The Comptroller
and Auditor General of Bangladesh: Arguments for “Substantial
Independence” (Joint Author – Md Abdullah Al Mamun) published in the
Chittagong University Journal of Law, Volume XXI (2016) at pp 159-176
The Comptroller and Auditor General of Bangladesh: Arguments for “Substantial Independence”
Abstract
The intention of this paper is to analyze how the office of the
Comptroller and Auditor General of Bangladesh (hereinafter C&AG) and the
public audit apparatus working under it is doing in practice. The Lima
Declaration of Guidelines on Auditing Precept has
provided a summary of organizing principles and good practices for public
sector audit. While those ideals are not fully realized in many of the English
speaking and the French speaking countries representing the world’s two most
widely regarded schools of audit thoughts – the Westminster style Auditor
General Model and Napoleonic Audit Court Model - the picture is more gloomy and
complex in Bangladesh. The paper attempts to critically address the roles,
strengths and statutory weaknesses of the supreme audit institution of
Bangladesh and the need for its functional and institutional autonomy being
clearly understood and seriously addressed. As part of its overall thread, the
paper argues that the office of the C&AG of Bangladesh as a constitutional institution
lacks the required level of attention, mandates, independence and strength
expected of a “constitutional institution” in the true sense of the term. To
that end, the paper itself explores some options that could potentially lead to
a better public financial management and greater accountability of the
custodians of public funds in Bangladesh secured through the existence of a
powerful and meaningful audit system.
1.
Introduction
The prominence of a
national auditing institution in a democracy is intrinsically linked with the
peoples’ right to know the ‘financial status of the nation’ which in the
eyes of the Indian Supreme Court is a natural right and an essential feature -
a ‘basic structure’ - of the Constitution.[1]
Officials responsible for management of public resources are accountable to the
public for the stewardship of what they are assigned with. The Auditor General
and his office works to reassure the tax payers that public money is being
spent in the originally intended direction, accounted for and well managed.[2]
The problem, however, is rooted deep within the traditional accountability
structures that are not free from the asymmetric influence of special interest
groups, pork barrel politics and regular overuse of common pool resources. Varieties
of institutional mechanisms have been discussed and recommended to tackle these
problems. Yet the most potential weapon – a “substantially independent” public
auditor with an ex ante audit mandate - has been neglected so far.[3]
Given the importance of functional and
institutional independence of national auditors, the resounding silence on this
subject in the academic literature is frustrating,[4]
though there are signs of some “limited but developing”[5]
interest in this area.
Against this backdrop, the present paper argues
that the Auditor General’s personal independence, which is popularly projected
through a public image of the person of the auditor and which has the tendency
to confuse the legislated guarantees of his service related securities with that
of his office and officers, amounts to independence in a very limited sense – a
“conditional independence” at best. In a conditional independence discourse,
qualities of the person of the auditor general assume great importance compared
to the independence of the office of the Auditor General - better coined as “substantial independence.”[6]
Part II of the paper elaborates the contours of conditional and substantial
independence of the Auditor General and tries to synthesize some organizing
principles that may ensure substantial independence of the state audit office
and generate a sense of confidence in the overall accountability structure.
Part III of the paper then takes the office of the Comptroller and Auditor
General of Bangladesh (hereinafter C&AG) into consideration. After a brief
introduction to the office, its audit mandate, audit process and follow up
mechanism, attempts will be made in Part IV to see how far the system, as it
exists now, conform the notion of “substantial
independence” and the organizing principles delineated earlier. Specific
recommendations for statutory and institutional overhauling are made in
appropriate points in discussion. The paper then concludes (Part V) with some
recommendations for general and operational readjustments in the audit system
of Bangladesh which have important potentials of offering solutions to many of
the shortcomings we face now.
1.2. Methodological
Approach
While
working on the paper, we have looked in some detail at relevant published
materials from some Supreme Audit Institutions (SAIs) like those of India,
Australia, Canada, U.K.,U.S.A., France, Switzerland and also of some
Sub-Saharan African countries. We concentrated on consists of some annual
reports produced by each of these SAIs plus the official handbooks, ‘guides’ or
brochures describing the work of each body to the general public. Furthermore,
since looking at annual reports is not a method that can address the core of
our concern – capability deficits in the institutions themselves, our study
addressed some other formal documents, comparative studies, policy papers from
international agencies, academic articles and statutes that penetrate deep into
the legal and institutional base of the audit institution. Being a conceptual
paper, we had very little scope to draw from interviews, observations or other
empirical and statistical data.
2.
From Conditional Independence to a Substantive one
The need for an independent national auditor
is undisputed in theory and practice. There is such a widespread acceptance of
the proposition that there is little point to engage in an academic exercise of
marshalling the arguments for this.[7]
Countries unfortunately poster a hegemonic attitude towards public
audit and conceive it as a legitimizing device that can only help sustaining
the existing political arrangements.[8]
Moreover, until very recently, the disturbing tendency of governments to
encourage confusion between independence of the person of a state auditor with
that of his office has been very effective in sustaining an image of an
independent audit mechanism without actually placing the auditor beyond reach
of the executive. By covertly dominating the audit machinery, successive
governments have been able to use the rhetoric of audit independence to legitimize their actions and signal to
the electorate its respect for the conventions of Westminster type financial
accountability.[9] Therefore, instead of a substantive independence, the discourse of audit independence has led
to, and continues to be, a form of conditional or
functional independence.
