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Presentation by G. de Vries (English), Regional Conference for Supreme Audit Institutions of the European Neighbourhood South Region, June 2018

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Presentation by G. de Vries (English), Regional Conference for Supreme Audit Institutions of the European Neighbourhood South Region, June 2018

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Presentation by G. de Vries (English), Regional Conference for Supreme Audit Institutions of the European Neighbourhood South Region, June 2018

  1. 1. © OECD Regional Conference for Supreme Audit Institutions of the European Neighbourhood South Region The changing role of Supreme Audit Institutions in the light of the Sustainable Development Goals Gijs de Vries Senior Visiting Fellow, London School of Economics (LSE) Former Vice-President, Netherlands Court of Audit 20 June 2018 Tunis, Tunisia
  2. 2. © OECD Outline • The Sustainable Development Goals • Accounting for progress: follow-up and review • A role for audit institutions? • INTOSAI • Opportunities for SAIs o Auditing national preparedness o Auditing financial management o Auditing SDGs 16 and 17 o Leading by example • Making a difference
  3. 3. © OECD The Sustainable Development Goals “Transforming our World: the 2030 Agenda for Sustainable Development” United Nations General Assembly Resolution A/RES/70/1, 25 September 2015 17 Sustainable Development Goals 169 targets 244 indicators so that “no one will be left behind.” “A universal, transformative and integrated agenda that heralds a historic turning point for our world” – UN Secretary-General Ban Ki-Moon (2015)
  4. 4. © OECD
  5. 5. © OECD Follow-up and review Global level: High-level Political Forum on Sustainable Development Meets annually - at the level of Heads of State and Government every 4 years, under the General Assembly - at technical and ministerial level in other years, under ECOSOC Themes for review 2017: Goals 1, 2, 3, 5, 9 and 14 2018: Goals 6, 7, 11, 12 and 15 2019: Goals 4, 8, 10, 13 and 16 National level: Voluntary National Reviews - member states invited to “conduct regular and inclusive reviews of progress” at the national and sub-national levels and present Voluntary National Reviews (VNR) at the HLPF (Agenda 2030) 22 countries submitted VNRs in 2016, including Egypt, Morocco 43 countries submitted VNRs in 2017, including Jordan, Qatar 47 countries submitted VNRs in 2018, including Bahrain, Egypt, Lebanon, Qatar, Saudi Arabia, State of Palestine, United Arab Emirates
  6. 6. © OECD The role of Supreme Audit Institutions Why? • Trust is a cornerstone of the social contract between citizens and governments; • Trust in government requires the public sector to be transparent and accountable; • Supreme Audit Institutions (SAIs) are pillars of transparency and accountability What? SAIs provide independent assurance to the legislature and the citizens about the legality, efficiency, effectiveness, and integrity of public financial management How? SAIs make a difference to the lives of citizens if they: • strengthen the transparency, accountability, and integrity of government and public sector entities; • demonstrate ongoing relevance to citizens, the legislature, and other stakeholders; • are model organisations that lead by example (ISSAI 12)
  7. 7. © OECD INTOSAI INTOSAI “aims to become an authoritative, independent voice on the challenges facing the global community in planning and implementing the SDGs and reporting on their progress.” (Abu Dhabi Declaration, December 2016) Cross-cutting priority: contributing to the follow-up and review of the SDGs Four objectives for SAIs:  assessing the preparedness of national governments to implement, monitor, and report on progress of the SDGs, and subsequently to audit their operation and the reliability of the data they produce;  undertaking performance audits that examine the economy, efficiency, and effectiveness of key government programs that contribute to the SDGs;  assessing and supporting the implementation of SDG 16 which relates in part to transparent, efficient, and accountable institutions; and SDG 17, which concerns partnerships and means for implementation;  being models of transparency and accountability in their own operations, including auditing and reporting (INTOSAI Strategic Plan 2017-2022)
  8. 8. © OECD How to audit national preparedness?  Political commitment Has the government set national priorities, baselines, measureable targets, and a timetable to implement the relevant goals and targets?  Implementation plans Are coherent implementation plans being developed? Have the SDG-related policies been integrated with other national development plans? Who is in charge of co-ordination?  Responsibilities and budgets Have political responsibilities and resources been allocated for each of the priority targets? Are budgets realistic? Will additional funds be required?  Monitoring and reporting Are arrangements in place for monitoring and reporting on progress in reaching the SDGs? Will the reports be made public, and is Parliament ready to debate them?  Awareness raising Does the government encourage public awareness of the SDG? Does it stimulate dialogue with all relevant stakeholders, including the private sector, academia, and civil society organisations?  Reliable data Is the national statistical agency free to collect and report data without political interference? Is it able to collect and public complete, credible, relevant, accurate, and timely data?
