Evolving Good Practice for PACs

Rick StapenhurstProfessor of Practice, McGill University

Evolving Good Practice for PACs

• CPA-WBI Study Group (Toronto, 1999)

• McGee “The Overseers” (2002)

• Various additional studies (2002-2011)

• WBI survey 2008-13 & research

• Kerry-Pelizzo-Stapenhurst revision of “The Overseers” (ms to be submitted next week)

“The Old Story”

“The Overseers” - content

• State of the art• Ecology of the PAC• Committee’s purpose, scope and functions• Structure of PAC• Relationship between PAC and Auditor General• Special problems of PACs in small parliaments• Methods of PAC operations• Position of PAC in overall committee structure• The future of the PAC

Conceptual Approach: Key Actors and their Relationships

Auditor General

Parliament

Executive

Reports

Examines

Accountability

Relationship

PUBLIC FINANCIAL ACCOUNTABILITY

“The Overseers” – conclusions (1)

• First PAC: UK House of Commons, 1862

• Copied by most countries with a “Westminster” tradition

• Considerable variation in modus operandi across the Commonwealth

“The Overseers” – conclusions (2)

• Most effective when bipartisan

• Chaired by the senior Opposition (67%)

“The Overseers” – conclusions (3)

• Need to build capacity of Parliaments, PACs and AGs

• Critical: independence of AG from political, and legal constraints

• PACs need to develop the means to exchange information on developments, standards and best practice

More Specifically: Auditor-General

• Professional relationship with government• Working relationship with all parliamentary

committees• Historically, focus on probity• Increasing emphasis on VFM, performance

audits• Choose any item w/in mandate, but open to

suggestions from PAC• Adequate funding & resourcing

More Specifically: PACs (1)

• Bipartisan • Terms of reference (wide vs. narrow)• Work based on AG report, but free to undertake own

inquiries• McGee: sole focus on ex-post budget cycle• Focus on policy implementation, not policy• Some members reluctant to serve on committee• Average size: 11 members; “adequate” representation

of opposition (av: 30%)• Need for training & adequate staff

PACs (2)

• Historically, PACs have not sought publicity – more recently, public hearings (55%)

• Use of sub-committees• Do not examine individual complaints (refer to

Minister or Ombuds)• Divergence of reporting practices• Deal with individual public servants?• Problems with government

implementation/PAC follow-up

Smaller PACs

• Problem of membership/quorum Joint committee?Co-opt non-Parliamentarians?• Problem of adequate staffing AG as secretariat?Treasury officials? • Deal with individual public servants?• Problems with government implementation/PAC

follow-up

Initial “Good Practice Guide” (2005) 1) The Committee is small; committees seem to work well with 5-11 members, none of whom should be government Ministers;2) Senior opposition figures are associated with the PAC’s work, and probably chair the Committee;3) The Chair is a senior parliamentarian, fair minded and respected by parliament;4) The Committee is appointed for the full term of the parliament;5) The Committee is adequately resourced, with an experienced clerk and a competent researcher(s);6) There is clarity on the Committee’s role and responsibilities;

7) The PAC meets frequently and regularly;8) Hearings are open to the public; a full verbatim 9) transcript and summary minutes are quickly available for

public distribution;10) A steering committee plans the Committee’s work in advance and prepares an agenda for each meeting to the full Committee;11) The typical witness is a senior public servant (the “accounting officer”) accompanied by the officials that have detailed understanding of the issues under examination;12) The Auditor’s Report is automatically referred to the PAC and the Auditor meets with the PAC to go over the highlights of the report;

13) In addition to issues raised by the Auditor, the PAC occasionally decides to investigate other matters;14) The PAC strives for some consensus in their reports;15) The Committee issues formal substantive reports to parliament at least annually;16) The PAC has established a procedure with the government for following up its recommendations and is informed about what, if any, action has been taken;17) In all its deliberations, the PAC uses the Auditor as an expert advisor;18) Parliaments hold an annual debate on the work of the Committee.

“The New Story”

• Size: 2 (Anguilla) to 25 (Ghana); av: 11.6• Opposition: 0 Singapore) to 12 (Ghana); av:

42%• Staff: 0 (Jamaica, Guyana, Grenada) to 20

(India); av: 4.5• Opposition Chair: 70%• Emerging problem: political fragmentation

Impact of political fragmentation: INDIA

Quality of Members & Training• For Liberia, the most pressing needs are proper secretariat

“and to provide training for members on our committee too”• For Tanzania, training is the solution for many of the problems

confronting PACs. “Training, training, training. All Members of Parliament… need training. One piece of training you need to tell Members of Parliament who come to the Public Accounts Committee is that public money has no party (…) The people who should be most annoyed for money not being utilized properly are the people in power. If you are a Member of Parliament in power, you should be the first person to frown at or rebuke any public officer who misuses money, because he’s not carrying out the promises that were made out to the people”