Conditional
independence for the purpose of this paper is perceived
as best allowable freedom from external direction in the initiation and conduct
of an audit. To operate under a conditional form of independence, the Auditor
General will have a limited control over his staffing levels and appointments
but will not be financially autonomous. Substantive
independence, on the other hand, would prevent the executive from meddling
with the organization of the audit office, including staffing levels and
position categories and influencing the program and conduct of audits. The
dismissal, payment and appointment of the auditor general would be beyond the
sole discretion of the executive. Substantive independence, in this sense, will
only be present if audit independence encompasses legal, fiscal and political independence.
Legal
independence is derived from the constitutional and
statutory context shaping the organization and role of audit office. It refers
to statutory provisions which are designed to protect the person of the Auditor
General and to identify and proscribe behavior which could be construed as
interfering with the duties of a public officer. Fiscal independence will require that that his office is not
directly dependent on the executive for financial and logistic supports. Political independence is present if no
successful overt or covert attempts are made by political actors to influence
the work of the Auditor General and his office. Of course, there is no denial
that substantive independence as a concept would draw heavily from the
co-operation of audited bodies and the parliament. How the executive reacts to
unfavorable reports and how the central coordinating department of the
government co-operates with the national audit institution would tell much
about the effect a political independence casts in reality. Some organizing
principles fostering the audit independence, however, may be distilled out in
academic discourse.
2.1.
Organizing principles of an ‘Independent’ Audit Office
As a matter of threshold, a series of international
instruments, most prominently the
Lima Declaration of Guidelines on
Auditing Precept, have detailed the basic
tenets of public sector auditing, including the delimitation of audit
jurisdiction, the relationship it should have with the executive, legislature
and judiciary and the nature of reporting and follow up that should be carried
out.[10]
The most vital insignias of audit independence would include firstly, the Auditor General’s freedom
from dependency on, and influence of, the institutions and persons he is
assigned to audit.[11]
To this end, the appointment of the head of audit division and members
of its collegial institutions need be kept free from political and
administrative manipulations and backdoor settlements.[12]
The process therefore typically involves an independent body which ensures that
prospective appointees are widely canvassed, due process is followed and a
short list of suitable candidates is presented for final selection. Though most
of the common law countries prefer appointment by the president instructed by
the executive, recent trends there encourage some form of parliamentary
involvement in the process.[13]
Additional consultation with the Speaker, the leader of opposition and
audit committee of the parliament is widely encouraged. Moreover, the
parliamentary audit committee is sometimes allowed a veto on an
appointment proposed by the executive. Lima guidelines suggest that
direct appointment by the parliament instructed by its audit committee has the
best potential of ensuring the autonomy normally expected from the office.
Second, as
for tenure of the Auditor General, there has been a trend away from an
earlier practice of appointing the auditor general for life. In most
jurisdictions the term of appointment is for a fixed term. The prescribed
length of the tenure is kept long enough to enable the development of
independence and steering of activism and also short enough to avoid the
incumbent becoming complacent or 'stale' in the role and to enable the
introduction of contemporary thinking.
Third, the remunerations and financial benefits attached to the
post also need protection from possible influence or control by the executive,
or by the treasury and other parts of the bureaucracy. Usually the Auditor
General’s remuneration is protected from being diminished during his or her
term of office.
Fourth, to check retaliatory removal from office, most
jurisdictions limit the grounds and procedure for removal constitutionally and
statutorily. As part of the constitutional and legal scheme, there is a
tendency to adopt the removal grounds and procedure applicable for the judges
of the highest judiciary. Some jurisdictions provide for suspension from
office. Though the power has been left in the hands of the executive, a number
of jurisdictions further prescribe that the Auditor General will be
automatically restored to office unless parliament either confirms the
suspension or requires his removal.
Fifth, as a matter of principle, the scope for reappointment has
been recognized as an undesirable practice which might compromise independence.
With the time for reappointment approaching, the incumbent could become
reluctant to criticize or seek prominence by being overly critical.
Sixth, functional
autonomy of the Auditor General is reflected in the accounting procedure
congenial to the status and stature of the office. Very often, the mandate or
jurisdictional boundary is determined by the constitution so that it remains
immune from legislative restlessness.[14]
Other details of the audit procedure are required to be adopted only after
agreement with the audit office.[15]
Seventh, it is also looked upon that the audit office remains focused
and bold in discharge of its mandate. Most jurisdictions therefore offer immunity
or indemnity from prosecution for both acts of commission and omission,
past or present that result from the normal discharge of their duties.[16]
Eighth, financial autonomy of the audit office is maintained by
keeping scope of direct application to the budgetary authority (ministry of
finance and legislature)[17]
and also of managing and allocating the funds allotted to the Audit office
under as many separate budget headings as it thinks fit.[18]
Ninth, audit office is provided with adequate powers to obtain timely,
unfettered, direct, and free access to all the necessary documents and
information, for the proper discharge of their statutory responsibilities.[19]
This involves power to request information and set time limits for furnishing
information or submitting documents and other records including the financial
statements.[20]
Tenth, though the findings of the Auditor General would not be seen as a
legally enforceable judgment, the office must be empowered to approach the
authority which is responsible for taking necessary measures and require the
accountable party to accept responsibility within a definite time period set by
the office.[21]
To this end, the audit office’s own statutory power to follow-up and report to
the parliament would be a must.[22]
Follow up would have a second phase as well. Recommendations of the parliamentary
committee would not be the end of the ex post scrutiny process. In some
countries, committee reports are followed by a formal response from the
government. In practice, however, a formal response from the government is not
always sufficient for ensuring that the committee’s recommendations are acted
upon. Some countries,
such as Germany, go further in their follow-up through the use of a formal
tracking report produced regularly by the audit institution. The civil law
countries allow the audit office a judicial power to rule on the
appropriateness or propriety of a particular expenditure. While judicial
approach to audit may not commensurate with the common law based auditor
general approach, some quasi judicial power in relation to ensure free access
and due compliance with the audit observations may add to the credibility of
the institution.
