Taking stock: SAI activities in supporting implementation

3 – SUPREME AUDIT INSTITUTIONS’ INPUT INTO POLICY IMPLEMENTATION – 101

SAI activities that assess and support:

Functional direction provided to entities (Table 3.4, key element A), management of risks by entity-level management (Table 3.4, key element C), and an independent internal audit function (Table 3.4, key element D)

As governments strive to cut red tape and implement more efficient and cost-effective controls and regulations, SAIs can promote a top-down and risk-based approach to internal control through the promotion of risk identification and assessment that cuts across government activities. All peer SAIs reported that they are already doing this on a ministry level, however, there appears to be scope to scale up this activity to provide commentary on the ways in which the CoG, or leading ministries, can better manage risk. Only half of SAIs report looking at leadership in this domain, which is recognised by international principles as being critical to an effective risk-based approach.

5/10

Of peer SAIs looked at: Public sector entities' leadership in establishing a culture of control and risk-management.

10/10

Of peer SAIs looked at: The effective, efficient and economic application of risk management through risk based approaches to internal control, regulatory policy, and budgetary management.

Examples of SAI work in this area include:  The Netherlands Court of Audit studied the financial ties between the Netherlands and eight financial institutions following their closer integration during the financial crisis. They assessed the government’s assessment of institutions’ financial profiles and the measures taken to mitigate the risks. The Court prepared eight factsheets to show the financial ties between the Netherlands and the eight institutions, and the financial profiles of the institutions and the measures taken by them to mitigate risks. A case study of this innovative approach is found in Box 3.3.  In order to assess the governance of controls, the Comptroller General of the

Republic of Chile (CGR) audited the internal control systems of local governments. The CGR’s report discusses the structural problems relating to authority, centralisation of power, and distribution of civil servants in a significant portion of Chile’s municipalities. These problems reduce the quality of services and internal control procedures. The report proposes reorganising the structure to ensure consistency and efficiency of local government control systems (CGR, 2010).  The UK’s NAO provided an audit on risk management in the centre of government. HM Treasury’s risk level was assessed as part of the 2014 to 2015 annual report and accounts of HM Treasury (NAO, 2015).  Since the 1990s the US GAO has been compiling a “high risk list” (GAO, 2015) to identify which agencies pose high risks to the sustainability of the public sector. The list has been considered a useful tool for Congress, and is updated at

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