Measuring PAC Effectiveness

• McGee: Number of meetings and reports• Add: Number of inquiries, hearings

• Key findings: PACs make a positive contribution to reducing

corruption & hence, developmentWhat works in some settings does not work on

others -> one size does not fit allOpposition chair, # of staff are important variables

New Important Factors

• PAC right of access

• PAC Powers

Power Africa Canada Caribbean British Isles/

Ireland

Pacific

Government agencies within the finance portfolio 75 92 100 100 100

Government agencies outside the finance portfolio 75 92 100 100 100

Statutory authorities75 92 50 67 88

Government owned corporations 75 92 100 67 100

Local government authorities 50 39 100 38 100

Parliament (and its expenditures) 75 - 100 100 75

Parliamentarians’ expenditures (eg. Staff) 75 - - 67 86

Government service providers 50 46 0 67 57

Government funded non-government organizations 50 46 50 67 50

Africa CAN Carib Brit Isles Pacific

Examination of accounts and financial affairs

100 100 100 100 100

Consideration of budget estimates (other than Audit Office) 0 7.1 50 25 37.5

Efficiency, economy and effectiveness of government policy 100 78.5 0 62.5 57.1

Efficiency and economy of policy implementation (value for money) 100 92.8 50 100 71.4

Effectiveness of government implementation (delivery of outcomes)

100 92.8 50 100 71.4

Undertake self-initiated inquiries

50 57.1 100 50 42.8

Examine AG Compliance reports

100 100 100 100 75

Examine AG Performance reports

100 100 100 100 50

Refer matters to the AG

75 78.6 100 100 75

Changing World of PACs

TRADITIONAL MODELAssociated with Westminster/Commonwealth

Reactive/Ex-post institutions

-> Many PACs have retained these features, but….

1st Transformation: New & Non-Commonwealth PACs

AfghanistanBhutanDenmarkEthiopiaFederated States of MicronesiaFinlandIsraelIndonesiaKosovoLiberiaNepalRwandaSouthern SudanThailandTurkey

2nd. Transformation : Powwers of New PACs

Country Power to refer matters to the AG

Power to self-initiate an inquiry

Power to consider budget estimates

Bhutan Yes No No

Indonesia Yes Yes No

Kosovo Yes Yes No

Nepal Yes Yes Yes

Thailand Yes Yes No

3rd. Transformation: Ad Hoc PACs

• Bangladesh

• Pakistan

• Fiji

• Nigeria

New “Good Practice Guide” (2013) • The Committee is small; committees seem to work well

with 5-11 members, none of whom should be government Ministers;

• Senior opposition figures are associated with the PAC’s work, and probably chair the Committee;

• The Chair is a senior parliamentarian, fair minded and respected by parliament;

• The Committee is appointed for the full term of the parliament;

• The Committee is adequately resourced, with an experienced clerk and a competent researcher(s);

• There is clarity on the Committee’s role and responsibilities;

• The Committee meets frequently and regularly;• Hearings are open to the public; a full verbatim transcript

and summary minutes are quickly available for public distribution;

• A steering committee plans the Committee’s work in advance and prepares an agenda for each meeting to the full Committee;

• The typical witness is a senior public servant (the “accounting officer”) accompanied by the officials that have detailed understanding of the issues under examination;

• The Auditor’s Report is automatically referred to the Committee and the Auditor meets with the Committee to go over the highlights of the report;

• In addition to issues raised by the Auditor, the Committee occasionally decides to investigate other matters;

In addition to issues raised by the Auditor, the Committee has the power to investigate other matters.

• The Committee strives for some consensus in their reports;

• The Committee issues formal substantive reports to parliament at least annually;

• The Committee has established a procedure with the government for following up its recommendations and is informed about what, if any, action has been taken;

• In all its deliberations, the Committee uses the Auditor as an expert advisor;

• Parliaments hold an annual debate on the work of the Committee.

New (1)

1) A Committee should asses its performance annually.

2) Committees should be involved in determining their own budgets. Such budgets should provide financial resources for member allowances, site visits and costs related to public hearings.

3) Specialized training (including orientation and mentoring) should be provided to new PAC members.

New (2)4) The Committee should have unconditional access to all government agencies and have the power to “follow” government money provided to non- government service providers. 5) In smaller jurisdictions, there may be benefit in combining ex-post and ex-ante budget review within the remit of the PAC.

6) Committee membership should provide for adequate participation by opposition MPs; their proportion of PAC membership should at least represent their proportion of the seats in Parliament.