INSTITUTIONALIZING PUBLIC ACCOUNTABILITY

WHY CITIZEN-ORIENTED, INDEPENDENT EXTERNAL PUBLIC AUDITING THRIVES IN SOME COUNTRIES AND FAILS IN OTHERS
Katharina Noussi, Doctorate Candidate, Institute of Political Science, University of Vienna, katharina.noussi@univie.ac.at, katharina.noussi@gmail.com Presentation prepared for delivery at the 26th Annual ICGFM International Conference: PFM in the 21st Century - The PFM Architecture, Institutions, and Tools to Meet the Challenges of the Modern Worlds, April 29 May 4, 2012; Miami, Florida ; www.icgfm.org

AGENDA
1. The concept Supreme Audit Institutions (SAIs) as accountability arrangements

2.
3. 4. 5.

The problem - ISSAI implementation -> RQ: Why ?

Hypotheses testing through regression analyses What the heads of SAIs think Conclusion

Research Design
Mixed-methods-approach of praxeology (Bourdieu, Harrits)
4 phases: Preliminary res., QUAN + QUAL, Discussion

INSTITUTIONALIZING PUBLIC ACCOUNTABILITY WHY INDEPENDENT EXTERNAL PUBLIC AUDITING THRIVES IN SOME COUNTRIES AND FAILS IN OTHERS

1. THE CONCEPT - SAIS AS ACCOUNTABILITY ARRANGEMENTS

ARE SAIS ACCOUNTABILITY ARRANGEMENTS?

Research method:
1. 2. Literature review Hypotheses testing through content analysis of the ISSAIs

Results:
The concept: accountability as a virtue and as a mechanism
Relationship qualifies as acc. mechanism if it meets 5 criteria:
1. 2. 3. 4. 5. Is there explanation and justification of conduct by the actor? Is the explanation directed at a specific forum? Does the actor feel obliged to come forward? Is there possibility for debate and judgment by the forum? Is there the optional imposition of sanctions or rewards?

ACCOUNTABILITY -> obliged to justify or explain conduct (Bovens)

ARE SAIS ACCOUNTABILITY ARRANGEMENTS?

3 purposes of accountability arrangements: to guarantee (1) democratic, (2) constitutional, (3) learning accountability Hyp: SAIs qualify as accountability arrangements from all 3 perspectives > test through structured qual. content analysis of ISSAIs (Bovens)

Overall: TRUE
democratic accountability :TRUE in principle constitutional accountability :TRUE learning accountability : partly TRUE

-> UNGA Resolution (A/RES/66/209) on

Promoting

the efficiency, accountability, effectiveness and transparency of public administration by strengthening supreme audit institutions

-> Reflects increased self-confidence of SAIs

(strategic plan 2005, Mexico Declaration 2007, South African Declaration 2010, donor cooperation 2010, UNGA Resolution 2011)

INSTITUTIONALIZING PUBLIC ACCOUNTABILITY WHY INDEPENDENT EXTERNAL PUBLIC AUDITING THRIVES IN SOME COUNTRIES AND FAILS IN OTHERS

2. THE PROBLEM - ISSAI IMPLEMENTATION

THE PROBLEM - ISSAI IMPLEMENTATION

RQ: SAIs are accountability arrangements BUT is this accountability relationship institutionalized? De facto as well as de jure?

Method: Literature review Development and construction of SAI rankings based on

Open Budget Survey (2010), Global Integrity Reports (2008-2010) PEFA-Id26 (2007-2011) OECD Budget Survey (2007/08) IDI Stocktaking Report, anonymized version (2010)

SOME CHALLENGES

(OPEN BUDGET SURVEY 2010, 94 COUNTRIES WORLDWIDE)

Lack of independence from the Executive

Executive decides SAI head (24) Executive decides budget (35), of which funding not sufficient (19) Limited freedom to decide what it will audit (11)

Lack of follow-up by Legislature

No follow-up (21) or only minimal follow -up (19)

Reports have no consequences

Executive does not reveal steps taken to the public (78) Neither the SAI nor the legislature reports steps taken (72)

Public not informed about annual accounts

Final audited accounts are not completed within 24 months after the end of the fiscal year or they are not released to the public. (34)

Public does not give inputs

SAI does not maintain formal mechanisms with the public (45)

THE POWER OF SAIS OBS2010

(YEAR 2009, 94 COUNTRIES, 10 QUESTIONS)

THE POWER OF SAIS PEFA ID26

(PEFA-ID26, 2007-2011, 61 COUNTRIES, 3 QUESTIONS)

