PI-31. LEGISLATIVE SCRUTINY OF AUDIT REPORTS
ABOUT THE INDICATOR
This indicator focuses on legislative scrutiny of the audited financial reports of central government, including institutional units, to the extent that either (a) they are required by law to submit audit reports to the legislature or (b) their parent or controlling unit must answer questions and take action on their behalf. It has the following four dimensions and uses the M2 (AV) method for aggregating dimension scores:
- Dimension 31.1. Timing of audit report scrutiny
- Dimension 31.2. Hearings on audit findings
- Dimension 31.3. Recommendations on audit by legislature
- Dimension 31.4. Transparency of legislative scrutiny of audit reports
IMPACT ON BUDGETARY OUTCOMES
The legislature has a key role in exercising scrutiny over the execution of the budget that it approved. A common way in which this is done is through a legislative committee(s) or commission(s) that examines the external audit reports and questions responsible parties about the findings of the reports. A report on the results of review of the external audit report(s) by any mandated committee should be
submitted for consideration (and ideally debated) in the full chamber of the legislature in order to constitute a completed scrutiny. This is usually necessary before the executive can formally respond, though corrective action may be taken at any time. The operation of the committee(s) will depend on adequate financial and technical resources, and on adequate time being allocated to keep up to date on reviewing audit reports.
INDICATOR MEASUREMENT GUIDANCE
31:1. As mentioned under PI:29.2.3 and PI-30:2, when there is no external audit, the government’s annual financial statements should be submitted directly to the legislature. If the legislature does not require an external audit of the financial reports that the government submits, the legislature is not fulfilling its role of ensuring the accountability of the executive leading to score D on every dimension of the present indicator. If the government does not submit its statements to the legislature, then the score for PI29.2 is D. The score for PI-30 is also D.
31:2. If there has been no functioning legislature in place during the past three years, the indicator should be scored NA.
Dimension 31.1 Timing of audit report scrutiny
DIMENSION MEASUREMENT GUIDANCE
31.1:1. This dimension assesses the timeliness of the legislature’s scrutiny, which is a key factor in the effectiveness of the accountability function. Timeliness can be affected by a surge in audit report submissions, where external auditors are
Dimension 31.1. Scoring
|Score||Minimum requirements for scores|
|A||Scrutiny of audit reports on annual financial reports has been completed by the legislature within three months from receipt of the reports.|
|B||Scrutiny of audit reports on annual financial reports has been completed by the legislature within six months from receipt of the reports.|
|C||Scrutiny of audit reports on annual financial reports has been completed by the legislature within twelve months from receipt of the reports.|
|D||Performance is less than required for a C score.|
Pillar Seven: External Scrutiny and Audit