1. CURRENT ISSUES & FUTURE TRENDS IN PARLIAMENTARY OVERSIGHT
Rick Stapenhurst
World Bank Institute

2. OVERVIEW OF PRESENTATION
The Budget Cycle + Parliament (Ex-Ante and Ex-Post)
Conceptual Approach to Parliament’s Role in the Ex-Post Budget Cycle
Current Situation in Commonwealth
Future Challenges & Directions incl. Support for PACs
Conclusions

3. The Budget Process
The heart of parliament’s work is its mandate to enforce financial and policy accountability.
The “power of the purse” is parliaments’ historical role –but this is a complex challenge.
It isoften useful to envisafe a contituing budget cycle process.
This cycle includes many parts of the governance system, including the executive, the public service, civil society groups…and parliament.
Certain facets of this system are principally the responsibility of the executive : the cash-debt management system, an accounting system and an annual (or multi-year) budgeting system. There are internal managerial reporting and audit systems.
But there are a parallel system of external functions (outside the circle), ranging from budget planning, to revenue/expenditure allocations, public accounting and external audit. It is here that parliament plays (or at least can play) a key role.
So, before moving on, need to differentiate between parliament’s role ex-ante in the budget process and parliament’s role ex-poste

4. The Budget : Amendment powers: a survey

5. Conceptual Approach: Key Actors and their Relationships
PUBLIC FINANCIAL ACCOUNTABILITY
Parliament
Accountability
Relationship
Reports
Public
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.
Auditor General
Executive
Examines

6. Conceptual Approach to Parliamentary Oversight … continued
Accountability Relationship with Executive
Committees used to hold Exec. to account
PAC deals with use of public funds - other committees with policies & outcomes
AG assists, & reports to Parliament
(DIAGRAM, CONT)
Public accountability is one of the fundamental tenets of a democratic society.
All of the stakeholders in the accountability framework are accountable to someone, and ultimately to the public – that is why the public are put at the center of the diagram.
PACs are accountable to the legislature
The Legislature to the public
Civil servants to Ministers and MPs
Auditors to the Legislature
Media – an important alley of the PAC – to the public
Important lesson gained from global experience – both in and out of the Commonwealth – is that accountability systems work best when ALL these stakeholders accept their RESPECTIVE responsibilities

7. Conceptual Approach…cont
Conceptual Approach…cont. : Fiduciary Obligations Explained Parliament, PAC and public audit
Parliament holds ‘power of the purse’ and obligation to hold the Executive to account
PAC oversees use of public funds & resources by Executive
Does this by examining public accounts
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.

8. Conceptual Approach…cont
Conceptual Approach…cont. : Fiduciary Obligations Explained Mandates of PACs:
PAC mandate determined by Rules/ SOs, some case by Constitution
Narrow Focus - financial probity and regularity
Wider Focus - value for money, perf. audits, program effectiveness
Other matters can be referred to PAC
The mandate of PAC rests either with the jurisdiction of Parliament (via the Standing Orders (Sos) or the Parliamentary Rules) or is derived, in some cases, directly from the constitution. PAC must be seen as an essential part of the country’s systems of integrity, and as an efficient mechanism of political and financial infrastructure
PACs do not set their own mandates. This is important given that PAC requires the support of parliament to carry out their investigations.
The scope of PAC mandates are determined by Parliament, but how these mandates are implemented is largely dependent upon the Chairperson. A PAC with a committed and strong and skillful Chairperson will undoubtedly be more effective.
Other matters, such as specific investigations related to the use of public funds can be referred to the PAC –via the Speaker. Example s include investigations into misappropriation of funds or tendering processes.
Often these specific investigations will lead to the establishment of a PAC subcommittee with its own TORs. This allows the other work of the PAC to continue.

9. Conceptual Approach…cont
Conceptual Approach…cont. : Fiduciary Obligations Explained The Role of Other Committees
PAC oversight = entire Executive
Other Committees also exercise oversight responsibilities
PAC / other committees need to cooperate, share workplans for greater oversight
Policy and dept’l issues better addressed by other committees or PAC sub committees
Scope of PAC investigations can be as numerous as the number of government Departments.
It is inefficient for PAC to attempt to undertake a comprehensive review of ALL departments, or even the entire AG report. PAC must determine scope of its investigations for a given year.
One possible means to strengthen PAC investigations is to work with the Dept committees, where these exist, during the review of the AG report, PAC can then ‘scale up’ its work to look at issues of performance, results and value for money in addition to compliance audit

10. Conceptual Approach…cont
Conceptual Approach…cont. : Fiduciary Obligations Explained PAC and the Auditor General
PAC work often determined by the AG reports
PAC must decide follow-up issues
An effective PAC = depts. taking AG concerns more seriously
Cooperation with AG on follow-up = greater accountability
Ensures Depts. are taking corrective action
The large volume of AG reports and issues therein, coupled with its own limited resources means that PACs cannot follow up on all AG reports or issues raised in them. Follow-up issues are taken from AG report, decided upon by PAC
Bureaucrats often live in fear of having to answer to the AG, but more so the PAC
PAC investigations can be seen as the “big stick” that the AG carries – PACs often use public opinion and media to their advantage more than AG

11. Current Situation in the Commonwealth:
Recent CPA study on PACs – The Overseers
- similar issues, developments and challenges across Commonwealth
Key issues : Status of PAC, Relations with the AG, Membership, Training/ Capacity-Building, Resources, Working Practices, Reporting and Follow-up
Capacity Building, Independence and Information Exchange are the main challenges identified by the CPA study. These are discussed in more detail later on (“recommendations”)
In addition, developing country legislatures were found to have distinct challenges that should be catered for. These included:
resource constraints
attendance of Members – given limited numbers and infinite responsibilities of MPs in Chamber, other Committees, Caucus and Constituency
lack of legal protections – related largely to the ability of the AG to carry out its role investigating corruption – strengthens need for an independent AG
lack of Understanding of PAC role where PACs have not yet firmly established their roles.

