Abstract
Mr. Roel Jannsen, an economics and financial journalist, has written an interesting book on Supreme Audit Institutions (SAIs). In essence, the book is a compilation of interviews of eight current and former heads of audit institutions from across the world. The book is unique in that it brings us the opportunity to ‘travel’ around the world, visiting the SAIs of different countries. The lessons from the personal experiences of these SAIs’ leaders are, indeed, what makes the book particularly interesting.
The book is well written, easy to read and fairly short, consisting of 103 pages. Excluding the Introduction, the book contains 8 sections pertaining to the SAIs of Tunisia, Austria, South Africa, the Philippines, Estonia, the United States, Uganda and Iraq. Besides the opinions of the heads of the SAIs, in each section we find a summary of the key statistics and some additional information about each country (e.g., population, GDP) and a brief description of the history of the institution. It also contains some biographical details (and a picture) of the SAIs’ leaders. Information about how the local SAI interacts with the International Organization of Supreme Audit Institutions (INTOSAI) is included as well. Given the topic, the approach and the structure of the book, it will be of interest to the general public. In the following, I will briefly discuss the salient points of the different sections and conclude with some thoughts.
The prologue ‘The pillars of integrity’ sets the scene. The history of the Netherlands Court of Audit is used to introduce the key theme of the book: the role of SAIs in today’s society. The prologue explains the vital role of SAIs in the accountability of governments, in the efforts to enhance governance in government institutions and in the disclosure of corruption cases. It also introduces three underlying topics discussed throughout the book: the evolving nature of SAIs and their different roles depending on the jurisdiction; the importance of individual leadership; and the current challenges of SAIs. The prologue closes with a commentary about INTOSAI’s assistance to national SAIs.
The section ‘La Cour Est Dans Mon Coeur’ focuses on the Tunisian Court of Auditors and its president Faiza Kei. The biographical information about the president underscores her involvement in women’s rights movements. Discrimination of women in decision-making was one of the issues she paid attention to during her time in office. In Kei’s view, the main duties of the Tunisian SAI are to: act as a watchdog of the political process; perform performance audits; and to fight against corruption. The section includes a brief discussion of the profound effect that the changes in government caused by the Jasmine Revolution in 2011 had on the SAI’s role and activities.
The section ‘Accountability, Transparency and Independence’ discusses the Austrian Rechnungshof and the role of Josef Moser, its current president. The recent financial crisis in Europe and the role of SAIs as a driver of reforms and changes in the public administration together with other structural problems faced by Austria and other European Union (EU) countries, such as the costs of pension systems, education, and health care, are at the core of the Austrian SAI’s agenda. In its president’s view, all these issues require SAIs to be forward-looking. The section also provides a description of specific examples of how the Austrian SAI works and how it interacts with citizens. The section closes with some words about his experience as a Secretary-General of INTOSAI and his involvement in the establishment of the INTOSAI Working Group on Accountability for and Audit of Disaster-related Aid.
‘The Leadership Makes the Difference’ section focuses on the South African SAI and its president Terence Nombembe. The first challenge he faced on his appointment in 2006 was a lack of qualified accountants and auditors. Besides promoting a new qualification for government auditors and developing some leadership programmes, he also promoted the notion of ‘clean audits’ and ‘dashboard reports’ as metrics for the effectiveness of government departments. In addition, the South African SAI has placed emphasis on bringing awareness of its existence and functions to government agencies and to the general public, and fighting against corruption, an endemic problem in South Africa.
‘The Face of Trust and Hope’ details the Commission on Audit (CoA) in the Philippines and its Commissioner Heidi Mendoza. Her story illustrates the dangers of being a government auditor, particularly when investigating corruption cases. Since her appointment, she has required security protection. The main activities of the CoA relate to specific requests for investigation of corruption cases and financial/compliance audits for government agencies. Among the challenges the agency faces, the Commissioner mentions the problem of logistics, due to the characteristics of the territory, and the participation of the CoA in the accountability process of natural disasters. The section concludes with some comments about a new initiative, the Citizens Participatory Audits (CPA) where citizens are engaged in the auditing process.
