Supreme audit entities are an important link in the chain of accountability for public expenditure decisions- providing independent reviews of government finances and performance to parliaments and to the public. The International Organization of Supreme Audit Institutions (INTOSAI) provides an online list of its member audit entities.
The mandate of supreme audit entities varies by jurisdiction, but often includes two types of audit. The first is regularity audits, which can include auditing the financial statements of government entities and of government as a whole, and auditing decision-making processes for compliance and probity. The second is performance, or value for money audits-reviewing the government's effectiveness and efficiency. Other entities may play a similar role-for example, government procurement agencies may be responsible for checking that procurement processes have been followed, as does the Contractor General in Jamaica.
Supreme audit entities can also have a role in PPP programs. In some jurisdictions, audit entities must sign off on PPP contracts before they can be implemented. Audit entities may then need to consider PPP commitments and processes as part of regular audits of contracting authorities and of the government as a whole. Audit entities may also conduct performance audits of PPP projects, or review the value for money of the program as a whole. This section describes each of these elements of auditing PPP programs. Audit institutions performing these roles can help improve PPP program governance. However, to be effective in doing so-rather than simply introducing delays, or saddling PPP programs with requirements that are not appropriate for the specific needs of PPP-audit entities may need training and support. INTOSAI, supported by the World Bank and by several Courts of Audits, delivers training activities for auditors, and produced a series of manuals on PPPs.
For further examples of how PPP auditing works in practice, see the articles on PPP Audits in Portugal, and Hungary's audit experience with PPPs, in the IMF publication on Public Investment and PPPs [#214, Chapters 17 and 18].
Box 2.10: Audit Entity Access to PPP Company Information While the remits of supreme audit entities vary, they typically extend only to government agencies, and entities wholly or majority owned by government. Supreme audit entities therefore typically do not have the right or responsibility to audit PPP companies. Nonetheless, the private company often holds a lot of relevant information. The access of the audit entity to information held by the private party has the potential to create conflict. Public Auditing Guidelines for PPPs issued by the Comptroller and Auditor General (CAG) of India (2009) discuss this issue in Section III: Scope and Objectives of PPP Audit. The guidelines suggest that access rights for the CAG in carrying out PPP projects may need to be defined in the public audit statute. In the meantime, the guidelines note that the audit entity is likely only to have access to information held by the contracting authority given its contract monitoring role [#132, Section 3, pages 29-38]. In the United Kingdom, this type of access is provided through mechanisms in the PPP contract itself. INTOSAI has published guidelines for auditing PPP projects (2007) which note that the audit entity must be clear about its access rights to the private company associated with the PPP [#158, Section 1, Guideline 1, page 9]. |