The Role of Audit in Promoting Government Accountability Muhammad Yunis Khan Auditor General of Pakistan

Panelist 3rd ASOSAI Symposium 1. The role of audit in promoting government accountability continues to be a theme repeatedly discussed within the ASOSAI / INTOSAI community over the last three decades. In fact the ASOSAI symposium at Chiang Mai Thailand in 2000 was titled The Role of SAIs in Promoting Good National Governance. Accountability forms the backbone of good governance and without establishing credible systems of administrative and legislative accountability, it is not possible to ensure continued good governance. 2. The philosophical basis of discussions on accountability are contained in the Lima Declaration of Guidelines on Auditing Precepts adopted at the IX INCOSAI in Lima in 1977, after deliberations by the Third Assembly of the ASOSAI in 1985 at Tokyo, Japan. Apart from the independence of Supreme Audit Institution, the rule of law and effective legislative oversight are considered to be essential premises for independent and effective government auditing that promotes government accountability. 3. Basic concepts, definitions of government accountability and various aspects of role of audit in the changing world of today in promoting and strengthening the accountability process have been adequately addressed in the key-note address and the Special Report presented before this forum today. There are three aspects of accountability identified during the 7th Congress of the INTOSAI 1971 and these are: fiscal-accountability, managerial accountability, and programme accountability.

4. The traditional or fiscal accountability deals with financial integrity, disclosure and compliance with applicable laws and regulations. Managerial accountability is concerned with the efficient and economical use of financial, physical, human and other resources. Programme accountability assesses whether programs are achieving

their intended objectives and whether best projects have been selected to achieve these objectives in relation to total costs and outputs/benefits. Section-4 of the Lima Declaration states The Supreme Audit Institutions audit objectives legality, regularity, economy, efficiency and effectiveness of financial management basically are of equal importance. However, it is for each Supreme Audit Institution to determine its priorities on a case-to-case basis. We, in Pakistan, have adopted a mixblend of financial and performance audit for improving financial management and strengthening of the accountability process. Based on risk analysis approach in auditing, we have started highlighting systemic issues in governmental operations. 5. In our current audit reports, we have highlighted systemic issues relating to highvalue procurements, award of contracts and cash management in the Federal Government, Ministries, Divisions and Departments. And where appropriate, we often suggest ways to address these issues. We have a vision to integrate audit and the core financial management of the country for improved, transparent and accountable governance. A special publication containing systemic issue in governmental operations based on the results / outcome of the audit has been sent to all the Principal Accounting Officers and other concerned stakeholders. 6. Improving and strengthening accountability should be a constant theme of audit reports. This depends on the quality of information and reporting on performance contained in them. Performance reporting ought to focus on program objectives / intentions, constraints and accomplishments and detailed analysis of variances noticed. To improve the quality of financial reporting and auditing, we are in the second phase of a World Bank assisted Project titled Project for Improvement of Financial Report and Auditing (PIFRA). The revised accounting and financial model developed under the project have been designed to meet the requirements of an Integrated Financial Management System (IFMS) in Pakistan. Modern auditing techniques and qualitative processes are being adopted in bringing about a qualitative change in the audit output/reports. The objective is to strengthen the accountability in governmental operations. 7. The role of audit basically remains the same i.e. reporting. But its strategy has undergone a paradigm change. In the new global paradigm, national auditing agencies 2

(SAIs) have to compete as a coalition to benefit from the three global drivers of paradigm shift i.e. globalization, technical innovation and customization. The new paradigm sees improvement and innovation in methods and technology as central. Strategic alliances between SAIs in research, developing processes, and knowledge sharing will create a professional advantage, strengthening trust and enhancing credibility for SAIs, with its stakeholders. In return the stakeholders will benefit internally and at the international level. Their future role will be based on the capability and competence to integrate the three factors to improve its core competency i.e. Auditing. 8. In our times, the systems of audit and accountability can not function effectively without continued professional education of the auditors and the auditees. It is the emerging tri-lateral relationship between the auditor, the auditee and the stakeholder that is expected to upgrade accountability practices in the public sector. Audit which mainly focuses on highlighting the anomalies, irregularities and disparities within the financial or managerial working of an organization, can not evolve without a selfrealization on the part of the stakeholders about their roles, duties and the collective responsibility of the civil society. Auditing systems transform and change, as will the process of public accountability. However, we must realize that audit can not be effective without the institutionalization of the process of accountability as a whole. Each person, each individual, each citizen of a state is a stakeholder in this process of public accountability. 9. The world is changing very fast today. SAIs have to be alert in re-defining their roles and strategies to address issues arising due to a host of factors including globalization of markets, changes in information technology, corporate corruption, and other malaises undermining transparency in public sector operations. In the past, the SAIs had been making efforts in promoting transparency, improving governmental performance and ensuring public accountability with traditional strategies, tools and skills. But problems and challenges of today cannot be addressed with devices of yesterday. To improve and strengthen public accountability SAIs have to take some initiatives collectively.

Sharing of information and increased co-operation at the international, regional and sub-regional levels by connecting the SAIs, through internet. More training programmes / workshops for the auditors to upgrade knowledge and skills. Improving the quality of audit reports Presentation, systemic issues etc to create an impact on the users. Mutual co-operation between the SAIs in the areas of common interests. Promoting value added approach in auditing through better co-operation with the auditee. More research in identifying new auditing procedures, methodology and techniques to tackle current issues and challenges.

1.6 Let me conclude my comments with the quote of one of our colleagues present here today on facing new facts and the known challenges that lie ahead: No country or SAI can or should try to do it alone, and the more we partner together to develop solutions to these shared problems, the greater the chances of success. The choice is simple. We can start rowing together, or we can risk sinking separately.