10

THE POWER OF SAIS GI08-10

(GLOBAL INTEGRITY 2008-2010, 70 COUNTRIES, 11 QUESTIONS) ,

11

THE POWER OF SAIS OECD

(OECD, 2007/2008, 97 COUNTRIES, 6 QUESTIONS)

12

THE PROBLEM ISSAI IMPLEMENTATION

Results: Great variation across data sources Problems: subjective data, different years, methods But hardly any SAIs are very powerful acc.arr. -> ISSAI implementation a challenge for most SAIs How can SAIs effectively implement the ISSAIs? What is required? Capacity building (CP), political will? CP? Only 5/14 countries have improved PEFA26 between 2005-2010, all recipients of CB -> CB requires time? (IDI)

-> RQ: WHY does independent external public auditing thrive in some countries and fail in others?

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INSTITUTIONALIZING PUBLIC ACCOUNTABILITY WHY INDEPENDENT EXTERNAL PUBLIC AUDITING THRIVES IN SOME COUNTRIES AND FAILS IN OTHERS

3. HYPOTHESES TESTING

THROUGH REGRESSION ANALYSES

14

TESTING SEVEN HYPOTHESES

RQ: WHY does independent external public auditing thrive in some countries and fail in others?

Method:
Constructing and testing of an explanation from the observers perspective: 7 hypotheses tested through multiple regression analyses Dependent variable: OBS2010 (but also tested on PEFA, GI, OECD, IDI data)

15

H1: INSTITUTIONAL MODEL THEORIES

Results: SAI court model (-), SAI monocratic model (+), Plurality electoral rule (0), Political competitiveness/nof veto players (+)

16

H2: SOURCE OF NATIONAL INCOME

Results: Oil rents (-), PFM support & IMF PRGF (+), direct taxation in democracies (+)
IMF 0 1

fh_status 1. Free 2. Partly Free 3. Not Free

80

OBS2010

60

OBS2010

40

20

-4

-2

log(tot_pfmaid_02.07pc)

log(directtax_02.07)

17

-5

-4

-3

-2

-1

20

40

60

INTOSAIregion AFROSAI-E ARABOSAI ASOSAI CAROSAI CREFIAF EUROSAI NRM OLACEFS PASAI

H3: DIFFUSION THEORIES

Results: Influence of good performers (+), External influence in post-conflict situation (+), int. norms socialization/CAC ratification (0)

OBS2010

20

40

60

80

100

log(childmort_02.07)

18

H4: MODERNIZATION THEORY

(PUBLIC DEMAND DETERMINES SAI POWER, LIPSET, 1959; PRZEWORSKI, 2000)

Results: Socio-economic development (+), civic/political rights (+) BUT conditioned on other variables often lose effect: see f. ex: Press Restriction, Problem: no specific data on SAI advocacy available
100 OBS2010 0 20 40 60 80

2.5

3.0

3.5 log(fh_press)

4.0

4.5

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H5: INSTITUTIONAL CAPACITY THEORY (INSTITUTIONS EFFECTIVE BECAUSE OF CAPACITY,

HUNTINGTON, 1968; FUKUYAMA, 2004)

Results: Large Capacity Building budget (-), Long-term CB (+), CB to deal with ext. environment(+), Performance audit CB (-), staff (+)

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H6: RATIONAL CHOICE INSTITUTIONALISM

Why are some appearances deceiving? Why do democratic institutions not work?

De jure = de facto? A camel hides his head behind a tree and thinks nobody sees it, but in fact everybody does. (Int. 5) 21

H6: RATIONAL CHOICE INSTITUTIONALISM

North, Wallis and Weingast (2009):
-> democracies develop and consolidate if elite pacts are selfenforcing and pareto-improving
Elite pacts create new options for elites = doorstep conditions

DC#1: Rule of law for elites DC#2: Perpetually lived organizations DC#3: Consolidated control of the military
Haber (2006): 3 strategies by autocrats to deal with the launching organization:

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terror, rents, organizational proliferation

Results: DC#1/judiciary indep. (+), DC#2 /executive constraints (+), DC #3/fragmentation (+), 3 strategies by autocrat (+)

ciri_kill 0. Practiced frequently 1. Practiced occasionally 2. Have not occured

OBS2010

20

40

60

80

-5

-4

-3

-2

-1

log(newbusdens_04.07)

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H7: ORGANIZATIONAL THEORIES OF LEADERSHIP-LED CHANGE

Leadership: the set of actions that intentionally creates change space and mobilizes people, ideas, meaning and resources to achieve a change purpose. (Andrews et al. 2010)

