Congress and the Executive

70 – 2 – SUPREME AUDIT INSTITUTIONS’ INPUT INTO POLICY FORMULATION

Box 2.4. The SAI Poland – Preparation of government strategic documents for 2014-2020 (continued)

Audit criteria

Country laws and regulations (including internal government regulations, orders and correspondence between those audited) and other (EU financial framework).

Resources

The audit was conducted by seven organisational units of the SAI (co-ordinated by the regional branch in Warsaw), with each unit corresponding to an assigned audited line ministry. The audit activity was carried out between September 2012 and April 2013.

Outcomes and benefits

The audit report revealed some weaknesses in the government’s strategic planning model, the main one being a lack of institutional strength and a lack of co-ordination among the entities involved in planning, which was assumed in governmental documents. NIK found that the Ministry of Regional Development had taken the lead on strategic planning, but was not equipped with the tools necessary for effective co-ordination.

As a result, NIK recommended establishing a separate strategic planning centre dedicated and equipped to leading this work. This unit would help to tackle the discrepancy between strategic planning, the Long-term Budgetary Perspectives and the Performance Budget, which became pronounced during the audit. NIK considers bridging gaps between these three spheres as critical, underlining that this gap has created a great vulnerability in the public administration system as a whole.

Good practices used

The performance audit required a broad approach and a careful assessment of the crosscutting activities of various entities involved in the strategic planning system. NIK relied on internal expertise and demonstrated its value-added to the debates around strategic planning. It participated in relevant parliamentary committees. This process contributed to its internal understanding of the issues and emphasised the need to continue strictly monitoring and analysing the government’s progress in strategy fulfilment.

Lessons learned

As NIK did not use external experts to solidify its own opinion, it did encounter some difficulties in identifying competent staff to participate in the complex and cross-cutting audit on the thematic issues.

Further reading

www.nik.gov.pl/kontrole/P/12/181/ www.nik.gov.pl/kontrole/P/12/039/ Sources: OECD Survey of Peer Supreme Audit Institutions; further reading links above.

SUPREME AUDIT INSTITUTIONS AND GOOD GOVERNANCE: OVERSIGHT, INSIGHT AND FORESIGHT © OECD 2016

2 – SUPREME AUDIT INSTITUTIONS’ INPUT INTO POLICY FORMULATION – 71

Box 2.5. The SAI of the Netherlands – linking evidence-based decisions with efficiency gains

Objective

The Netherlands Food and Consumer Product Safety Authority (NVWA) was created on 1 January 2012 through the merger of three inspectorates: the General Inspectorate (AID), the Netherlands Plant Health Authority (PD) and the original Food and Product Safety Authority (VWA). The government had foreseen two opportunities to make savings with the new supervision methods of the NVWA: 1. The three merger partners' development and the introduction of new supervision methods was looked upon as a potential source of cost savings. By using risk-based working methods and giving more responsibility to the private sector, the NVWA would need fewer people. 2. As inspections, knowledge development, personnel and premises/operational management could be combined following the merger, economies of scale were anticipated.

The SAI of the Netherlands - Algemene Rekenkamer (NCA) - assessed whether the merger was evidence based, and whether it produced the desired efficiency gains.

Type

Performance audit.

Scope and methodology

The Court of Audit assessed the merger between the VWA, the AID and PD by looking at 1) the cost savings ex post; and 2) the underlying premises of the merger.

Criteria

Country laws and entity objectives.

Timing and resources

650 working days.

Outcomes

The audit determined that the government had failed to make a thorough analysis of the pros and cons of the merger before it decided to merge the inspectorates in 2007. The government had based its decision on general considerations and assumptions about potential efficiency gains. The conditions under which new supervision methods could cut expenditure, how much money would be saved and over what time period, had not been studied in advance. The inability to apply the new methods of supervision across the board meant that foreseen major savings were not realised in recent years. The new supervision methods are also unlikely to produce significant savings in the next four years because they will first require the investment of time and money. The expected economies of scale from the merger also proved too optimistic. Foreseeable risks, for example in the field of IT, were not taken fully into account. Furthermore, the overlap between the three organisations was never quantified, but was estimated to never be greater than 13%.

The considerable savings expected of the merger have so far failed to materialise, resulting in inevitable consequences for the feasibility of the planned savings. The intended structural saving of €50 million as from 2012 has not been achieved. The target of a further saving of €31.6 million as from 2018 was lowered by €11.8 million in 2013. The Court deemed it unlikely, however, that even this lower savings target will be achieved.

SUPREME AUDIT INSTITUTIONS AND GOOD GOVERNANCE: OVERSIGHT, INSIGHT AND FORESIGHT © OECD 2016

72 – 2 – SUPREME AUDIT INSTITUTIONS’ INPUT INTO POLICY FORMULATION

Box 2.5. Netherlands – linking evidence-based decisions with efficiency gains (continued)

Following the audit, the State Secretary for Economic Affairs began implementing the NCA’s recommendation to consider social risks and human resources before taking any decision on further changes to the NVWA's tasks and budget. The SAI received no response on its recommendation to monitor the achievement of savings, and has since encouraged the ministry to provide a clear overview of the initial budget, the savings targets and the price level in the annual budget and accounts.

Good practices used

This was an innovative performance audit for the NCA as it not only evaluated the results of the decision (in this case, the savings) but also looked at the assumptions for the decision (the merger). Auditing if the assumptions of a decision were plausible helps to determine the causes of unsatisfactory results. Analysing the wording of relevant documents, figures, and interviews with those directly involved, broke down general concepts (such as “synergies”) on which the decision was based into more operational concepts. The audit included a quantification of the overlaps – or lack of synergies – that existed between the merged entities.

At a very basic level, the Court found it useful to study the figures of the intended budget cuts. There appeared to be considerable uncertainty within the Ministry of Economic Affairs about the reference level from which the cuts had to be realised. Moreover, the effect of inflation is important in such long-term policy intentions and was not made explicit. Determining the causes helped to strengthen the Court’s recommendations.

Lessons learned

In this study the Court tried to uncover whether the new organisation (NVWA) had enough resources for their tasks and, to this end, conducted many structured interviews with staff. At the end of the study, the Court considered much of the interview information as unreliable. The Court now views the reliability of information from interviews as a methodological problem to be solved by further integrating other scientific approaches with qualitative analysis.

Further reading

www.courtofaudit.nl/english/Publications/Audits/Introductions/2013/11/Supervision_of_the_ Netherlands_food_and_consumer_product_safety_authority_following_the_merger. Sources: OECD Survey of Peer Supreme Audit Institutions; further reading link above.

Box 2.6. The SAI of the United States – linking performance to decision-making in Congress and the Executive

Objective

“As Congress creates, modifies, and funds federal programs and activities, it needs pertinent and reliable information to adequately assess agencies’ progress in meeting established performance goals, ensure accountability for results, and understand how individual programs and activities fit within a broader portfolio of federal efforts.”

The US Congress updated the statutory framework for performance management in the federal government, the Government Performance and Results Act of 1993 (GPRA), with the GPRA Modernization Act of 2010 (GPRAMA), to foster a more co-ordinated and whole-ofgovernment approach to achieving meaningful results.

SUPREME AUDIT INSTITUTIONS AND GOOD GOVERNANCE: OVERSIGHT, INSIGHT AND FORESIGHT © OECD 2016