Eleventh, when necessary, the audit office may
assist the parliament and administration in the form of expert opinions, including
comments on draft laws and other financial regulations. The administrative
authorities shall bear the sole responsibility for accepting or rejecting such
expert opinions. This additional consultative role must not anticipate the
future audit findings and must not interfere with the effectiveness of audit.
The independence of audit office provided under the constitution and law also
guarantees a very high degree of initiative and autonomy, even when they act as
an agent of parliament and perform audits on its instructions. This
relationship should be defined constitutionally.[23]
Twelfth, civil
society organizations can use the audit reports to pressure governments to
respond to audit recommendations and improve governance. Civil society
organizations, may also serve the audit office through social audits and other
such processes that may complement and augment the work of the audit office. As
such, each institution can complement the other’s work in promoting good
governance. To this end, a South African
civil society initiative known as Public Service Accountability Monitor (PSAM)
presents a really encouraging picture. PSAM follows up the reported case of
corruption and misconduct with department concerned. Once the details are
established, the head of department is contacted to know the disciplinary
outcome, if there be any. In the event of a non response, PSAM takes resort to
the Promotion of Access to Information Act which makes it a near impossible for
the department concerned to deny information anymore. The response is then
recorded by way of telephonic interview and is available in text and audio
format in the internet. Huge success of PSAM process in South Africa shows how
legislative efforts may be supported and complemented by the civil society.[24]
While the twelve
principles of audit ‘independence’ outlined above reflect the modern parameters
of a substantially independent state audit system, the system that works in
Bangladesh seems to live far below the bench. This part of the paper would present a brief introduction to the office
of the Comptroller and Auditor General of Bangladesh (C&AG) and its
constitutional and statutory mandates, functional paradigms and follow up
techniques. The next part (Part IV) would then attempt to fathom the system in
the scale of the twelve principles discussed in Part II and pinpoint the
loopholes.
3.
The Comptroller and Auditor General of Bangladesh (C&AG)
The office of C&AG is a constitutional post created by
the constitution of Bangladesh. President appoints the Comptroller and Auditor
General,[25]
in consultation with the prime minister.[26]
Terms and conditions of the office are to be settled by the president subject
to any laws made by parliament,[27]
if there be any. Mandate of the C&AG extends to the public accounts of the
Republic, known as consolidated fund[28]
- and of all courts of law and all authorities and officers of the Government.[29]
The C&AG is essentially seen as an office working for parliament within its
greater democratic oversight regime. Parliament can mend and amend the powers
and functions of the C&AG in the way it thinks fit, of course subject to
the limits mentioned in the constitution.[30]
As an officer of parliament, the auditor general reports to the parliament via
the president.[31]
3.1. The Audit Process
The
C&AG covers audits of various sectors of the government for particular fiscal years
in which special emphasis is given to cover major areas of risk including
public works, education, communication etc. Annual audit reports are submitted
to the Ministry concerned. Alongside the traditional approach of conducting
financial, compliance or regulatory audits,[32]
the Office is now conducting performance audit[33]
to determine economy, efficiency and effectiveness in the management of public
resources. Apart from these, special audit and audit on the ministries under
the Medium Term Budget Framework (MTBF) has also been conducted by the Office
of C&AG on issues of national interest and concerns. The Director Generals
(the heads of the Audit Directorates) are responsible for conducting audit on
behalf of the C&AG in their respective jurisdictions. Audit observations
involving serious financial irregularities are treated as Advance Paras (AP)
and subsequently developed into Draft Paras (DP) after taking into consideration
the replies received from the concerned auditee organization and the Principal
Accounting Officer, usually the Secretary of the Ministry or Division
concerned. The concerned Audit Directorate issues Draft Para to the controlling
Ministry and allows further time for the ministry to clarify, respond or take
remedial action. The Office of C&AG scrutinizes these Draft Paras and
incorporates in the audit reports after approval of the C&AG. Below is a table showing the mandates of
different Directorates of Audit working under the Comptroller General’s office.[34]
Directorates
|
Jurisdictions
|
Commercial
Audit Directorate
|
All
public sector entities and State owned enterprises including nationalized
commercial banks and financial institutions, autonomous semi-autonomous
bodies and public holding companies
|
Local
and Revenue Audit Directorate
|
All
civil government departments, local and statutory bodies, including
municipalities, city corporations, universities and National Board of Revenue
(NBR)
|
Civil
Audit directorate
|
Office
of the Controller General of Accounts (CGA), 6 Divisional Controller of
Accounts offices, 49 Chief Accounts Offices, 58 District Accounts Offices and
418 Upazilla Accounts Offices under the CGA
|
Works
Audit Directorate
|
Public
Works expenditure of the public works department, Roads and Highways
Department, Bangladesh Water Development Board, Bangladesh Power Development
Board, Dhaka Electric Supply Authority, Water and Sewerage Authority,
Bangladesh Civil Aviation Authority, Local Government Engineering Department,
Public Health Engineering Department and City Development Authorities
|
Foreign
Aided projects audit Directorate
|
All
development and technical assistance programs and projects in the public
sector funded by foreign aid
|
Railway
Audit Directorate
|
All
establishments of Bangladesh railway, office of the Additional director
General (Finance), Bangladesh Railway and offices under its administrative
control.