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H7: SAI LEADERSHIP

Results: SAI leadership (+)
(measured through engagement of a SAI in INTOSAI groups + number of speeches held at UN/INTOSAI seminars (2005-2011))
total$SAIleader_total1f high low med
100

Development Action Plan (+)

[IDI data]

OBS2010

20

40

60

80

4 fh_ipolity2

10

25

HYPOTHESES TESTING
Results: all H were verified, particularly robust across data sources and specifications were: H1: monocratic SAI model (+) H2: Oil (-) H3: proximity to good performers, part. ZA, EU (+) H4: Socio-economic dev. (+), Democratization (+) H5: CB length> budget, Capacity building to deal with ext. env. (+), n of staff (+) H6: Inter-elite relationships (+) H7: SAI leadership (+)

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INSTITUTIONALIZING PUBLIC ACCOUNTABILITY WHY INDEPENDENT EXTERNAL PUBLIC AUDITING THRIVES IN SOME COUNTRIES AND FAILS IN OTHERS

4. WHAT HEADS OF SAIS THINK

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WHAT HEADS OF SAIS THINK

Method: 17 confidential interviews with SAI leaders: 6 INTOSAI regions, WDI classifications: 5LI, 5LMI, 6UMI, 1HI FH classification: 6 not free, 4 partly free, 7 free countries SAI model: 10 monocratic, 4 Board, 3 court models 2/20 interviewees were female 15 face-to-face, 2 phone interviews, Summer 2011 Analysis from an interpretive perspective, using inductive qualitative content analysis (Mayring)

Objective: to carve out logics of political practice, to add reflexivity through the subjects perspective, to bring the lifeworld back in (Bourdieu, Harrits)

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WHAT HEADS OF SAIS THINK: RESULTS (1/4)

Reform initiation:
I1: Yes, because of outside influence. It would have been impossible to change by itself. But there was still local ownership of the process because [name of the Vice President] and the President [of the SAI] supported it.

(External influence (part of PFM reform, INTOSAI), follwed by engagement by committed individuals, part of broader political change)

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WHAT HEADS OF SAIS THINK RESULTS (2/4)

Reform strategy:
I7: And the main source for our independence is that we have to convince our employees, our staff first, that the commitment to mutuality and professionalism is very important to keep our institution independent. And at the same time this also depends on the administrative leadership of the head of the institution, that others from outside of the institution feel that he is not an enemy for them.

(Legal reforms, staff training, infrastructure, exchange, improve external communication, personal integrity, leadership skills)

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WHAT HEADS OF SAIS THINK RESULTS (3/4)

Support factors:
I8: We dared to press for changes against several political parties and ministries. Then the government composition changed. We also received support from the public, NGOs (particularly Transparency International), the media and support from donors (EU, OSCE, SIGMA, UNDP, WB.). We received also support from the financial committee to whom we are accountable. They are professionals from accounting and control and support us. We have received support also from neighboring SAIs, as well as from the Norwegian SAI, INTOSAI, EUROSAI.

(pol. will, culture, history, civil society, PAC, political change, economic growth, INTOSAI, donors, GRECO observations, personal motivation)

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WHAT HEADS OF SAIS THINK RESULTS (4/4)

Constraints:
I16: , you see the problem is not auditing the people close to the president, you can audit them. There are basically two areas where audit institutions have problems, the office of the president and the defense ministry. They are not well trained journalists at times when I give them some of the information, but when I see the way they treat them, it is sensational, and through their own interpretation, which has not anything to do with the findings we have had and the analysis we ourselves have done.

(lack of political will, illiteracy, low awareness of SAI role, weak rule of law, violence, lack of capacities, institutional design, weak management)

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Int. Nr.
1

SAI reform successful?

Yes, new SAI act approved in 2010

Political will important?

Yes, new act was delayed until change of composition of parliament Yes, governance reform is led by president of the republic Yes, delays due to opposition in parliament

Open access for elites?

Yes, lately lots of efforts to curb corruption Yes, strong economic growth, overall democratic reforms Yes, strong economic growth, overall democratic reforms, political consolidation of the military ongoing Yes, overall democratization, strong economic growth

SAI led reform process?

Yes, two board members led the reform process.

Other leaders?
Yes; EU study, other SAI leaders, political party Yes, revolution started democratic process, EU neighborhood support

Yes, new SAI act approved in 2008

Yes, new SAI act approved in 2011

Yes.