12. Current Situation in the Commonwealth: Common Features:
Average size = 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.
Common features relate more to size, and composition than to performance or practices.

13. Current Situation in the Commonwealth: 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
The WBI study found that there was / is general agreement on a framework of powers and practices for an effective PAC. These powers and practices have also been the ones employed by the most successful PACs:
Ÿ        1. Having a broad scope (meaning looking at road conditions rather than traffic accidents, not just doing additional detailed work);
Ÿ        2. Power to select issues without government direction (and also to initiate enquiries);
Ÿ         3. Power to report conclusions, suggest improvements and follow up on these;
Ÿ         4. Strong support from the legislative auditor, members of parliament, and research staff that creates a unity of purpose about PAC work.
Relative impact of success factors also related to fact that the PAC, as an institution, has evolved less in the newer commonwealth countries – this is linked to issues that are discussed in the “Future Directions / Challenges” section

14. Current Situation in the Commonwealth: Common Challenges:
Highly partisan climate
Government dislike of legislative oversight
Lack of media or public involvement
Lack of a strong ethical base for public service
Partisan climate in PAC can deter the committee from developing consensus. This could compromise PAC investigations, deliberations, and the determination of priorities
No government really likes to be put under a microscope and to have their accounts reviewed – let alone by a committee that is often chaired by the opposition. Good relations between the PAC Chair and the Leader of Government business / Whips / Speaker will be important for effectiveness of PAC – even if the government is not fully supportive of increased legislative oversight.
Closed PAC sessions are counter productive to enhancing accountability – and are NOT in the “public interest”. Some decisions or issues may need to be discussed in camera but the majority of sessions, and information, should be made available to the public – this linked with dual aims of increased participation & transparency which supports improved accountability.
Public service needs to see itself as accountable not only to the Minister for actions, but to the public through parliament. Changes in mindset of public service are not easy to achieve.

15. 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
Beyond capacity and resource issues, biggest challenge is to modernize public audit – modernizing usually refers to a shift away from review of public accounts to performance audits / Value for Money
E.g. the UK, Canadian and Australian committees, some years ago, moved in this direction but most ‘developing / emerging ‘ legislatures have not so moved. Exception = South Africa with the Performance Finance Management Act (PFMA) – but even here, capacity issues also a challenge …. PACs from developing countries have the benefit of being able to learn from the develop country’s mistakes and therefore could “leapfrog” the reform process - - if provided with proper support and enabling environment.
Difficult to tell whether the PAC led or followed the AG into value for money audits,
Capacity issues for PAC become more evident when scope of PAC work becomes wider - - (unless PAC utilizes other Dept Committees (given their depth and level of policy-specific knowledge) more effectively) This is also linked to point 2 above

16. Future Directions and Challenges:
Public Sector reforming and moving towards performance systems
Are PACs mirroring these reforms?
Can PAC be a catalyst for reform in public financial accountability?
The message here is that PACs were developed in response to reforms in the public sector aimed at creating better systems of accountability – the Auditor and Comptroller General. (Back to the Future… )
As the public sector begins to reform itself again, with an emphasis on improved standards, performance budgeting, etc, is PAC also keeping up with the changes so it retains relevance / clout?

17. Future Directions and Challenges: Some Recommendations:
Improved AG links
Improved resources for PACs
Structured training for PAC members
Better use of sub-committees by PAC
Better involvement of public & media
Better procedures for follow-up
Greater links and info exchanges with other PACs
3 Follow-up Priorities were identified by CPA study group:
Capacity Building = constant theme, need to improve institutional capability of Parliaments, PACs and AG offices to carry out their functions
Capacity building needs to be supported by resource allocations
Independence = with particular AG Offices. Must be free from political or legal constraints that could inhibit them from carrying out their functions diligently and impartially
Information Exchange = PAC should have the means to exchange information and ideas to keep them up to date with important developments, changing standards and best practices as they emerge.

18. Conclusions:
PAC one part in public accountability framework but only one with links to all other actors
Accountability relationships affect PAC effectiveness
Perf. reporting & VFM audits require greater consideration of relationships /capacity of PACs and AG
PAC exchanges = strengthening PACs & accountability frameworks
PAC and AG are important actors in promoting accountability. Both are part of the parliamentary infrastructure that helps ensure the governments are held to account for their operating policies and actions, and their management and use of public resources.
Accountability Framework = just one part of the larger good governance framework– linkages and relations between participation, transparency and accountability
FINAL WORD:
We began by asking what role for PACs in protecting the public interest. PAC has a role to play in protecting the public interest – it is one of ensuring greater accountability and transparency in allocation and use of public funds. But… PAC will need to either reform itself, or be a voice for reform in public accountability (public audit) if PACs are to continue to keep abreast of citizens demands for greater oversight of government performance, and not just its accounts.