Government & Nonprofit

Maria lopes, Creating a legal base for an independent and efficient Supreme Audit Institution, SIGMA, Tunis 12 July 2016

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Presentation by Maria Lopes, Portugal, entitled "Creating a legal base for an independent and efficient Supreme Audit Institution", at the seminar organised by SIGMA for the Tunisian Court of Accounts on the theme of the financial and administrative independence of State Audit Institutions (SAI). The seminar took place in Tunis on 12 July 2016.
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  • 1. © OCDE Initiativeconjointedel’OCDEetdel’Unioneuropéenne, financéeprincipalementparl’UE Creating a legal base for an independent and efficient Supreme Audit Institution Developing the legal framework for an independent and efficient Court of Auditors Maria da Conceição de Oliveira Lopes Court of Auditors of Portugal Tunis, 12 July 2016
  • 2. Initiativeconjointedel’OCDEetdel’Unioneuropéenne, financéeprincipalementparl’UE SUPREME AUDIT INSTITUTIONS (SAI) • SAI may exist in all political regimes in order to watch over established legality. However, in democratic regimes, they have the fundamental mission of informing citizens and their representatives (Parliament) on the way public resources are managed/used. • The level of a society’s democratization can be evaluated or measured by the degree of independence of its Supreme Audit Institution. • The Lima Declaration (1977) and the Mexico Declaration (2007) represent the main external audit charters for public finances as they define the conditions of their independent and efficient function. 1
  • 3. Initiativeconjointedel’OCDEetdel’Unioneuropéenne, financéeprincipalementparl’UE LIMA DECLARATION OF GUIDELINES ON AUDITING PRECEPTS ISSAI 1 – Founding principles to audit public finances Independence of SAI (Section 5) • Supreme Audit Institutions can accomplish their tasks objectively and effectively only if they are independent of the audited entity and are protected against outside influence. • Supreme Audit Institutions shall have the functional and organizational independence required to accomplish their tasks. • The establishment of Supreme Audit Institutions and the necessary degree of their independence shall be laid down in the Constitution; details may be set out in legislation. 2
  • 4. Initiativeconjointedel’OCDEetdel’Unioneuropéenne, financéeprincipalementparl’UE LIMA DECLARATION OF GUIDELINES ON AUDITING PRECEPTS ISSAI 1 – Founding principles to audit public finances Independence of the members and officials of Supreme Audit Institutions (Section 6) • The independence of Supreme Audit Institutions is inseparably linked to the independence of its members - Members are defined as those persons who have to make the decisions for the Supreme Audit Institution (one person or a collegiate) - The independence of presidents and members shall be guaranteed by the Constitution. 3
  • 5. Initiativeconjointedel’OCDEetdel’Unioneuropéenne, financéeprincipalementparl’UE LIMA DECLARATION OF GUIDELINES ON AUDITING PRECEPTS ISSAI 1 – Founding principles to audit public finances Financial Independence of SAI (Section 7) • SAI shall be provided with the financial means to enable them to accomplish their tasks. • If required, Supreme Audit Institutions shall be entitled to apply directly for the necessary financial means to the public body deciding on the national budget. • Supreme Audit Institutions shall be entitled to use the funds allotted to them under a separate budget heading as they see fit. 4
  • 6. Initiativeconjointedel’OCDEetdel’Unioneuropéenne, financéeprincipalementparl’UE LIMA DECLARATION OF GUIDELINES ON AUDITING PRECEPTS ISSAI 1 – Founding principles to audit public finances Relationship to Parliament (Section 8) • The independence of SAI provided under the Constitution and law also guarantees a very high degree of initiative and autonomy, even when they act as an agent of Parliament and perform audits on its instructions. • The relationship between the SAI and Parliament shall be laid down in the Constitution according to the conditions and requirements of each country, 5
  • 7. Initiativeconjointedel’OCDEetdel’Unioneuropéenne, financéeprincipalementparl’UE LIMA DECLARATION OF GUIDELINES ON AUDITING PRECEPTS ISSAI 1 – Founding principes to audit public finances Relation to government and the administration (Section 9) • Supreme Audit Institutions audit the activities of the government, its administrative authorities and other subordinate institutions. This does not mean, however, that the government is subordinate to the Supreme Audit Institution. • In particular, the government is fully and solely responsible for its acts and omissions and cannot absolve itself by referring to the audit findings--unless such findings were delivered as legally valid and enforceable judgments--and on expert opinions of the Supreme Audit Institution. 6
  • 8. Initiativeconjointedel’OCDEetdel’Unioneuropéenne, financéeprincipalementparl’UE MEXICO DECLARATION ON SAI INDEPENDENCE • SAI, during the INTOSAI congress held in Mexico in 2007, established 8 core priciples to properly audit public sector finances. These principles are linked to the following aspects: 1. Statutory legal framework of SAI 2. SAI heads and members 3. Audit 4. Access to information 5. Communication of results 6. Content and timing of audit reports 7. Mechanisms of efficient follow-up 8. Resources 7