  9. 9. © OECD Are national SDG-related policies implemented well? How to audit good financial management (performance)?  Effectiveness: on key government targets, are indicators improving, stagnating, or regressing? Are programs having a clear and positive impact on the quality of life of citizens? Is government doing the right things, and is it doing things right?  Economy and efficiency: are programs financed at reasonable cost, and implemented within budgets? Has funding been wasted?  Integrity: have programs and projects been designed and managed to minimize the risk of fraud and corruption?  The environmental aspects of the Sustainable Development Goals can also be audited in the context of financial and compliance audit. SDGs 6 (Clean water and sanitation), 13 (Climate action), 14 (Life below water), 15 (Life on land), as well as relevant environmental targets under other Sustainable Development Goals
  10. 10. © OECD Example: water management The Middle East and North Africa is the most water scarce region in the world. Over 60% of the region’s population lives in areas with high or very high water stress. The MENA region has the greatest expected economic losses from climate-related water scarcity, estimated at 6-14% of GDP by 2025. Relevant SDGs (selection): SDG 6.1, 6.4, 6.5 (water and sanitation); SDG 13.1, 13.3, 13.4 (climate change); SDGs 1.5 and 11.5 (disaster management) Possible audit questions:  Are national water resources being managed sustainably and efficiently?  Are water services being delivered reliably and affordably?  Are water-related risks being appropriately recognized and mitigated? World Bank, Beyond Scarcity. Water Security in the Middle East and North Africa (2018)
  11. 11. © OECD Auditing SDG 16 (I) SDG 16 (4) and SDG 16 (5)  SDG 16(4): By 2030, significantly reduce illicit financial and arms flows, strengthen the recovery and return of stolen assets and combat all forms of organized crime  SDG 16(5): Substantially reduce corruption and bribery in all their forms Audit questions might include: • Strategy Is there a national anti-corruption strategy which includes targets, indicators, and a timetable? Does the government report publicly on the results obtained? Does it encourage the active participation of individuals and groups outside the public sector, such as civil society, in the prevention of and the fight against corruption (Art. 13, United Nations Convention against Corruption)? Are whistle-blowers protected? • Agencies Do the agencies charged with combating fraud and corruption have appropriate mandates, budgets, and human resources? Do they share information and work together? • State-owned companies Does each state-owned company have a system of internal control and internal audit that is fit for purpose? • Political finances Are political finances sufficiently transparent (parties, elections, ministers, members of Parliament)? Are transparency requirements being enforced effectively? Are sanctions dissuasive?
  12. 12. © OECD Auditing SDG 16 SDG 16(6): Develop effective, accountable and transparent institutions at all levels Indicator 16.6.1: Primary government expenditures as a proportion of original approved budget, by sector (or by budget codes or similar) Audit questions might include:  Reporting Does the government report the rate of primary government expenditures by sector in the annual budget execution report? Are the figures correct?  Budgetary transparency Does the government publish the annual draft budget and the annual budget execution report on the internet? Does the government publish a Citizens Budget? Is the annual budget execution report issued on time, and does the SAI receive it within three months of the end of the fiscal year? Do budgetary documents reflect national policy on the SDGs?
