Independence Formal independence of AAAs is measured by reviewing constitutional and legal provisions along three main dimensions of impendence: institutional (constitutional and legal guarantees), individual (guarantees for the auditor-general and the agency’s staff), and financial independence.12 This indicator is inspired by Taliercio’s research on tax agencies and this definition of institutional autonomy centering on governance mechanisms and managerial features (Taliercio 2004, 2003).
Credibility The previous indicator measures formal independence and, thus, does not entirely capture the influence of informal rules and practices. Complementary information is thus required to measure public and expert perceptions of the credibility of audit work. The effectiveness of AAAs hinges upon the technical quality and institutional credibility of their audit findings and the manner in which they are attained. Audit processes must lead to clear findings and articulate cost-effective recommendations, supported by convincing evidence and an effective communication strategy (Allen and Tommasi 2001:356-357). The indicator of credibility of audit findings is derived from the survey data of the Index of Budget Transparency for 2003 (Lavielle et al, 2003). 13
Timeliness Timeliness is critical to ensure that audit findings are relevant and influence policy-making. Excessive delays make audit reports irrelevant and often inconsequential to sanction mismanagement or prevent corruption. The general perception of the timeliness of audit reports is also derived from the Index of Budget Transparency for 2003 (Lavielle et al, 2003).
Enforcement Lack of adequate follow-up of audit findings and enforcement of audit recommendations is a principal cause of ineffectiveness. Audit findings are inconsequential if audit recommendations are not acted upon by the government, forcing a reluctant bureaucracy to comply, or if they are not expeditiously transmitted to the courts in case of criminal proceedings. They are of limited use if the dysfunctions they detect are not redressed through remedial legislative action, for example through corrective legislation, inquiry commissions or impeachment proceedings. The indicator of the degree of enforcement of audit findings (which does not only depend only on the AAA) is based on a measure of the legal status and binding nature of audit rulings by the United Nations Development Programme (UNDP 2004). However, this indicator measures whether AAAs are legally empowered to enforce their decisions, not necessarily whether they do so consistently.
12 The degree of AAAs’ structural independence is captured along three main dimensions: institutional (constitutional guarantees, statutory provisions, formal supervision arrangements, scope of mandate, autonomy in defining work-plan, unfettered access to financial information, scope of authority), individual (rules governing selection, nomination and removal of agency head, length of tenure, individual privileges and immunities of auditors-generals, legally-defined procedures for recruiting, promoting and dismissing staff, degree of control of agency head over personnel management, professional standards and technical competence), and financial independence (level and determination of the agency’s budget). Dove (2002:83) defines autonomy ‘as an agency’s ability to carry out its legal mandate without interference from other actors in its environment.’ In particular, in terms of the agency’s budget, while absolute financial independence is unrealistic and unadvisable, several institutional devises exist for securing adequate funding, such as numerical and procedural rules. The AAA’s budget can be a fixed percentage of the budget, as in Ecuador or Guatemala. The AAA can also have the ability to draft its budget and submit it to the legislature, as in Argentina or Mexico. In Bolivia, Colombia and Venezuela, the executive must incorporate the agency’s draft budget in the government’s budget proposal without modifications. In Nicaragua, the AAA drafts its budget proposal and submits it for review to the executive as part of the normal procedures of the budget process.
13 This indicator is measured along four main dimensions, including whether the auditor-general is trustworthy; whether the agency’s recommendations have contributed to combat corruption; whether the agency verifies that the executive complies with the physical goals of the budget programs; and whether it has the capacity to effectively oversee federal spending.