  • 9. Initiativeconjointedel’OCDEetdel’Unioneuropéenne, financéeprincipalementparl’UE UN GENERAL ASSEMBLY RESOLUTION 66/209 (2011) Promoting the efficiency, accountability, effectiveness and transparency of public administration by strengthening supreme audit institutions • recognizes the important role of supreme audit institutions in promoting the efficiency, accountability, effectiveness and transparency of public administration • Recognizes that supreme audit institutions can accomplish their tasks objectively and effectively only if they are independent of the audited entity and are protected against outside influence, • Also takes note with appreciation of the Lima Declaration of Guidelines on Auditing Precepts of 1977 and the Mexico Declaration on Supreme Audit Institutions Independence of 2007and encourages Member States to apply, in a manner consistent with their national institutional structures, the principles set out in those Declarations 8
  • 10. Initiativeconjointedel’OCDEetdel’Unioneuropéenne, financéeprincipalementparl’UE MEXICO DECLARATION 8 Core principles to audit public sector finances Principle 1 – The existence of an appropriate and effective constitutional/statutory/legal framework and of de facto application provisions of this framework • The Constitution and the legislation have to spell out the extent of SAI independence in a way to guarantee the adequacy and efficiency of the judicial supervision of SAI in the state structure. Principle 2 – The independence of SAI heads and members (of collegial institutions), including security of tenure and legal immunity in the normal discharge of their duties • The applicable legislation specifies the conditions for appointments, re-appointments, employment, removal and retirement of the head of SAI and members of collegial institutions 9
  • 11. Initiativeconjointedel’OCDEetdel’Unioneuropéenne, financéeprincipalementparl’UE MEXICO DECLARATION 8 Core principles to audit public sector finances Principle 3 – A sufficiently broad mandate and full discretion in the discharge of SAI functions SAIs should be empowered to audit the • use of public money, resources, or assets, by a recipient or beneficiary regardless of its legal nature; • collection of revenues owed to the government or public entities; • legality and regularity of government or public entities accounts; • quality of financial management and reporting; and economy, efficiency, and effectiveness of government or public entities operations. While respecting the laws enacted by the Legislature that apply to them, SAIs are free from direction or interference from the Legislature or the Executive in the • selection of audit issues; • planning, programming, conduct, reporting, and follow-up of their audits; • organization and management of their office • enforcement of their decisions where the application of sanctions is part of their mandate. 10
  • 12. Initiativeconjointedel’OCDEetdel’Unioneuropéenne, financéeprincipalementparl’UE MEXICO DECLARATION 8 core principles to audit public sector finances Principle 4 – Unrestricted access to information • SAIs should have adequate powers to obtain timely, unfettered, direct, and free access to all the necessary documents and information, for the proper discharge of their statutory responsibilities. Principle 5 – The right and obligation to report on their work • SAIs should report at least once a year on the results of their audit work. Principle 6 – The freedom to decide the content and timing of audit reports and to publish and disseminate them • SAIs are free to make observations and recommendations in their audit reports, taking into consideration, as appropriate, the views of the audited entity. 11
  • 13. Initiativeconjointedel’OCDEetdel’Unioneuropéenne, financéeprincipalementparl’UE MEXICO DECLARATION 8 core principles to audit public sector finances Principle 7 – existence of effective follow-up mechanisms on SAI recommendations • SAIs have their own internal follow-up system to ensure that the audited entities properly address their observations and recommendations by takin corrective action Principle 8 – Financial and managerial/administrative autonomy and the availability of appropriate human, material, and monetary resources • SAIs should have available necessary and reasonable human, material, and monetary resources—the Executive should not control or direct the access to these resources. SAIs manage their own budget and allocate it appropriately. 12
