adequately perform their tasks, they depend on other state institutions to have a meaningful impact. The challenge is, therefore, how much independence is enough and how much is too much. There might even be a trade-off between independence and effectiveness, as the effectiveness of AAAs depends on their active connection with the other components of the system of fiscal control (Manning and Matsuda 2000).
Our ‘functional linkages’ hypothesis nuances the traditional view in the political economy literature according to which autonomy is best guaranteed by insulating oversight agencies from their political environment.52 The agency autonomy literature tends to value independence as an end it itself, rather than as a means to improve the agency’s performance. It fails to acknowledge that excessive autonomy may, in fact, undermine agency effectiveness. Autonomy through insulation might well guarantee survival but can lead to irrelevance, as the case of the Chilean CGR suggests. The resulting danger is not political capture, but institutional sclerosis. We thus concur with Dove (2002:224) that:
‘an agency strategy based on cautious engagement tends to win an oversight agency more real autonomy, while one based on insulation tends to result in the oversight agency becoming irrelevant.’
Fourth, shortcomings in the cycle of accountability reflect deeper dysfunctions in principal- agent relations between AAAs and the legislatures. The fluidity of the functional relationship between AAAs and legislatures is key to explain the effectiveness of the system of fiscal control. However, as this research reveals, this ‘legislative connection’ is the weakest link in the cycle of financial accountability, as reflected in the dysfunctions in the certification of public accounts and government discharge. In Argentina the certification process has effectively ceased to be meaningful; in Brazil it is marred with procedural difficulties; and in Chile it does not happen.
External auditing is not as effective as it could be partly because of the inadequate follow-up of audit findings and enforcement of audit recommendations by legislatures. At the same time, excessive dependence on the legislature also has its drawbacks, as the case of Argentina illustrates. Being a political appendix of the legislature makes the AGN vulnerable to partisan meddling, a vulnerability that is exacerbated by the politicization of the AGN’s decision-making structure. The root causes of dysfunctions are to be found in the legislatures’ lack of political incentives to use the information provided by its agent, the AAA, to oversee its main agent, government. Disclosure of audit findings and freedom of information can help AAAs circumvent the legislature and directly report to their ultimate principal, the public.
Fifth, external audit systems are in transition, seeking to redefine their role in fiscal control and their contribution to public management. However, to be fully effective, AAAs must clearly define their main purpose and mission. In many countries, they find themselves torn between a liberal concern for restraining government, through ex-ante control and compliance auditing, and a managerial concern with improving government performance, through ex-post performance auditing (Speck 1999, 2000). The liberal concern is predominant in the court model of tribunal of accounts, as in Brazil, and in those that emphasize ex-ante compliance control, as in Chile. The managerial concern is reflected in auditing techniques privileging ex-post performance auditing, as in Argentina. The case of Brazil nevertheless shows that these two functions are not necessarily compatible within the same organizational model.
52 Dove (2002:223) argues that oversight ‘agencies are more likely to sustain their autonomy if they minimize dependence on their task environments and close themselves off as much as possible to contacts that could lead to interference’ (Dove 2002:223). Similarly, Matsuda (1997:14-15) sustains: ‘the insulation strategy is based on the premise that the best way to protect the agency autonomy is to stay away from partisan politics, trying […] to maintain political neutrality and giving political actors few reasons for intervention.’