Yes, audit reform in 1988, subsequent gradual implementation

Yes, overall constitutional reforms

No, audit reform in 1999 but only de jure, de facto not implemented

Yes, blockade by president of the republic

Yes, new SAI act adopted in 2011 but not yet fully implemented Yes, audit act amended in 2004

Yes, president of the republic resisted reform for a long time Yes, post-conflict situation, overall governance reforms

No, semi-authoritarian No, SAI Board members are regime, no rule of law for complacent. elites, high corruption, strong growth but largely due to petrol exports. No, very fragile country with Yes, SAI pushed for ongoing violent conflicts reform

Yes, Recent SAI reforms were part of overall democratic reforms. SAI was created by two influential political leaders more than 100 years ago. There is no resistance from the public.

Yes, strong support by external actors and the public Yes, strong support by external actors

No, very fragile country

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Yes, new SAI law enacted in 2005 but only came into effect in 2007

Yes, executive delayed implementation for years (first draft of law was presented in 2001)

No, post conflict country, slowly implementing democratic reforms

Yes, SAI developed trust from political parties and internal culture of integrity, and slowly increased de facto power. Yes, SAI led process

Yes, external actors, parliamentarians and public pressure groups supported the reform

Int. Nr.
9

SAI reform successful?

No, no SAI legal reform initiated. No, SAI scope has been reformed in 1999 but still not implemented properly. Yes, comprehensive SAI reforms adopted in 1992-1995. Yes, overall SAI reforms in 2004, new monitoring system launched in 2010. Yes, constitutional reforms in 1984, in 2011 dismissal of head of SAI due to public outcry. Yes, new SAI law adopted in 2008

Political will important?

Yes, lack of political support impedes reform. Yes, executive only officially supporting but de facto blocking SAI work. Yes, reform part of overall change of political system. Yes, SAI reforms part of overall democratic reforms Yes, President of the republic ordered change of SAI head.

Open access for elites?

No, very fragile country with ongoing conflicts. Partly.

SAI led reform process?

No.

Other leaders?
Donor support for SAI capacity building has been initiated. ?

10

11

Yes.

12

Partly, strong growing economy, successfully consolidating democratic reforms Yes, but weak rule of law for the wider public.

Yes, SAI led reform process and had to overcome many constraints

Yes, external pressure and internal pressure led to democratization. Yes, the public supports reform.

13

Not clear about SAIs role in 1984 but SAI leader resisted his dismissal in 2011.

Yes, public outcry led to change of head of SAI.

14

Yes, President of the republic supported reform

Yes, interviewee confirmed hypothesis when speaking about other countries. Yes; president does not yet support reform of SAI but supported adoption of new procurement law; proposal of the procurement law was first blocked by the prime minister. Yes, all parties supported SAI reform.

15

16

Yes, new SAI strategy launched in 2004 to increase its public profile. No legal reform required. No, SAI legal reforms not yet achieved but gradual improvements such as a new procurement law approved in 2011.

Partly, consolidated control over the military but low organizational proliferation, improvements in governance. Yes, OECD member.

Yes, SAI led the reform process.

Yes, SAI led reform of end of year audit and also supports public administration reforms. Yes, procurement law reform was led by SAI and current efforts for SAI legal reforms are led by the SAI.

Partly, semi-authoritarian regime with high levels of corruption and weak rule of law but organizational proliferation.

17

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No, constitutional reforms were approved in parliament but could not be adopted due to national political crisis.

No, fragile country with ongoing violent conflicts, semi-authoritarian system, low growth.

Yes, SAI initiated reform.

Yes, regional INTOSAI support, donor support, public support. Yes, INTOSAI input, learning from peers, support from parliamentarians and the public increasing. Yes, support by INTOSAI regional group. SAI plans to approach donors. Media often counterproductive, journalists would need training. Parliament dominated by governing party. Yes, support by all political parties but political context impeded reform implementation.

INSTITUTIONALIZING PUBLIC ACCOUNTABILITY WHY INDEPENDENT EXTERNAL PUBLIC AUDITING THRIVES IN SOME COUNTRIES AND FAILS IN OTHERS

5. CONCLUSION

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SUMMARY: WHY INDEPENDENT EXTERNAL PUBLIC AUDITING THRIVES IN SOME COUNTRIES AND FAILS IN OTHERS
While the institutional arrangements for government auditing, the nature of the source of national income, the external influence on reform, the local demand for public accountability and the technical and organizational capacities of SAIs matter, -> the political economy of inter-elite relations

and the existence of SAI leadership capacities and commitment

ultimately conditions the effective institutionalization of SAIs as accountability arrangements.

-> SAIs work if they are the result of a political process.

