whether they have a mandate for life or a temporary mandate, and that self-
   regulation, including sufficient financial means, should, among other issues,
   be guaranteed in SAIs’ respective constitutions and laws and be observed by
   the Legislative Powers.
2. In relation to the Executive Powers, it is essential to ensure favourable
   conditions for self-regulation by SAIs in the management of both human and
   financial resources. In particular, this applies to the determination of activities
   to be developed (framework, schedule, methods), the decision as to the
   entities to be audited, the co-operation and relations with internal control
   bodies, the duty of audited entities to collaborate with SAIs, the recognition of
   auditees responsibilities, where appropriate, and the establishment of the
   principle of the “contradictory”, or similar, procedure.
3. In relation to the Judicial Power, it is considered desirable, where appropriate,
   that SAIs and the organs of Judicial Power be given a legal framework
   governing the co-ordination of their respective powers.
                                                                              3
                                                                     APPENDIX E

                       INDEPENDENCE OF SAIs PROJECT

                             Final Task Force Report


 Outcome of the Lisbon Seminar (1998) and IVth EUROSAI Congress (1999)


OUTCOME OF THE EUROSAI IVth CONGRESS (1999)

This congress was held in Paris, France, in June 1999. Its main theme was “The
Independence of SAIs in Europe”.

Key topics discussed during the congress included the following:

1.   The independence of public organs
2.   Relationships with legislative, executive and judicial branches of government
3.   The means to attain independence
4.   Relations with media
5.   The accountability of SAIs
6.   Independence and freedom

The main conclusions reached at the end of the congress were as follows:

In the INTOSAI Lima Declaration of Guidelines on Auditing Precepts (1977), the
SAIs have asserted their attachment to independence, which is an indispensable
condition of efficient audit of public funds management.

Since then, social, technological and political evolutions have been numerous. In
particular, the opening of central and eastern European countries to democracy
has renewed the demand for independence and transparency. Decentralisation,
privatisation and deregulation have changed public management.

This is why EUROSAI members, after having convened in the Lisbon seminar
(1998) and after their congress in Paris (1999), reaffirm that their independence
today relies on the following principles:

1. SAIs ought to have the resources they need to be fully independent.

The independence of SAIs should be based on constitutional or legislative
provisions, which enshrine their institutional status within public authorities.
Independence relies also on the guarantees extended to heads of SAIs, enabling
them to carry out their duties in a sufficiently stable environment. Legal
protection against pressure from outside and clearly defined investigative powers
are needed in order to safeguard auditors’ independence.
                                                                               4
                                                                      APPENDIX E

                      INDEPENDENCE OF SAIs PROJECT

                            Final Task Force Report


 Outcome of the Lisbon Seminar (1998) and IVth EUROSAI Congress (1999)


SAIs should have at their disposal sufficient resources to fulfil their tasks.
Budgetary autonomy is another factor that can foster genuine independence.
Finally, to be fully independent, SAIs must be free to plan and conduct audits as
they see fit.

2. Independence goes hand in hand with accountability, which is provided
   for in a variety of ways, depending on a country’s institutional
   framework.

SAIs ought to abide by the same rules they recommend others to enforce.
Hence, they ought to establish internal audit procedures to ensure the
effectiveness of their own work. Internal audits should be structured so that they
have the means to provide SAI heads and senior officers with a clear picture of
how their institution is performing. These internal audits should provide regular
monitoring of operational indicators and conduct assessments of audit results.

SAIs increasingly submit themselves to external audits. This procedure offers
the public a guarantee that SAIs follow sound operational practices, but it should
not challenge their independence. By publishing their budget performance
reports and reports of their audit activities, and by submitting them to Parliament,
SAIs should provide the highest degree of transparency for the way they use
available resources and the results they have achieved.

3. Relations with the media are another indicator of the independence of
   SAIs.

The freedom of SAIs to define their own communication policy toward the media
and the public within existing legal and regulatory frameworks is an essential
component of their independence and effectiveness. They should make sure
that their communication gives a fair and unbiased account of their work and
does not give rise to pointless controversy. Except in those cases where
disclosure is compulsory pursuant to legal or constitutional provisions, this
freedom includes the possibility of deciding whether to make a report publicly
available. The same attitude can apply to the content, medium, format, date,
periodicity and channels of disclosure.
                                                                             5
                                                                    APPENDIX E

                     INDEPENDENCE OF SAIs PROJECT

                            Final Task Force Report


 Outcome of the Lisbon Seminar (1998) and IVth EUROSAI Congress (1999)


Transparency toward the audited body is of the essence. It has to be conveyed
either through a process where facts are agreed upon with audited bodies,
and/or through public access to audited bodies’ reactions, possibly by publishing
them alongside SAI reports, so that the public gets full, fair and balanced
information.

The public must always have direct access, with copies available, to reports the
SAI has decided to disclose. Reports should be made available in a variety of
media, including Web sites.

				
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