The section ‘E-auditing in Estonia’ provides specifics about the National Audit Office of Estonia (NAOE) and its Auditor General, Alar Karis. Karis points out that one of the challenges in Estonia is to overcome the Soviet legacy, and this has had an impact on the development of the NAOE. Overall, the issues faced by the Estonian SAI are similar to those of other developed countries (e.g. population ageing and the sustainability of the pension system) but there are also problems specific to Estonia (e.g. too many municipalities and poor infrastructures). Compared to other countries, the reports of NAOE get significant broad media coverage. Two areas are a priority for the NAOE: e-governance and environmental audits. Finally, it is worth mentioning that Estonia is leading the Working Group on Environmental Auditing (WGEA) of the INTOSAI.
The next section, ‘From Accounting to Accountability’, is about the US Government Accountability Office (GAO) with comments from its former head, David Walker. He provides insights about what independence means in the context of public sector auditing. The section lists information about GAO audits, the expectations gap and how they work based on a ‘high risk list’, that is, a list containing the names of the agencies and activities that are more prone to waste, abuse, fraud or lack of effectiveness/efficiency. During his period in office, the GAO moved from an ‘accounting’ to an ‘accountability’ approach, including a change in the name of the agency (from General Accounting Office to General Accountability Office). The section also refers to the role of GAO in the event of a natural disaster and the difficulties GAO faced when trying to get information from the Federal Reserve during the current financial crisis. It closes with some comments about the Global Working Group (GWG), a group of SAIs from all over the world whose goal is to stimulate innovation and share best practices among SAIs.
The section ‘Auditing Extractive Industries and the “Oil Curse”’ is about the Office of the Auditor General (OAG) of Uganda and his Auditor General John Muwanga. He was first appointed in 2001 but he resigned due to the difficulties of running the office (e.g. low salaries, staff shortage, lack of independence). Some changes were made after his re-appointment in 2007, especially after the approval of the National Audit Act of 2008. The new act brought more independence from the Ministry of Finance and new staff were hired, increasing significantly the technical competence of the office. The lobbying efforts of the donor community were critical in this process. Given the importance of foreign aid for the country, a significant amount of the office resources are invested in the auditing of donor aid. The section provides some examples of corruption cases discovered by the OAG. Finally, the OAG role in the auditing of extractive industries and its close collaboration with the Working Group on Extractive Industries (WGEI) of the INTOSAI is discussed.
The final section, ‘Rebuilding the Board of Audit in a Shattered Country’ is about the Federal Board of Supreme Audit (FBSA) in Iraq and its former President Abdulbasit Turiky Saeed. The first goal of the FBSA is to install the rule of law, fight corruption and improve the public sector of a country in the most adverse circumstances. Acknowledging the key role of independence, part of his efforts were devoted to convincing government institutions that they are independent from any social, political or religious influence. Fighting against corruption, an endemic problem of the country is FBSA’s priority. Besides the audits undertaken by the FBSA, the Ministry of Finance hires one of the big four audit firms to audit the oil revenues, a significant source of revenue for the government. A big problem in Iraq is the safety of FBSA personnel – employees are usually sent abroad after an audit to ensure their wellbeing and in some parts of the country there are no FBSA personnel at all. The section includes a description of some corruption cases.
Although this is not a textbook or a research endeavour, being an academic, I feel a critical review of the book is warranted. First, the book is superficial and uncritical. The different sections devoted to each country offer some general comments about the role of SAIs and their leaders without getting deeper into the main issues and challenges faced by the institutions/individuals. Even for a non-academic audience, the book could be more ambitious. Second, the book could have included a critical assessment of the role of SAIs based on the evidence collected through the interviews. That is, a closing chapter summarizing the main ‘lessons’ learned from these leaders and critically discussing the main findings is missing. Third, taking into account the increasing interest in biographies and identities in accounting and auditing research (see, for example Gendron and Spira, 2010; Shelton and Jacobs, 2015), more details about the biographical histories of the SAIs leaders would be appreciated by the reader. Finally, at times the book reads like a brochure about INTOSAI and its activities.
While the Art of Audit would have benefited from more ‘hard’ information about the SAIs and their leaders as discussed above, I do think it is a well-written and readable book on key institutions in modern society. The book is a good introduction to the inner workings of these organizations and anyone interested would benefit from reading it, including academics – as it takes us ‘out of the comfort zone’ of academia and gets us closer to ‘realities’.