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OUTLOOK
Research: promissing potential for further research (need case
studies, more statistical data, anthropological research of elite motivations etc.)

Practice: There is a momentum for change -> SAIs seem very motivated, also UNGA Resolution need a system-wide comprehensive approach to strengthening SAIs, based on a profound situational analysis

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FOUR MAIN STRATEGIES FOR A COMPREHENSIVE APPROACH TO SAI REFORMS

I. II. Technical capacity building but do not stop there. Empower the SAI leadership to belief in reform success, to
engage in learning processes and to build alliances with partners and create a momentum for change.

III. Build up coordinated pressure from all sides (SAI staff,

donors, parliamentarians, media, NGOs, private actors, international law) on the political leadership, and create incentives for elite groups, so that the gains from enabling the SAI outweigh potential costs.

IV. Nurture and spread a culture of integrity so that

transparency and public accountability become a virtue.

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 www.profilnet.at

THANK YOU FOR YOUR ATTENTION!

The tendency of many SAIs is to play victim mentality. That is not the way you operate as a leader. Leadership is about influencing events. It is not about being submissive to the circumstance. You need to put a lot of effort in building a leader. (Interviewee 11)

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REFERENCES
Andrews, Matthew, Jesse McConnell and Alison Wescott (2010) Development as Leadership-Led Change - A Report for the Global Leadership Initiative and the World Bank Institute (WBI), Faculty Research Working Paper Series . Harvard Kennedy School, March 2010, RWP10-009 Bovens, Mark (2007) Public Accountability in Ferlie, E., Lynn, L.E. & Pollitt, C. (eds.). The Oxford handbook of public management. Oxford Univ. Press, Oxford. Pp.182-208. Bovens, Mark, Thomas Schillemans and Paul T Hart. (2008) Does public accountability work? An assessment tool in Public Administration, Vol. 86, No.1, pp 225-242. Fukuyama, F. (2004) 'The Imperative of State-Building', Journal of Democracy 15(2): 1731. Haber, Stephen (2006) Authoritarian Government in Weingast, B.R., Wittman, D.A. and Goodin, R.E. The Oxford handbook of political economy. Oxford, UK: Univ. Press. 693-707 Harrits, Gitte Sommer (2011) More Than Method?: A Discussion of Paradigm Differences Within Mixed Methods Research in Journal of Mixed Methods Research, 5(2), pp.150-155 Huntington, Samuel P. (1968) Political Order in Changing Societies. New Haven: Yale University Press.; INTOSAI-Donor Cooperation (IDI) (2010) Capacity development of supreme audit institutions status, needs and good practices. INTOSAI-Donor Cooperation Stocktaking Report 2010. INTOSAI Development Initiative (IDI), Oslo, Norway. Lipset, Seymour Martin (1959) "Some Social Requisites of Democracy: Economic Development and Political Legitimacy." The American Political Science Review 53 (1):69-- 105. Mayring, Ph. (2000). Qualitative Inhaltsanalyse. Grundlagen und Techniken (7. Auflage, erste Auflage 1983). Weinheim: Deutscher Studien Verlag

North, D.C., Wallis, J.J. and Weingast, B.R., (2009b) Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History, Cambridge University Press, N.Y.
Przeworski, A.et.al. (2000) Democracy and development. Political institutions and well-being in the world, 1950 - 1990. Cambridge: Cambridge Univ. Press.

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DATA SOURCES FOR GRAPHS AND FIGURES: SEE THE CORRESPONDING PAPER BY THE AUTHOR
Slides 10-13(world maps): see Appendix B Slide 17 (SAImodel): table 3 (1) Slide 18 (PFMaid): Appendix D, table D.8(3), graph D.1 Slide 18 (direct tax): Appendix D, table D.11 (1), graph D2 Slide 19 (INTOSAIregion): Appendix D, table D.11 (2), graph D.3 Slide 20 (press freedom): Appendix D, table D.11 (3) Slide 20 (press freedom): table 3 (1)

Slide 21 (ext.environment): Appendix D, table D.2. (5)

Slide 21 (performance audit): Appendix D, table D.2. (5) Slide 23 (Doorstep conditions): Appendix D, table D.11 (4) Slide 24 (judicial indep.): table 3 (2b) Slide 24 (p_xconst): table D.2 (6) Slide 24 (p_fragment): table D.2(6) Slide 24 (new business density): Appendix D, table D.11 (5), graph D.4 Slide 26 (Sal leadership): graph 1, Appendix D, table D.10 (2) Slide 26 (Dev. Action Plan): Appendix D, table D.4 (1)

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