‘budgets are now seen not only as a tool of macroeconomic policy, but also as having a managerial and political role […]. The key to successful public finance management is to balance the economic, managerial and political roles of public finances. It is, therefore, a matter of governance.’
Nevertheless, the sophistication of performance evaluation undertaken by DIPRES begs the question of whether performance auditing by the CGR would add any value. While there might be a conflict of interest in having DIPRES evaluate the performance of the budget system it supervises, the executive opposes the extension of the CGR’s prerogatives to ex-post performance auditing or ‘auditoria de gestión.’ It argues that the CGR’s legalistic approach to fiscal control would hinder, rather than improve public management. It also fears that the CGR would concentrate too much power and would not be sufficiently accountable. Interviews with legislators confirm that this is also the view held in the legislature. The challenge of performance auditing is thus dual: changing the CGR’s corporate culture and overcoming DIPRES resistance.
Relations with the legislature are also deficient. The CGR is not an auxiliary institution to the legislature and it has not actively sought to develop the legislative connection. Interactions between the CGR and the legislature are not strategic, reflected, for example, in the ad-hoc nature of the legislature’s requests for special audits. The weakness of the links between the CGR and the legislature must nevertheless be placed in the broader context of a weak legislature in budgetary terms. Alejandro Foxley acknowledges that:
‘the follow-up of audit findings is particularly problematic, as the CGR does not posses enforcement powers and the legislature is neither designed nor equipped to do so […]. There is a legal vacuum here.’ 50
As the CGR supervises the accounting system, there is no independent auditing of government financial statements and no annual certification of government public accounts. Moreover, there is no public accounts committee within the legislature to review government accounts and follow- up audit findings. Thus, the Chilean external auditing system deviates from international best practice, as ‘the absence of any external audit opinion on the financial statements of the government does not correspond with a modern approach to external auditing of the public sector’ (World Bank 2004:9). However, for the CGR to emit an audit opinion on government financial statements, this would require abandoning its role in government accounting and ceasing to participate in administrative decision-making through ex-ante control. Both these reforms would require amending the constitution.
As a result, the CGR provides little advice or support to the legislature in the oversight of government finances. The weakness of the links between the CGR and the legislature must nevertheless be placed in the broader context of a weak legislature in budgetary terms. As Siavelis (2002) underscores, legislative budget oversight, whether through routine ‘police patrols’ such as those provided by the CGR or through inquisitorial ‘fire alarms’ of legislative inquiry commissions, is deficient, as reflected in recent corruption scandals.
Presidents Eduardo Frei and Ricardo Lagos have made improved accountability to the legislature a political priority. The legislature has enhanced its own capacities for government financial oversight and is taking a more active role in public budgeting, requests more fiscal information from the government. In 2003, the legislature’s joint budget committee became a permanent structure, assisted by an embryonic budget research office established in 1997. Until then, this committee was only activated for the review of the government’s budget proposal.
50 Author interview with Senator Alejandro Foxley, Minister of Foreign Affairs and former Minister of Finance, Santiago, Chile, 12 August 2004.