Principles of SAI Independence

Principle 7: Follow-up Mechanisms

SAI Independence Principle 7

The existance of effective follow-up mechanisms on SAI recommendations

Principle 7 recognises that SAIs have two roles. One relates to holding public bodies to account. The other is about helping to achieve meaningful improvements. One of the main measures of a SAI’s effectiveness is whether governments and auditees act on its findings and recommendations.

A SAI therefore needs the power to follow up its audit reports. It should also be able to report to the Legislature and the public on the extent to which its recommendations are being implemented. If a SAI issues reports recommending improvements to internal controls or the better management of public services and these recommendations are ignored, then, it may be asked, why have a SAI? There should be a reasonable expectation on the part of audited entities that, once an audit report has been completed in accordance with Principle 6 (taking account of the views of the audited entity) and the SAI’s recommendations accepted, the public can expect that the recommendations will be implemented in a timely manner – and where they have not been, the audited entity should be expected to explain to the Legislature and citizens why not.

This principle does not specify who should undertake the follow up, nor where the results of such follow ups should be reported. The appropriate mechanism is widely regarded as a matter for the country context. As noted under Principle 1, the extent to which follow up processes need to be implemented through the legal framework or as a matter of practical application is also a point for consideration.

The options for follow up mechanisms may include some or all of the following:

  • a legal duty on the SAI to follow up its recommendations, with a responsibility to develop appropriate systems and an obligation to produce a follow up report to the Legislature at least annually;
  • the role being taken on by a government ministry (such as the Ministry of Finance), which must prepare a report to the Legislature which is tabled and made public;
  • each audited entity being required to produce an annex to its own annual report noting progress against the SAI’s recommendations; or
  • a committee of the Legislature itself carrying out the follow up, with the power to hold hearings and examine the affected entities, and a requirement to report to the full Legislature.

Other approaches can have an emphasis on enforcement and sanction. Enforcement of audit findings and recommendations is important for many SAIs, especially those which operate under the judicial model or in countries with strong cultures of compliance and sanction. Finding the best approach requires careful attention in law drafting, to achieve the desired level of compliance without undermining the fundamental precepts of public sector auditing as they apply in the particular jurisdiction.

These SAIs should inform the citizens about the results of their sanctioning procedures, whether conducted internally or through other jurisdictions.

When considering enforcement in an anti-corruption context, it is also important that the SAI has the ability to communicate findings to the Judiciary or other agencies responsible for law enforcement. This may happen, for example, in cases where the SAI detects possible corruption during an audit, or has specific authority to undertake forensic investigations that could result in prosecution. As noted under Principle 5 and Principle 6, it is important for the SAI’s reporting powers to have enough flexibility for this purpose.

Whatever follow up system is in place it needs to be robust, based on real evidence of implementation, timely and publicly available.