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5), the control of corruption (Figure 6) and the strength of public institutions (Figure 7). Considering the empirical and statistical evidence of the impact of institutional quality on economic development (Keefer 2004a, 2004b; Kaufmann and Kraay 2003; Knack 2002; Knack and Keefer 1997), we can infer that AAAs also have an indirect influence on fiscal performance through their impact on the quality of financial governance.


The data nevertheless reveal a weaker connection between external auditing and adherence to the rule of law and constraints on the executive, suggesting that AAAs contribute only marginally to checking executive discretion (Figure 8). This finding suggests that AAAs alone are not enough to effectively restrain executive discretion and are themselves often undermined by it. It confirms that, while AAAs could potentially play a critical role in strengthening government accountability, they often fail to do so because of structural dysfunctions in the system of fiscal control in which they are embedded.


These results suggest the existence of systemic failures in external auditing systems. To ascertain the influence of the governance context on agency performance, we complement the preceding cross-country statistical analysis with three longitudinal case studies, following the most-similar method of comparative inquiry. The following three chapters compare and contrast the institutional trajectories of the AAAs of Argentina, Brazil and Chile. These three case studies illustrate the three main different models for organizing the external audit function at the national level. Each case study analyses the agency’s institutional profile, its institutional trajectory and its institutional linkages with the other components of the system of fiscal control, in particular the legislature. The annual certification of public accounts and discharge of government are used as proxy indicators of the quality of the linkages between AAAs and legislatures.

Argentina: The failure of reform and the fiction of control

To preserve traditions, violate the laws! Carlos Fuentes, La Silla del Águila, 2003:322.

The Argentine Auditoría General de la Nación (AGN) is a collegiate AAA with close institutional links with the legislature. It functions as the legislature’s auxiliary agency in the oversight of government finances. The case of Argentina provides an example of fiction of control and failure of radical reform. The history of the AGN highlights the limits of institutional design and technical solutions as a strategy to improve organizational effectiveness.

The case of the AGN is an interesting case in two respects. First, it suggests that AAAs can have only a limited impact when formal fiscal institutions are undermined by informal practices and undercut by adverse political incentives. The AGN ranks among the least performing AAAs in the aggregate index of institutional effectiveness in Figure 3 and Table 5 suggests that performance is deficient across all dimensions and particularly in terms of independence and timeliness. Second, it illustrates the limits of radical reform strategies based on the import of exogenous institutional models. As in tango, extravagant advance was followed by swift retreat, as the implanted AAA proved not to be fit for purpose in a highly politicized bureaucracy lacking a culture of control and with weak adherence to the rule of law. The nature of the political system, regularly dominated by fused legislative and executive majorities, provides a particularly inauspicious environment for any form of external control and oversight.


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