|
Performance
Audit Directorate
|
Performance
Audit of Selected bodies
|
Mission
Audit Directorate
|
All
overseas missions under Ministry of Foreign Affairs, nationalized banks,
shipping corporation offices and Biman Bangladesh Airlines Offices operating
abroad.
|
The
Defence Audit Directorate
|
All
units/formations of the Defence forces, including army, air force and navy,
field services organizations like the Department of Meteorology, geological
Survey of Bangladesh, Controller General of Defence Finance (CGDF) including
the offices of the Defence Finance Department under the CGDF.
|
Post,
Telegraph and Telephone Audit Directorate
|
All
establishments of the Postal Department, Bangladesh Telecommunications
Company Limited, Bangladesh Telecommunication regulatory Commission and the
office of the Chief Accounts Officer, Ministry of Post and telecommunication.
|
3.2. The Public Accounts Committee (PAC)
The reports of the Auditor
General are submitted to the president who causes them to be laid before
parliament.[35]
Prior to that, the C&AG has to apprise the prime minister as per the Rules
of Business. The Public Accounts Committee of the parliament (hereinafter
referred to as PAC) is mandated by article 76 of the constitution to consider
reports of the C&AG. The PAC sleets important observations of the audit
report for detailed examination and hold hearings of the principle accounting
officers i.e., the Secretaries of
Different Ministries and Divisions. It makes recommendations and submits
reports to the parliament. C&AG provides necessary support to the PAC in
its effective functioning. When the full committee meeting is held, in addition
to the related offices of the respective Audit Directorates, the C&AG
remains present as amicus curie and
make clarifications to the committee in its deliberations. Officers of the
Audit Department attached to the parliament assist the committee in preparation
of its report. If they are so requested, the concerned officers of the C&AG
remain present in the meetings of the Public Undertaking Committee (PUC) and
Estimate Committee (EC) as well.
3.3.
Follow-up by the Audit Directorates
The
responsibility to follow-up audit reports on the basis of decisions of
parliament as recommended by the PAC and as communicated by government for
execution will rest with the Audit Directorates concerned. In case of any doubt
as to whether a particular report or question has been adequately dealt with by
Parliament or its Public Accounts Committee or the Government, the matter
should be referred to the C&AG for advice on further appropriate action.
The C&AG shall have authority to apprise the Cabinet or any higher
authority of the instances of irregularities and wastage including fraud,
misappropriation and embezzlement embodied in the audit reports referred to the
PAC for immediate action on them.
IV
4. A Critical
Assessment of the Audit System of Bangladesh
While the constitutional
provisions and the provisions of the Comptroller and Auditor General
(Additional Functions) Act of 1974 and 1975 and the Comptroller and
Auditor-General (Additional Functions) (Amendment) Ordinance of 1983 convey a
more or less satisfactory arrangement of state audit, an overall assessment of the
institutional stature, functional capability and efficiency of the C&AG
would present a mix bag of hope and concerns. As will be shown in this part of
the paper, the method of appointment of C&AG has been a source of ambiguity
and confusions. Considered from the perspective of relationship of the auditor
to the executive and parliament, the C&AG, Bangladesh may be perceived both
as a public servant or an officer of parliament[36]
which puts the institute in an unusual mess of complexities in respect of its legal, fiscal and political independence which I touted as parts of its greater substantive independence.
4.1. Imperfect
Legal Independence
The constitutional
authorization of the parliament and the president appears to be restrained
within assigning of responsibilities to the C&AG. Once responsibilities are
assigned, the Auditor General “shall not be subject to the direction or control
of any other person or authority.”[37]
Public accounts of the Republic and of all courts of law and all authorities
and officers of the government are constitutionally within the reach of
C&AG.[38]
Parliament may add accounts of any other body corporate ‘directly established
by law’[39]
to that list and assign additional functions by law.[40]
Parliament may also exclude ‘anybody corporate’ from the jurisdiction of
C&AG by creating special auditing arrangements for those bodies.[41]
Accordingly, the Comptroller and Auditor General
(Additional Functions) Act 1974 and its 1975 amendment were enacted. These gave
the C&AG an additional task of certifying the appropriation and finance
accounts and auditing the accounts of other statutory public authorities,
public enterprises and local authorities.[42] Section 3A of the 1974 Act, however, accommodated a
questionable provision. Under this, the government may exclude any Ministry,
Division or office of the government from C&AG’s mandate. Thereby the 1974 Act
created ways for dispensing with the initial accounts required to be kept in
the treasuries and initial and subsidiary accounts of stores and stock,
manufacturing, trading and profit and loss accounts required to be kept in any
such Ministry, Division, or office of the government.[43]
While article 128(2) of the constitution authorizes the parliament to “remove”
any “body corporate” from the C&AG’s mandate, excluding “any Ministry,
Division or office of the government” tightens the C&AG’s hands and legs beyond
constitutional contemplation.