  13. 13. © OECD Auditing SDG 17 SDG 17 (1): Strengthen domestic resource mobilization, including through international support to developing countries, to improve domestic capacity for tax and other revenue collection Indicator 17.1.1: Total government revenue as a proportion of GDP, by source Indicator 17.1.2: Proportion of domestic budget funded by domestic taxes Audit questions might include:  Have policies been agreed to improve domestic resource mobilization? Do they reflect the targets and indicators of SDG 17?  Does the customs administration follow international good practice?  Are taxation policies structured and administered to minimize the risk of losses to the treasury from illicit financial flows? Has the country joined international initiatives to combat tax avoidance and evasion? E.g. WCO, Framework of Principles and Practices on Customs Professionalism (2015); OECD, Integrity in Customs – Taking stock of good practices (2016) E.g. Multilateral Convention on Mutual Administrative Assistance in Tax Matters; Global Forum on Transparency and Exchange of Information for Tax Purposes; Extractive Industries Transparency Initiative (EITI)
  14. 14. © OECD Being a model of transparency and accountability “SAIs only deserve trust if they themselves are objectively judged as being credible, competent and independent and can be held accountable for their operations. In order to make this possible, they need to be model institutions (…)” (ISSAI 12) How can SAIs lead by example?  Institutional standards o Independence o Mandate  Operational standards o Internal governance and ethics o Audit quality and reporting o Financial and human resource management o Communication and stakeholder management
  15. 15. © OECD Institutional standards  Independence o Effective constitutional framework o Financial autonomy o Organisational autonomy o Independence of the Head of the SAI and its officials  Mandate o Including performance audit (economy, efficiency, effectiveness) o Access to all relevant information (including security-related) o Right and obligation to report
  16. 16. © OECD Operational standards SAIs are required  to make public their mandate, responsibilities, mission and strategy  to adopt standards, processes and methods that are objective and transparent  to apply high standards of integrity and ethics for staff at all levels  to operate systems of risk-based auditing and of quality control that reflect the relevant INTOSAI standards  to communicate timely and widely on their activities and audit results through the media, websites and by other means  to communicate effectively with the Parliament, the government, and other stakeholders ISSAIs 1, 10, 11, 12, 20, 30, 40; Fundamental Auditing Principles
  17. 17. © OECD Building blocks of trust in institutions – performance and accountability World Bank: “The Arab Spring events caught the world by surprise. Standard development indicators failed to capture or predict the outburst of popular anger during the spring of 2011. What could explain this conundrum (…)?” (…) people felt stuck (…) and the middle class in particular was frustrated. Measures of subjective wellbeing and determinants of life (…) show a precipitous decline in life satisfaction scores on the eve of the Arab Spring, especially for the middle class. These declines reflected perceptions of falling standards of living, related to the shortage of formal-sector jobs, the dissatisfaction with the quality of public services, and government accountability. (…) The social contract of redistribution without voice stopped working. The middle class wanted more – it wanted voice, real opportunities and accountability.” Elena Ianchovichina, Lili Mottaghi, and Shantayanan Devarajan, Inequality, Uprisings, and Conflict in the Arab World, World Bank, MENA Economic Monitor, 2015
  18. 18. © OECD N. Spierings, ‘Trust and Tolerance across the Middle East and North Africa: A Comparative Perspective on the Impact of the Arab Uprisings’, Politics and Governance, 2017, Volume 5, Issue 2, p. 10
  19. 19. © OECD Making a difference By auditing national implementation of the Sustainable Development Goals, Supreme Audit Institutions can:  make a difference to governments (good financial management)  make a difference to parliaments (accountability)  make a difference to citizens (trust)  strengthen the position, performance, and reputation of the SAI

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