  • 14. Initiativeconjointedel’OCDEetdel’Unioneuropéenne, financéeprincipalementparl’UE PORTUGAL COURT OF AUDITORS Constitution of the Republic (Principels 1 and 2) • The court is a soverign body considering that it fits within the category of courts (article 110, n.1) • A court that is unique in its category with the rank of a higher court (article 209 paragraph c) • As a court, it is independent and only governed by law (article 203) • The president’s term lasts 4 years , renewable (articles 133, paragraph m) and 214, n. 2) • Independence, irremovability and irresponsibility of magistrates (in the discharge of their tasks ) • Value of the court’s decisions – mandatory for all public and private entities and prevalent over those of other authorities (article 205, n. 2) (Principle 3) • Generic functions and authorities of the court (article 214, n.1) Auditing the legality of public expenses and judging the accounts determined by law . Issuing a statement on the state’s general account including social secutiry  issuing a statement on the accounts of the autonomous regions of Azores and Madeira; Make the responsibilities effective by financial infractions within conditions stipulated by law;  Exercise the other functions that are grantd to it by law. 13
  • 15. Initiativeconjointedel’OCDEetdel’Unioneuropéenne, financéeprincipalementparl’UE Portugal COURT OF AUDITORS Organization Act and Court Procedeeings • The Organization Act and Proceedings of the Tribunal de Contas (OAPTC) was approved by law 98/97, 26th of August, and amended by the following laws: • Law 48/2006, 29 August; • Law 35/2007, 13 August; • Law 3-B/2010, 28 April; • Law 61/2011, 7 December; • Law 2/2012, 6 January; and • Law 20/2015, 9 march. • All these amendments by the OAPTC aimed at reinforcing the powers of the court and the efficiency of its audit. 14
  • 16. Initiativeconjointedel’OCDEetdel’Unioneuropéenne, financéeprincipalementparl’UE Portugal COURT OF AUDITORS Organization Act and Court Proceedings • The judges are recruited through a competetive selection examination and are appointed, to life, by the Court President (Principles 1 et 2) • Collegiality of decisions • Judicial Panel (3rd Section): conviction to pay fines or to restitute unduly paid funds through errors detected during audits conducted by 1st and 2nd Sections, • Separation of functions: (Principles 1 and 3) – Referral of the judicial panel - Prosecution Authority (public ministry) – Investigation/Instruction- judges of the 1st and 2nd Sections – Ruling- judges of the 3rd Section • A system of appeal • Broad mandate – articles 1 (types of audit); 2 (who to audit); 5 (what to audit); 41 (State accounts); when to audit: article 46 (a priori); 49 (concomitant); 50 and 51 (successive); advisory competence (article 5, n.2) (Principle 3) • Strategic Planning (three-yearly basis) and activity plans (annual) approved by the full Court (Principles 1 and 3) 15
  • 17. Initiativeconjointedel’OCDEetdel’Unioneuropéenne, financéeprincipalementparl’UE Portugal COURT OF AUDITORS Organization Act and Court Proceedings Auto-government (articles 31, 32, 33 and 34) : (Principles 1 and 8) • Administrative and financial powers of the president identical to ministerial authorities (article 33). • The Court, in a general pleanary session, approves the project of its annual budget, which is presented to the government in the given deadline for the elaboration of a finance law proposal. It gives to the assembly and to the republic all elements that the latter needs in this respect. • Financial Autonomy of the «Treasury» - local revenues (imposition of service fees - articles 35, 46 n.5, 53 n. 3, 54 n.3 paragraph j), and 55 n.2) • The administrative council of the Court presided by the general manager is in charge of financial management, they are also in charge of: (article 34) a) Authorizing expenses that the president is not in charge of authorizing; b) Authorizing the payment of expenses; c) Preparing Court budget projects and treasury as well as proposals of necessary budget amendments; d) Managing the Court’s treasury. 16
  • 18. Initiativeconjointedel’OCDEetdel’Unioneuropéenne, financéeprincipalementparl’UE Portugal COURT OF AUDITORS Organization Act and Court Proceedings • The court has the necessary powers to obtain an unrestricted, direct and free access to all documents and information it needs to accomplish its mission. (Principle 4) For example:  Instant access to state accounts;  Access to accounts, archives, computerized systems of bodies under court control;  All public services and institutions, including state inspections, have to collaborate with the court in a way that helps it accomplish its mission. • Publicisation of audit reports and court judgments (v.g. internet) (Principles 5 and 6) • When the court does not dispose of the necessary technical abilities and competences to implement a specific task, it is entitled to recruit external experts. (Principle 8) 17
  • 19. Initiativeconjointedel’OCDEetdel’Unioneuropéenne, financéeprincipalementparl’UE Portugal COURT OF AUDITORS Organisation Act and Court Proceedings • The Court has its own system of following recommendations (Principle 7) • Non-respect of Court of Auditors’ Recommandations  Can result in the application of sanctions (article 65, n. 1, paragraph j)of the OACPTC; and  Is taked into account during the evaluation of culpability and the sanction progression (articles 64 and 67 of the OACPTC) 18
  • 20. Initiativeconjointedel’OCDEetdel’Unioneuropéenne, financéeprincipalementparl’UE 19
  • 21. Initiativeconjointedel’OCDEetdel’Unioneuropéenne, financéeprincipalementparl’UE END Thank you for your attention 20
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