4.2. Functional dependency of the C&AG
The constitution seeks to ensure functional independence of the C&AG
by fixing his term of office. It is either five years from the date on which he
entered upon his office, or until he attains the age of sixty-five years,
whichever is earlier,[44]
of course, unless he decides to resign earlier.[45]
Within this temporal limit his tenure is, in fact, a tenure during good
behavior. There is a strong conviction that the current practice of appointing
C&AG for five years does not provide a long enough term to foster activism,
initiate and implement reforms. However, the most
problematic aspect of this lies in the appointment itself. Present method of
appointment of the C&AG and selection of his officers in the Audit
Department results in
effective subordination of this department to the executive branch of the
government. The C&AG is appointed by the
president, advised by the prime minister, from among senior officers of the
Audit and Accounts Cadre, which makes it just another department of the
government in every respect. In the Warrant of Precedence, C&AG is ranked
sixteenth, which is below the rank of Cabinet Secretary. While the C&AG is
expected to audit a Cabinet Secretary in appropriate cases, his subordination
to a Secretary of the government appears unreasonable in all considerations of
propriety and judiciousness. In many countries this position is of an
equivalent rank to that of a minister or a federal justice.[46]
Reflecting the ‘special’ relationship between Public Account Committees (PAC)
and the audit office, there is emerging support at the Commonwealth level for
the PAC playing a major role in selection of Auditor General and his cadres in
conjunction with the executive.[47] Of course, there are views
that seek to eliminate any role play by the executive at all. Hence, an
American style presidential appointment followed by parliamentary nomination of
candidates may mark a middle course between the two opposing propositions.[48]
Appreciably,
in cases of his removal or dismissal from office, the C&AG is
treated like Judges of the Supreme Court.[49]
This again is somewhat
compromised in article 130 of the Constitution which leaves a scope for the
president, i.e., the executive, to
virtually neutralize an unfavorable C&AG by appointing an Acting Auditor
General in his place until he “resumes” the functions of his office. It,
however, appears that an unfavorable C&AG may not “resume” his function
freely and easily. It is the president who “is satisfied” that the
Auditor-General is “unable to perform his functions on account of absence,
illness or any other cause.”[50]
Apparently, the president has been made the master of judging the initiation,
continuation and conclusion of the ‘inability’ without assigning any role to
the parliament or Supreme Judicial Council in this regard.[51]
The apprehension is not a mere theoretical one, when we recall the incident of
the president of Bangladesh himself was made “unable” to resume his function on
an earlier occasion.[52]
Office of the C&AG of
Bangladesh is also severely restrained in following up its audit reports
effectively. There is a huge backlog of audit reports and objections in the
PAC. Most of the cases result from lackluster approach of the departments
concerned in commenting on the accuracy and fairness of the report.[53]
To this end, recently there has been a demand for the enactment of an Audit Act
that would make it legally binding for the auditees to report on actions taken
regarding execution of the audit and PAC recommendations. The Act would also contain an adequate
offences clause. Failure to respond audit reports and observations need
to be handled seriously and the culture of impunity must be strictly guarded
against.[54]
Apart from this, the working
relation of the C&AG with the executive appears well articulated in
general. The C&AG may send instructions to and also receive instructions
from the government. While the public accounts of the Republic must be kept in
the form and manner prescribed by the Auditor-General,[55]
he shall give the government such information and assistance in the preparation
of its annual accounts as it may ask for.[56]
The C&AG’s responsibility to assist the government, however, extends so far
as his own accounts keeping responsibility allows him to do so. The C&AG may make rules and give
directions in respect of all matters pertaining to audit of any accounts he is
required to audit.[57]
The Auditor-General is given wide power to require necessary books or documents
to be sent to him for inspection.[58]
He and persons authorized by him have
access to all records, books, vouchers, documents, cash, stamps, securities,
stores or other property of body he seeks to audit.[59]
The Auditor General’s excess to information has been further consolidated by
ensuring his access to such materials in the possession of “any person in the
service of the Republic.”[60]
Moreover, the government is obliged to give him such information as he may
require for the preparation of any account or report which it is his duty to
prepare.[61]
4.3.
Financial dependency of the Audit Department
The greatest threat to the
operation of an independent audit department in Bangladesh has been the audit
department’s dependence on the executive branch for the resources necessary to
meet his audit mandate. The C&AG officers and
staff are under the administrative control of the Finance Division of the
Ministry of Finance, which controls the appointment, promotion, and
disciplinary action for the C&AG employees. While countries like Denmark
allows the Auditor General to place its budget directly to the parliamentary
public accounts committee,[62] the annual budget of the
audit department needs to be placed and approved by the Ministry of Finance,
like other ministries. The C&AG’s independence as upheld in the
Constitution has been jeopardized by this practice[63] and resulted in a
serious "constitutional anomaly".[64]
The government of Bangladesh,
however, has seen such freedom as inconsistent with its constitutional right to
determine spending levels for all organizations requiring appropriations from
Parliament.[65] Therefore, a more preferable arrangement budget approval
could be to involve a parliamentary committee considering the C&AG budget
and audit plans prior to approval by the Parliament.[66] The institution of Public
Accounts Commission as is applied by the U.K. parliament presents a
worth-consideration model in this regard.[67]
4.4. Missing Political Independence
As is said earlier, while
audit department plays the role of statutory whistle blower, success of the
system rests with the overall commitment of the body politic in making its
existence a meaningful, and impact a forceful, one. Audit may detect fraud and
abuse but application of sanctions by government is critical for the ultimate
deterrent effect. Making government behave, on the other hand, is a
politico-democratic task. Popular awareness and interest in the activities of
the audit department is a key to such efforts. In Bangladesh, the audit
department remains hidden within the other departments and directorates of the
government. Its
activities and reports are never highlighted with the media, unlike the
practice in other countries. In fact, the civil society and media does not seem
to count it as something separate from the bureaucracy. Things are not
highlighted even when the PAC discusses an audit report. The PAC also does not
invite the press or media in deliberation. Given the attention vacuum, only an atmosphere conducive to the C&AG
freely engaging with the media and civil society on various audit and
accountability issues could strengthen the audit department as an important
oversight institution of the Republic.[68]
5. Concluding Observations
New paradigms are evolving
in the political systems around the world. Global economy is in a tumult and
governments are seeking novel solutions to critical economic problems. Other
stakeholders i.e., the people, media,
civil society and development partners are also demanding more accountability
and transparency from the executives, especially after the rise of the peoples’
right to know the affairs of the government – Right to Information. All these combined
raise major challenges to the arrangements in the Audit Department of
Bangladesh.[69]
In their current form, audits in Bangladesh do not always provide a clear
picture of government performance in those specific areas in which citizens
have the greatest concerns. Reflecting on such issues would call for a drastic
paradigm change in the way we approach auditing in Bangladesh. While most of
the constitutional, statutory and political issues associated with the C&AG
of Bangladesh are addressed and necessary restructuring are suggested in the
earlier part of this paper (Part IV), we like to recommend some general and
operational readjustments in this wrapping-up part that may gear up the drastic
paradigm change we seek:
1.
