Strengthening Good Governance Through Financial Audits: The Albanian Experience

Author: Lorena Lici

Introduction

Effective financial oversight is foundational to good governance. The Supreme State Audit Institution of Albania (KLSH) plays a vital role in safeguarding public resources, promoting accountability, and reinforcing trust in public institutions. This article shares key findings from the institution’s 2023 audit activities, assesses their impact on public sector governance, and identifies best practices applicable across INTOSAI member SAIs.

Audit Scope and Strategic Objectives

KLSH operates under a strategic framework aligned with its mission to support parliamentary oversight and ensure the efficient, effective, and economical use of public funds. Three overarching strategic goals are tracked through performance indicators. In 2023, KLSH issued 71 financial audit opinions, underscoring its commitment to accountability.

Key audit focus areas included:

• Budget Execution: Identification of irregularities in expenditure planning and execution, including unauthorized commitments and arrears.
• Procurement Oversight: Recurring deficiencies in public procurement practices due to procedural noncompliance, impacting value-for-money.
• Revenue Administration: Detection of lost revenues due to irregularities in tax and customs collection.

Corrective Measures and Implementation Rates

The audits resulted in 1,024 recommended measures, categorized as corrective financial, damage compensation, disciplinary, and administrative. Verification of recommendation implementation showed mixed outcomes:

• 98% of financial corrective measures were accepted, but only 17% were fully implemented.
• 94% of damage compensation measures were accepted, with a 32% full implementation rate.
• Disciplinary and administrative measures also reflected relatively low implementation, signaling challenges in enforcement and follow-up.

Institutional Impact and Legal Cooperation

KLSH referred 67 audit reports to the Special Prosecution Against Corruption and Organized Crime and an additional 24 cases to local prosecutor offices. These referrals demonstrate the institution’s cooperation and role in combating corruption and enforcing accountability beyond administrative measures.

Public Engagement and Transparency

Citizen engagement with KLSH is increasing, evidenced by 368 information requests and complaints in 2023—primarily regarding local government operations. KLSH responded promptly to all actionable cases, contributing to its growing public credibility.

External Assessments and Recognition

The Support for Improvement in Governance and Management (SIGMA) initiative, a joint initiative of the Organization for Economic Co-operation and Development (OECD) and the European Union issued a report in 2023 on Public Administration Principles, and acknowledged KLSH under Principles 16 and 31 as a trusted, capable actor promoting effective service delivery and fiscal integrity. Survey data revealed:

• 58.6% of respondents identified KLSH as the most effective domestic accountability institution, surpassing Parliament (49.5%).
• Transparency and accountability perceptions for central and local governments remained low (around 40%), reinforcing the need for SAI interventions.

Best Practices and Lessons Learned

1. Evidence-Based Recommendations: KLSH employs a structured approach to recommending and tracking corrective actions. This could serve as a replicable model for SAIs aiming to enhance follow-up processes.
2. Legal Interface: Systematic referrals to anti-corruption bodies and local prosecutors reinforce the SAI’s deterrent effect. This cooperation can be formalized through inter-institutional protocols.
3. Public Communication: Prompt and transparent handling of citizen complaints fosters trust and legitimacy—practices that can enhance the SAI’s profile as a public protector.
4. Performance Monitoring: Periodic self-assessment and strategic tracking through key performance indicators support institutional maturity and alignment with INTOSAI standards.

Conclusion

The Albanian SAI’s experience in 2023 exemplifies the important role of SAIs in promoting integrity, fiscal discipline, and trust in public governance. While challenges persist in implementation and enforcement, structured audits, cross-sector cooperation, and public engagement form the pillars of its success. These practices offer valuable insights for peer SAIs committed to improving public sector outcomes through financial oversight.

References

1. State Supreme Audit Institution. (2023). Annual Performance Report.
2. SIGMA/OECD. (2023). Monitoring Report: Principles of Public Administration – Albania.
3. International Organization of Supreme Audit Institutions (INTOSAI). ISSAI 12: The Value and Benefits of Supreme Audit Institutions.