can enforce accountability on its agent. The function of oversight agencies such as AAAs is to provide information required to the government’s principal. For Allen and Tommasi (2001:356), ‘auditors are authorized only to report what they have found. They must rely on others to correct the reported problems.’
Oversight and accountability While accountability cannot exist without means of redress, it does not necessarily require oversight agencies to be endowed direct, legally ascribed sanctioning power. Rectification can be achieved indirectly through those state institutions possessing sanctioning powers and the ability to enforce accountability on government. Mainwaring (2003) and Kenney (2003) distinguish between direct and indirect sanctioning powers, noting that ‘some mechanisms of accountability rely exclusively on answerability without necessarily having the capacity to impose sanctions’ (Mainwaring 2003:13). 9
This understanding of the role of oversight agencies reinforces the conceptualization of AAAs as auxiliary agencies to the legislature in the oversight of government finances.10 It also underscores the critical importance of the synergies between the components of the architecture of fiscal control. In particular, it defines financial accountability as a system and a process, rather that the responsibility of a single organization. In fine, AAAs are only a component, albeit a critical one, of a broader system of checks and balances in public financial management. As O’Donnell (1999:39) underscores:
‘if [AAAs] are to be effective, they can very rarely function in isolation’: ‘effective horizontal accountability is not the product of isolated agencies but of networks of agencies. In particular, their ultimate effectiveness depends on decisions by courts and legislatures to enforce government accountability.’ 11
Therefore, a central paradox of AAAs resides in that their effectiveness depends both on their independence from government and the efficacy of their functional linkages with the legislatures and the courts. AAAs must also cultivate their relations with the public in general and the media in particular. The question thus becomes not whether AAAs should be independent or not, but rather how much independence is enough and how much is too much.
To gauge the impact of AAAs on financial governance, we construct a quantitative index of AAAs’ institutional effectiveness in ten Latin American countries and correlate it with proxy indicators of fiscal performance and budget quality. The index is constructed along the four key attributes of AAAs: (i) their independence from the executive, (ii) the credibility of audit findings, (iii) the timeliness of audit reports, and (iv) the enforcement of audit recommendations.
9 According to Mainwaring (2003:13), ‘Accountability cannot exists with no sanctioning power; some capacity to redress wrongdoing by referring the case to other venues (especially the justice system) is critical to systems of accountability […However], accountability does not require direct, legally ascribed sanctioning power. Agencies of oversight are expected to refer possible wrongdoings to actors that can impose sanctions; this indirect sanctioning power suffices to characterize a relationship of accountability.’
10 This theory holds that political accountability for corruption and mismanagement should be enforced by the legislature on the executive, while managerial accountability for waste and underperformance ought to be enforced by the executive on the bureaucracy. In criminal and penal cases, including cases of corruption, the judiciary is responsible for enforcing judicial accountability.
11 Another important distinction is between managerial accountability and political accountability: ‘political accountability involves holding those in public office responsible for performance and decisions, while managerial accountability involves the more technical aspects of fiscal and administrative responsibility’ (Newell and Bellour 2002:6). While managerial accountability is part of the process of bureaucratic delegation, political accountability is embedded in the process of legislative delegation. However, managerial accountability is often inoperative in the absence of political accountability.