The Westminster model of governance that we follow expects the audit
apparatus to audit the policy implementation rather than policy per se.[70] However, conviction is
getting force that audit should not mean mere correctness of the amounts spent
somewhere, it must also reflect on whether the money was poured on the wrong
project. Supreme Audit Institutions in Germany, Vietnam and the U.S., for
example, now comment on the appropriateness of government budgets in addition
to examining government expenditures. Particularly the “Activist
Performance Audit” approach applied by the Government Accountability Office
(GAO) of the U.S. is worth consideration. According to Wheat (1991), activist
performance auditors regard the public as their ultimate client and auditors
are not hesitant to offer some comments on the government policies that
underpin agency performance.[71]
2.
Another
option could be to allow citizens to participate in the conduct of audits. As
citizens will look for specific measures of performance, they will use their
access to (and participation in) audit institutions to obtain information on
those measures that they are interested in reviewing. Allowing citizen
participation in audits will require that audit institutions create spaces in
which citizens can meaningfully participate in audit programs and thereby
obtain specific measures of government performance. It is therefore believed
that adoption of the spirit and practice of ‘audire’ – the public
hearings of accounts – will assist the Audit Department in meeting many of the
modern anti-corruption challenges.[72]
The Chinese National Audit Office for example
started the system of issuing Announcement of Audit Findings from 2002, with a
view to making audit findings public in a timely manner and improving the
transparency of auditing work.[73]
Likewise, in 2002, the Philippines’ National Commission on Audit (COA) entered into a
partnership with several non-governmental organizations to conduct
participatory audit exercises.[74]
3.
The
practice of issuing Status Report as adopted by the Canadian Audit office
also has much to offer. A
typical Status Report would follow up the progress made by the government in responding to
recommendations contained in
previous performance audits.[75]
4.
The
practice of the U.S. Government Accountability Office of producing audit report
at the request of members of Congress
including the committee chairpersons, ranking minority members and whenever
possible, at the requests of individual members merit attention.[76]
Such a widening of audit mandate would lead to enhanced democratization of the
process and better justify the state audit apparatus.
5.
An
ultimate and more drastic option could be to infuse some of the features of civil law system Napoleonic or Judicial
Audit Court Model. The Westminster style Auditor General model, to which
the C&AG of Bangladesh projects to belong, is based on closer interaction
with the legislature. Audit court model, on the other hand, asserts equal
distance from the executive and legislature and seeks to adjudge the legality
of expenditures as well.[77]
Audit courts have both judicial and administrative authority. Independent of
both the legislative and executive branches of government, it is considered an
integral part of the judiciary.[78]
Unfortunately, the office of the C&AG of Bangladesh is failing to be in
line even with the Westminster model. Factually it does not lie within the
legislative domain neither do it projects itself to be within the vortex of the
executive. While taking the Comptroller and Auditor General of Bangladesh
completely out of the executive and legislature and placing them within the
judicial hierarchy is impractical in many respects, a quasi-judicial authority
to determine the appropriateness of the money spent on a particular project may
be garnered well within the Auditor General Model if it is accompanied by
increased participation of the public. Alternatively, if there are concerns for
increased institutional clash and complexity arising out of a quasi-judicial
audit authority, a modified version of the Napoleonic Audit Court Model - the
Court of Accounts Model of some Sub-Saharan African countries deserves
consideration. There the Court of Accounts (Cour or Chambre des Comptes) is a division
or separate court within the judicial system which is completely separate from
the supreme audit institution. The court, with the support of its staff, judges
the legality and regularity of the transactions and accounts of individual
public accountants and reports to Parliament on the overall State Account. The
professional staffs traditionally have a legal rather than accounting or audit
backgrounds, but this is expanding in several countries.[79]
On a concluding
note, it must be emphasized that the arguments for ‘substantial independence’
of the public audit placed above should not - and they actually do not-
overlook the need for the
audit institutions justifying their existence itself by auditing the results
achieved and value-added for the public by their audits and efforts. Ultimately
it is inconsistent for an Audit body preaching to promote democratic
accountability to bypass the reflection on the extent, content and quality of
its own activities.
* Assistant Professor,
Department of Law, University of Chittagong
[1]The Indian Administrative
Tribunal Jodhpur Bench, at Jodhpur Original Application number 52/2004 and Misc
Application 60/2009 with Original Application 96/2007 with Misc Application
13/2011. See also National Dairy Development Board v. Union Of India And
The Comptroller & Auditor General of India; Writ Petition (Civil) No.
4834/1998 & C.M. No.9784/1998, in Writ Petition (Civil) No.2748 of 1998 Kesavananda
Bharati v State of Kerala AIR 1973 SC 1461 quoted in Chahat Chawla (2011),
“Comptroller and Auditor General in Good Governance,” Selected Works of Chahat Chawla at p 4 < http://works.bepress.com/chahatchawla/1> accessed on 20 May, 2015.
