Issues and Opportunities in Working with Supreme Audit Institutions (SAIs)

1
Issues and Opportunitiesin Working with
Supreme Audit Institutions (SAIs)

• Latin American and the Caribbean Region
• May 3, 2006

2
Regional Objectives

• To enhance SAI independence, capacity and impact.
• Through-
• 1) high level policy dialogue
• 2) innovative interactions
• 3) financing to build capacity and
• 4) leveraging the Banks portfolio.

3
Regional Context and Opportunities

• Up to date analytical underpinnings of Country
  Economic and Sector Work.
• Country Assistance Strategies in the last four
  years have increasingly contemplated
  interventions to modernize public sector
  institutions and strengthen governance.

4
Regional Context and Opportunities

• Increases in Country Assistance through Budget
  Support.
• Greater reliance on Client Country Systems.
• Anti- Corruption Initiatives.
• Strategic External Partnerships and
  Harmonization.

5
What do the diagnostic say?

• In the last 4 years SAIs have done very well in
  improving their statutory position. Independence,
  audit scope and access has improved.
• There has been some consistent efforts across the
  region to improve Human Resources, through
  recruitment, retention, qualification and
  training however results on the ground have been
  limited due to lack of budgetary resources.
• The quality of Leadership, Strategy and Ownership
  of reforms is varied
• The areas most in need of modernization continue
  to be in the areas of Governance, Audit
  methodology, External Relations and timeliness,
  monitoring and follow up of results.

6
Some examples of recent interventions

• a) High level policy dialogue
• Peru- 2002/ 2003 strengthening of Congressional
  Oversight, Increased Independence of SAI.
• Peru-New Regulations Required to Implement and
  Support the National Control Law.
• Haiti-supporting the introduction of a new
  decree, facilitating the reorganization of the
  institution and implantation of capacity building
  activities.

7
Some examples of recent interventions

• a) High level policy dialogue
• Honduras- New SAI created in 2002.Crafting and
  implementation of new organic law and regulations
  based on INTOSAI standards.
• Poverty Reduction Support Credit supported
  execution of the first phase of the HR Strategy-
  severance packages for unqualified staff,
  retooling of professional staff, establishment of
  vigilance committees.
• Technical Assistance Loan is supporting the
  second phase of the HR strategy- creation of a
  new University curriculum for public accounting.
  It is expected that not less than 70 of SAI
  staff be certified as public auditors in the next
  two years.

8
Some examples of recent interventions

• b) Innovative interactions
• Ecuador- Memorandum of Understanding between
  National Audit Office of Ecuador and World Bank
  for contracting of private audit firms and for
  oversight of quality.

9
Some examples of recent interventions

• c) Financing to build capacity
• Trust Funds Institutional Development Grants Two
  (2) under implementation and One (1)
  satisfactorily completed.
• Since 2001 we have been engaged with the Central
  American and Caribbean Organization of Supreme
  Fiscalization Entities (OCCEFS).

10
Some examples of recent interventions

• c) Financing to build capacity
• In Argentina, beginning in 2004, the Bank has
  partnered with the National Audit office, to
  implement a grant of US 600,000 for the training
  of professional accountants and the
  implementation of Computer Assisted Auditing
  techniques.

11
Some examples of recent interventions

• d) Leveraging the Banks portfolio.
• Investment Operations In Brazil the Secretaria
  Federal de Controle handles 100 of the audits of
  bank- financed projects.
• Borrower Country Systems and the Audit
  Arrangements in place including in Mexico,
  Brazil, Colombia, Peru.
• Evolving practice has shown that for 2004, in
  LCR, 25 of project audits conducted were
  prepared by SAI. This percentage has
  progressively increased since then, but we are
  still below the Bank-wide average (45 in 2004).

12
Major Challenges and obstacles to further
engagement

• a) Low enforcement of auditor findings.
• b) The lack of capacity to implement reform.
• C) Limited financial and personnel management
  independence and insufficient resources for
  effective public external audit.

13
What we could do more of

• a) Systematic support for human recourse
  development, by providing knowledge and learning
  opportunities, including peer learning.
• b) Foster the creation of multi-year Peer Review
  Programs in conjunction with other development
  partners.
• C) Mobilize grants to help SAIs beef up their
  non-staff resources, modernize their audit
  methodologies and improve their external
  relations and communication policies.