International Journal of Auditing – January 2003
Relations Between SAIs and Parliamentary Committees
Ideally, there is a symbiotic relationship between an SAI and the parliament to which it reports. These two important, but separate, institutions have mutually supportive roles in ensuring effective government. A parliament can perform its vital oversight functions most effectively when it uses—and can rely on—the audit work of the SAI. Similarly, an SAI can be much more effective when its parliament provides both a forum for the presentation and discussion of the SAI’s important audit results and, potentially, an ally in taking, or strongly encouraging others to take, appropriate corrective actions.
A number of countries have set up parliamentary committees (PCs) that have contact with SAIs. In relationship to the SAIs, their main purpose is to examine audit reports in detail, considering their observations, findings, and recommendations and presenting their own comments and recommendations to parliaments on government activities the SAIs have examined. PCs are often viewed as a means of improving public accountability and strengthening the role of SAIs.
In view of the importance of the relationship of SAIs with parliaments and PCs, the presidents of the SAIs of central and eastern European countries, Cyprus, Malta, and the European Court of Auditors requested a report on SAI/PC relations. The objective of the study was to examine relations between the SAIs and their respective parliaments, especially the PCs, and to suggest ways in which those relations could be improved to the mutual benefit of parliaments and the SAIs. Detailed information about relations between SAIs and parliaments/PCs was gathered by questionnaire from the participating countries (14 candidate/participant countries currently involved in the European Union accession process). The SAIs of Poland and Malta prepared the report, with support from the European Court of Auditors and SIGMA.1 Other SAIs with long traditions of state auditing also participated in this study.
The report was issued in November 2001 and covered the following areas:
- the general role of parliaments and PCs in relationship to SAIs;
- PCs’ composition and modes of operation;
- PCs’ role in the outputs and results of SAIs;
- PCs’ role in SAI operations;
- other PC functions related to SAIs; and
- the strengths, weaknesses, opportunities, and threats identified by SAIs.
Current Situation of SAIs and Parliamentary Committees in Eastern and Central Europe, Malta and Cyprus
The responses study showed considerable diversity among the countries. SAIs
cooperate with several different types of PCs.
- Committees in charge of various branches of administration and economy, such as committees on transport, agriculture, or health care (called branch committees). The main function of these PCs is to examine and prepare issues that are currently subjects of parliamentary debates and deliver opinions on matters that the Parliament or its Speaker have referred to them. Within the limits determined by the Constitution and statutes, the PCs also work as bodies of parliamentary review in specific areas of government activities.
- Committees exclusively or primarily responsible for state audit-related matters (called audit committees), which can be divided into two types: public accounts committees (Cyprus and Malta) and state audit committees (Hungary and Poland).
- Committees specifically responsible for SAI budget-related matters: approving the SAI budget, appointing outside auditors to audit the SAI, and reviewing the audited accounts (the National Audit Office Accounts Committee in Malta).
While most of the participating countries do not have frequent and periodic meetings between SAIs and PCs, such meetings as are held take place in parliaments where (1) there are committees exclusively or primarily in charge of issues of state audit (those in Cyprus, Hungary, and Malta) or (2) there is an established tradition of reviewing audit reports by most of the PCs (in Poland). The number of PC meetings convened each year to discuss SAI-related matters varies among the countries—from 1 to 3 meetings held in Albania, Bulgaria, Latvia, and Lithuania, to 75 such meetings in Cyprus, and 70 to 100 in Poland. In most cases, SAI-related matters constitute only one of the agenda items.
Typically, constitutions or laws require SAIs to submit their reports to their parliaments—particularly annual reports on their activities, audit reports on the execution of the state budgets, and reports on audits requested by the parliaments (when applicable). In some cases, SAIs also submit opinions on public accounts, reports on the use and preservation of state assets, and reports on the public debt.
Generally, PCs do not review more than half the audit reports they receive. PCs regularly review those reports for which parliamentary review is mandatory. Moreover, PCs regularly review reports from the audits they ordered (when applicable) or suggested.
The following are examples of SAI reporting and PC review.
- PCs receive a significant number of audit reports every year (e.g., 40, 60, or 200) and thoroughly review the majority of them (in Cyprus, Hungary, Malta, and Poland).
- PCs receive a significant number of audit reports (e.g., 20, 40, or 100) and review only a few of them (in the Czech Republic, Estonia, Latvia, and the Slovak Republic).
- In some of the countries, the audit findings are included mainly in annual reports and audit reports on the execution of the state budget. These reports are reviewed by PCs during one, two, or three meetings (in Albania, Bulgaria, and Romania).
- Sometimes PCs, over the course of several meetings, review a large number of audit reports (e.g., 70, 120, or 900), most of which relate to the audits of financial statements and financial transactions of local self-government and government units (in Croatia, Lithuania, and Slovenia). In such instances, few of the reports are reviewed in depth.
After reviewing SAI reports, some PCs prepare their own reports with their views,
comments, and recommendations to their parliaments (in Croatia, Romania, and sometimes in Cyprus). In Latvia, PCs formulate draft resolutions for Parliament. In
Hungary, PCs may formally approve or reject SAI reports and refer their decisions to
Parliament. In Poland, the relevant PC may pass a resolution, or “desideratum,” and
address its postulates to the Council of Ministers, individual ministers, or central state
bodies. The recipient is obliged to reply within 30 days. Replies to desiderata as well
as state bodies’ reports on their performance are reviewed at PC meetings. If a reply is
not received in due time or the reply is deemed unsatisfactory, the PC may resend the
desideratum, submit a motion to the Speaker for rejection of the reply as unsatisfactory, or submit a draft of a relevant resolution of the Parliament.
Other PCs review the audit reports but do not make any formal decisions/resolutions because such decisions would be implied in the PC hearings (in Albania, Bulgaria, Estonia, Lithuania, Malta, and Slovenia). In the Slovak Republic, PCs take note of audit reports but do not formally discuss them. In the Czech Republic, it is the subcommittee of the Budget Committee that actually discusses the SAI’s reports and proposes a draft resolution; the committee usually acts on the subcommittee’s suggestions and submits draft resolutions to the Parliament. In other instances, decisions are made only on the annual activities report of the SAI but not on the audit reports (in Bulgaria and Slovenia).
Best Practices Identified in the Study
The report contains two sets of recognized best practices—one directed toward the parliaments and one toward the SAIs. The first set of suggestions involves actions that parliaments could take to enhance their working relations with the SAIs and their oversight of government activities. In discussing these matters with members of parliaments, however, SAIs need to avoid any appearance of instructing parliaments in how to carry out their constitutional responsibilities. The suggestions are as follows:
- Assure in the state audit legislation that the SAI is independent of both the government and the parliament. Appoint the SAI head in a way that ensures broad support in parliament.
- Consider establishing a separate unit or person to coordinate the SAI’s contact with Parliament to facilitate communications and help assure SAI awareness of parliamentary needs and interests.
- Follow up on previous audit findings and inform parliament of any patterns of inaction on important problems.
- Avoid commenting directly on government policies, but recognize that disclosure of implementation problems may raise questions about the underlying policies.
The full text of the report is available at http://www.nik.gov.pl/english/documents/SAI_Parl_136.pdf.
For additional information, contact Jacek_Mazur@nik.gov.pl or
brian.vella@gov.mt.