[2] Pat Barrett (1996), “Some Thoughts
about the Roles, Responsibilities and Future Scope of Auditors-General,” Australian Society of Certified Practicing
Accountants Annual Research Lecture (Canberra November 14, 1996) Australian
National Audit Office < http://onlinelibrary.wiley.com/doi/10.1111/j.1467-8500.1996.tb02568.x/abstract>
accessed 15 February, 2015.
[3] Mark
Schelker and Reiner Eichenberger (2008), Rethinking Public Auditing
Institutions: Empirical Evidence from Swiss Municipalities, University of
Fribourg, Switzerland and CREMA
accessed
15 February, 2015.
[4] W. N. Funnell (1995), The Engendering of a Chimera: Sources of Independence for Australian
Commonwealth State Audit, University
of Wollongong, Department of Accounting And Finance Working Papers Series,
Paper no 95/3, at p
4 < http://ro.uow.edu.au/accfinwp/69/ > accessed 01 March, 2015
[5]
Christopher Pollitt and Hilkka Summa, Reflexive Watchdogs? How Supreme Audit
Institutions Account for Themselves, Public Administration, Volume 75, Issue 2 (1997),
pp 313-336 at p 313
[7] Pois in his study of the United States
General Accounting Office (GAO), observed: “[UN Declaration on SAIs
independence] recognizes that supreme audit institutions can
accomplish their tasks objectively and effectively only if they are independent
of the audited entity and are protected against outside influence; 2. Also
recognizes the important role of supreme audit institutions in promoting
the efficiency, accountability, effectiveness and transparency of public
administration, which is conducive to the achievement of national development
objectives and priorities as well as the internationally agreed development
goals, including the Millennium Development Goals; Pois (1979), Watchdog of the
Potomac: A Study of the Comptroller General of the United States, University
of America Press pp 3-4
[8] Richardson A. (1987),
"Accounting as a Legitimating Institution", Accounting,
Organizations and Society pp
341-355 at p 342
[10] The Lima
Declaration of Guidelines on Auditing Precepts adopted at the Ninth
International Conference of Supreme Audit Institutions, International
Organization of Supreme Audit Institutions, Peru 1977 and updated in 2005.
accessed 5 February 2015
[12] ISSAI-11, Guidelines and Good
Practices Related to SAI Independence,
accessed 5 February 2015.
[13] Vijay
Kumar (2008), The Comptroller & Auditor
General of India, A Thematic History 1990–2007 (Vol. I), APH Publishing House.
[14] For
instance, during 2010 the Pakistani Supreme Audit Institution received
constitutional protection. While his security of tenure was protected earlier,
sanctity of his audit jurisdiction was recognized in the constitution a fresh
which says that the Auditor General himself shall determine the extent and
nature of such audit. Any restrictions
on the mandate of the SAI Pakistan, which may have been perceived by some
quarters to have existed earlier have been lifted by this amendment and now all
operations of the federal and provincial governments fall squarely in the audit
jurisdiction of the Auditor General of Pakistan.
[16] The Mexico Declaration on SAI
Independence, Principle 2 <
http://www.issai.org/media/12922/issai_10_e.pdf> accessed 16 July 2015
[17] Ibid, Principle 8
[19] Supra Note 16, Principle 4
[22] Supra Note 16, Principle 7
[24] For more information on the
working of the South African Civil Society Organization visit - psam.org.za
[25] The Constitution of the
Peoples Republic of Bangladesh, Article 127(1)
[26] Ibid, Article 48(1)
[27] Ibid, Article 127(2)
[28] Ibid, Article 84
[29] Ibid, Article 128(1)
[30] Ibid, Article 128(3)
[31] Ibid, Article 132
[32] Financial (regulatory) audits
are designed to assess whether financial operations (management, collections
and expenditure) of government have been legally executed and are these
accounts a true and fair representation of the financial activities. The most
common Regulatory Audit is the review of the government’s annual accounts.
[33] According to INTOSAI and GAO
definition, Performance audit refers to an independent examination of a
program, function, operation or the management systems and procedures of a
governmental or non-profit entity to assess whether the
entity is achieving economy, efficiency and effectiveness in the employment of
available resources.
[34] Office of the Comptroller and
Auditor General of Bangladesh, Annual Report 2010, p. 8 <http://www.C&AGbd.org/publication/1323244735annual%20report%202010.pdf>
accessed
16 March 2015.
[35] Supra Note 25, Article 132
[36] While Article 127 of the Constitution of Bangladesh treats the
Comptroller and Auditor General as a servant of republic by vesting his
selection and appointment exclusively in the hands of the executive, Article
128 sees him working exclusively as an officer of the parliament.
[37] Supra
Note 25, Article 128(4)
[38] Ibid, Article 128(1)
[39] Ibid, Article 128(2)
[40] Ibid, Article 128(3)
[41] Ibid, Article
128(2)
[42] The
Comptroller and Auditor-General (Additional Functions)(Amendment) Act 1975 and
the Comptroller and Auditor-General (Additional Functions) (Amendment)
Ordinance 1983
[43] The Comptroller and Auditor
General (Additional Functions) Act 1974, Section 3(2)
[44] Supra
Note 25, Article 129(1).
Interestingly no such age limit has been provided for Chief Election
Commissioner, Public Service Commissioners, Law Commission members, Human
Rights Commission Members, Information Commission Members, Anti-Corruption
Commission Members, Ombudsman, etc.
