1. LEGISLATIVE SCRUTINY OF PUBLIC EXPENDITURES
M. Mozammal Hoque
Financial Management Sector Board
April, 2003

2. OVERVIEW OF PRESENTATION
Pillars of National Integrity System and Financial Accountability Cycle
Conceptual Approach to Parliament’s Role in Ex-Post and Ex-Ante Control
Current Situation
Future Challenges
Recommendations
This diagram is meant to illustrate the INTER-RELATIONSHIPS between the governance actors involved in public financial accountability. This reinforces the mosaic of issues that come together in the “public interest”
Some have shown this as an accountability chain, with the Exec / AG / and PAC each being a link in the chain. But this triangular diagram stresses the inter-relationships necessary to strengthen the system of accountability. Hence the relationships are more than linear.
Parliament has an important role given its connection to both the Executive, the Auditor General , and via committees and MPs, the public.
The arrows depict the more traditional relationships, but as argued later, the relationship between the PAC and the AG should be much more cooperative, and therefore 2-way flow.

3. National Integrity System
Pillars of National Integrity System
Sustainable
Development
National Integrity System
This diagram is meant to illustrate the INTER-RELATIONSHIPS between the governance actors involved in public financial accountability. This reinforces the mosaic of issues that come together in the “public interest”
Some have shown this as an accountability chain, with the Exec / AG / and PAC each being a link in the chain… But this triangular diagram stresses the inter-relationships necessary to strengthen the system of accountability. Hence the relationships are more than linear.
Parliament has an important role given its connection to BOTH the Executive, the A-G, and via committees and MPs, the public.
The arrows depict the more traditional relationships, but as argued later, the relationship between the PAC and the AG should be much more cooperative, and therefore 2-way flow.
Political Will
Parliament
Admin. Reforms
The Judiciary
Civil Society
The Media
Watch Dog Agencies*
The Private Sector
Economic Reforms
*Anticorruption agencies, Supreme Audit Institution, and Ombudsman's Office

4. Public Financial Accountability
People
Reports
Accountability Relationship
PAC
PEC
PUC
SCM
C&AG Audit GOB
Parliament
Donors
Media
Public Financial Accountability

5. Building Trust: Capturing the Promises of Accountability
Parliament
Performance reports
Audits
Redress Mechanisms
Media
Long-term
Goals
Improved Services
Confidence
Trust
Intermediate
Objective
Transparency
Disclosure
Redress

6. Financial Accountability Cycle: 3 Questions
What information can Oversight Agencies obtain about the Government’s activities; how relevant, accurate, timely and comprehensive is the information?
How well are the Oversight Agencies able to analyze the information, and develop action-oriented conclusions?
What kind of response are Oversight Agencies able to generate from the executive?

7. Conceptual Approach - Fiduciary Obligations - 1
Composition of Committees – various patters
Committee chair and membership
Accountability Relationship with Executive
Committees used to hold Executive accountable
PAC, Finance Committee and Public Undertakings Committee deals with use of public funds
other Standing committees deals with policies and results
Auditor General/Court of Accounts Assists, and Reports to Parliament
Parliament’s role in approving the allocation of public funds – also known and the ‘power of the purse’ – is supported by Parliament’s role in reviewing the use of those funds it approved.
Useful to think of the budget as a CYCLE and not an event – parliament approves the budget / the Executive spends / Parliament reviews expenditures, and in some cases, the performance of the programs the funds were spent on…
The public accounts, as prepared by the AG, have been the main document used by PAC in carrying out its mandate. PAC cannot carry out its mandate if it does not receive timely and accurate reports from the AG.
In some countries there are separate committees for public undertakings. This committee mostly reviews the accounts and also performance of the public enterprises.

8. Conceptual Approach: Fiduciary Obligations - 2
Parliament holds ‘power of the purse’ and obligation to hold the Executive accountable.
PAC oversees use of public funds and resources by Executive
Does this by examining public accounts
Courtesy: Rick Stapenhurst, WBI

9. Conceptual Approach: Fiduciary Obligations - 3
PAC work often dependent on the Auditor General’s reports
Effectiveness depends on follow-up
Report of PAC – Should it be discussed by the Parliament
Key issues : Status of PAC, Relationship with the AG, Capacity, Resources and Working Practices,

10. Current Situation : Common Features
Average size of 11 MPs
Size reflects party in legislature.
2/3 of Chairs from an opposition party; and 1/3 from the governing party
Prime focus on Public Accounts & reports of AG.
PAC reports generally available to the public.
Generally, PAC hearings are open to the public and media.
Courtesy: Rick Stapenhurst, WBI

11. Current Situation : Success Factors*
A broad scope
Power to select issues w/o gov’t direction
Power to report, suggest improvements, and follow-up
Strong support from AG, MPs and research staff that creates a unity of purpose about PAC work.
* Based on recent World Bank survey
Courtesy: Rick Stapenhurst, WBI

12. Current Situation in the Commonwealth: Common Challenges
Highly partisan climate
Government dislike of legislative oversight
Lack of media involvement
Lack of a strong ethical base for public service
Courtesy: Rick Stapenhurst, WBI

13. Future Directions and Challenges
Some PACs deal primarily with specific audit findings and transactions
PAC evolution parallels growth in mandate of legislative auditors into value for money
PACs not always prepared to handle broader scope of the work/more complex accountability arrangements of modern governments
Courtesy: Rick Stapenhurst, WBI

14. Future Directions and Challenges
Improve capacity of Auditor General
Improve research and secretariat
Capacity building of PAC members
Better use of sub-committees
Better involvement of public & media
Better procedures for follow-up
Strengthen International linkages

15. Integrated Financial Management and Control Approach
Public Accounts Committee
Parliament:
Oversight Functions
Public Undertakings Committee
Committee on Estimates
Ministries
Standing Committees on Min.
External Audit
Ministry B
Ministry A
Ministry C
“the dogmas of the quiet past are inadequate to the stormy present……….As our case is new, so we must think anew and act anew” Abraham Lincoln Former US President
The Finance Minister of Bangladesh who is an accountant and serving his third term as Finance Minister said about 90% of reform or creating ideas for increasing the capacity development always comes from the politicians and not from the permanent civil servants.
There is a need of CORORDINATION-LINKAGES-INTEGRATION
Identify change agents from Ministers/Secretaries
Prepare Strategic /Perspective Planning for Ministries
Give a Corporate look to Ministries
Focus on outputs than inputs/Measurement concept
Address human infrastructure of Ministries
Move from red taped file to a technology based system
Submit annual performance report to Parliament
Link with broader administrative reforms
Chief Executive Officer
Principal Accounts Officer
Chief Accounts Officer
Go for Pilots and Roll out