Public Sector Governance and Accountability Series: Budgeting and ...

What Would an Ideal Public Finance Management System Look Like? 373
BOX 11.4 Civil Society and the External Accountability
Function
In many governments, external audits were generally conducted and
appraised without public participation. Audit reports were made available
only to the legislature or client agencies; most members of the public had no
manner of accessing such reports, of knowing what was going on in government,
or of helping to improve governance. People’s rights to participate in
the conduct of public affairs and to be informed were impeded by the lack of
transparency of the auditing process and the absence of mechanisms to
demand public accountability for expenditure use. This impediment, in turn,
increased possibilities for corruption, fund mismanagement, and ineffective
service provision.
Audit entities across the globe, in line with their governments’ commitment
to promote transparency and good governance, have developed reform
strategies that include piloting civil society participation in the auditing process
or in the scrutinizing of audits. Participatory audit using a value-for-money
approach, for example, allows the determination of results and effects or of
values and benefits actually derived through public expenditures by the
community itself. This development, in turn, has had important consequences.
On the one hand, value-for-money reports are a form of performance
audit that goes beyond merely stating rule compliance to assess actual “value”
obtained from public spending. Thus, value-for-money reports can be used as
planning and decision-making tools as well as audit documents. These audits
are particularly valuable in settings where the supreme audit institution lacks
its own capacity to do performance audits.
On the other hand, through strengthened citizen participation in the
auditing process, government accountability, transparency, and credibility are
effectively enhanced. The existence of mechanisms for public participation is
in itself an important deterrent against corruption. It is expected to promote
more prudence in the use of public resources for projects that would benefit
local communities.
Last, by bringing the auditing process closer to the public, service
providers are able to find out the adequacy of their target expenditures to
the perceived civic demand. The community is able to assess government’s
performance in this regard and to advocate for specific improvements in
expenditure targeting and use. Such public participation should ultimately
lead to improved design and efficiency of public expenditures.
Source: Author’s compilation.
The new governance literature argues explicitly that the quality of
governance, strength of accountability relationships, and performance of
government are highly dependent on the existence of strategic relationships
between public and civic entities. The PEFA framework does not heed this