[45] Ibid,
Article 129(3)
[46] The World Bank (2007), Bangladesh: Public Sector Accounting and
Auditing, A Comparison to International Standards, Country Report at Para
35 < https://openknowledge.worldbank.org/handle/10986/7684 > accessed 15
February, 2015
[47] Vinod Sahgal, for example,
sees the PAC as the crucial agent among the “Three
Men in the Boat”—the Legislator, the Executive and the Auditor. More - Vinod Sahgal, Audit and
Legislative Oversight: Developing Country Perspective in Auditing for Social
Change: A Strategy for Citizen Engagement in Public Sector Accountability,
United Nations, 2007 pp 53-76 at p 74
[48] The Comptroller General of
the U.S. heading the Government Accountability Office (GAO) is appointed by the
President from a list of candidates proposed directly by the Congress. See - R.K.Sharma, Supreme
Audit Institution – U.S.A., Rupee Trail, Volume April-June 2012, Office of
the Comptroller and Auditor General of India, pp 15-18, at p 15
[49] Supra Note 25, 129(1) and (2)
[50] Ibid,
Article 130
[51] Regarding
the inability of the president, the Constitution provides for a Parliamentary
procedure and Supreme Court judges undergo a Supreme Judicial Council
procedure.
[52] For details of the incident
of President Iajuddin Ahmed being denied the freedom to decide his own ability
to resume his office see M Jashim Ali Chowdhury, An Introduction to the Constitutional Law of Bangladesh, Sunshine
Book (2nd Edition 2014), pp 280-81
[53] Supra Note 46, Para 38
[54] Ibid, Para 34
[55] Supra Note 25, Article 131
[56] Supra Note 43, Section 9
[57] Ibid, Section 11
[58] Ibid, Section 8
[59] Ibid, Section 5(2)
[60] Supra
Note 25, Article 128(1)
[61] Supra Note 43, Section 10
[62] R.K.Sharma, Supreme Audit Institution – Denmark, Rupee Trail,
Volume July-September 2011, Office of the Comptroller and Auditor General of
India, pp 44-49,
at p 45.
[63] Supra Note 46, Para
37
[64] E. Nonnanton (1966), Accountability and Audit of
Governments, Manchester, Manchester University Press p.374
[65] Nizam Ahmed, Parliament and
Public Spending in Bangladesh Limits of Control, 2000, Bangladesh Institute of
Parliamentary Studies, and UNDP, pp 53-79
[67] R.K.Sharma,
Supreme Audit Institution – United Kingdom, Rupee Trail, Volume,
January-March 2012, Office of the Comptroller and Auditor General of India, pp
36-42 at p 37
[68] Supra Note 46, Para 37
[69] Office of
Comptroller and Auditor General Bangladesh, Audit
Code, 2nd Edition, 1999, Dhaka,
[70] Section 6(2) of
the 1983 Audit Act of U.K., for example states that the comptroller and auditor
general is not entitled to question the merits of the policy objectives of any
department, authority, or body in respect of which an examination is carried out.
For more informed analysis on this point see: Mr. Vinod
Sahgal, Audit and Legislative Oversight: Developing Country Perspective in
Auditing for Social Change: A Strategy for Citizen Engagement in Public Sector
Accountability, United Nations, 2007 pp 53-76 at p 62.
[71] Simon D. Norton and
L. Murphy Smith, Contrast and Foundation of the Public Oversight Roles of
the U.S. GovernmentAccountability Office and the U.K. National Audit Office,
Public Administration Review, Vol. 68, No. 5 (Sep. - Oct., 2008), pp. 921-931
at p 924. Stable URL: http://www.jstor.org/stable/25145678, Accessed:
14-06-2016
[72] Vivek Ramkumar and
Warren Krafchik, The role of civil society organizations in auditing and
public finance management; Paper presented in the 6th Global Forum on Reinventing
Government Towards Participatory and Transparent Governance, 24 – 27 May 2005,
Seoul, Republic of Korea, pp 20-23 <
http://www.internationalbudget.org/wp-content/uploads/The-Role-of-Civil-Society-Organizations-in-Auditing-and-Public-Finance-Management1.pdf
> accessed 27 April 2015.
[73] R.K.Sharma, Supreme
Audit Institution – China, Rupee Trail, Volume October-December 2011,
Office of the Comptroller and Auditor General of India, pp 20-26, at p 22
[74] Albert van Zyl,
Vivek Ramkumar, and Paolo de Renzio, Responding to the challenges of Supreme
Audit Institutions: Can legislatures and civil society help?, U4 Issue
2009:1 at p 20
[75] Supreme Audit
Institution – Canada, Rupee Trail, Volume April-June 2011, Office of the Comptroller and
Auditor General of India, pp 30-35 at p 32
[76] R.K.Sharma, Supreme
Audit Institution – U.S.A., Rupee Trail, Volume April-June 2012, Office of
the Comptroller and Auditor General of India, pp 15-18, at p 15
[77] David A. Good., Parliament
and Public Money: Players and Police, Spring 2005, Canadian
Parliamentary Review pp 17-21 at p 19
[78] For an
illustrative analysis of the Audit Court Model and Auditor General Model see
- Albert van
Zyl, Vivek Ramkumar, and Paolo de Renzio, Responding to the challenges of
Supreme Audit Institutions: Can legislatures and civil society help?, U4
Issue 2009:1 at pp 13-15 and 30-32.
[79]Andy Wynn,
Independence of
Supreme Audit Institutions in Sub-Saharan Africa,
International Journal of Government Financial Management, Vol. X, No 1, March
2010, pp .55-62
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