The Good Governance Academy (not to be confused with Good Governance Africa) is a non-profit organisation that collaborates globally to share information on critical business issues as a public good, under the patronship of its founder, former Supreme Court judge Prof Mervyn King.
The organisation is known primarily for promoting good governance in the corporate sector – the King reports (I, II, III, and IV) on corporate governance are extensively used in South Africa and are viewed as indispensable guidelines. The organisation holds regular colloquia, focusing mostly on the private sector. However, for the first time it ventured into the realm of the public sector with its 12th colloquium, held on 7 November 2007 under the theme of Enhancing governance and accountability in the public sector. The sub-heading was The Auditor-General’s role in delivering independent oversight, fostering transparency, and ensuring the effective stewardship of public resources.
Guests included King, the academy’s CEO Carolyn Chalmers, and keynote speakers Jón Blöndal, head of budgeting and public management at the Organisation for Economic Co-operation and Development, Ian Carruthers, chairperson of the International Public Sector Accounting Standards Board, and Edward Olowo-Okere, global director for governance global practice at the World Bank.
The speeches were followed by a lively panel discussion with Tsakani Maluleke, South Africa’s auditor-general, and Gareth Davies, comptroller and auditor-general for the UK’s National Audit Office, with academy chairperson Alan Johnson moderating.
“Governance and accountability are the cornerstones of public trust and the effective functioning of governments,” the academy stated. “In the public sector, ensuring that resources are used efficiently, ethically, and in line with national priorities is essential for promoting transparency, enhancing service delivery, and safeguarding democracy.”
The Auditor-General’s role lies at the centre of this process of promoting good governance and upholding accountability, because that institution’s independent oversight plays a critical role in ensuring that public institutions operate with integrity and responsibility.
“As the principal authority responsible for auditing public resources, the Auditor General’s role extends beyond examining financial records. It includes ensuring compliance with regulations, assessing operational performance, and identifying areas for improvement in governance.”
Running a tight ship
The session with Maluleke and Davies focused on various aspects of their work, including standards for public sector accounting, skills development and attracting and retaining talent, organisational independence, undue pressure exerted on auditing staff, and more.
“We’re here to audit all of the public sector, every single public institution … every single year,” said Maluleke, adding that this involved some 3 600 staff members conducting around 1 000 audits in various tiers and sectors of government. The work of the Auditor-General of South Africa (Agsa) has several components, she said:
- It looks at critical areas so as to be able to give an opinion on the credibility of financial information, and to confirm whether the financial report is prepared in a manner that’s consistent with reporting standards.
- The audits also cover information on service delivery and performance, the scrutiny of which reveals if the institution has delivered on its predetermined performance objectives, and whether that information is credible.
- Compliance monitoring is another aspect, allowing Agsa to determine whether the rule of law has been observed while deploying public resources, particularly the laws that relate to financial management and procurement.
- All these assessments allow Agsa to pronounce on the state of internal controls in every environment, providing a sense of how the capacity or the capability of an institution is being preserved or being built by the people entrusted to run that institution.
Not only does this work reveal weak areas, but it supports institution leaders by providing feedback that helps them drive the type of corrections that will, on an ongoing basis, build the institution and improve how they run public affairs.
“At the end of the day, we can tell citizens how the resources that have been put in the custody of government are being deployed for their benefit or not.”
Davies, in turn, said his work was much the same. “My key stakeholders are the public in the UK, people who pay their taxes to fund public services and are entitled to transparent reporting on how that money is used, and also Parliament itself.”
Both AGs report regularly to a multi-party parliamentary committee, in the UK to the Public Accounts Committee and in South Africa to the Standing Committee on the Auditor-General.
“The combination of the technical audit process, assessing how well public money has been used, combined with the political scrutiny process of a cross-party group of MPs holding the government to account in Parliament is actually very powerful,” Davies said.
Both panellists agreed that auditing is not only about assurance and trust, but also about improvement. The National Audit Office produces what Davies referred to as “regular lessons learned reports” on, for instance, how digital transformation is being implemented across government, and those are used by officials in every part of government to assess their own improvement journey.
Independence guaranteed
Sources of funding, the respective appointment processes, and the type of tenure all play significant roles in the independence of their organisations, the two AGs agreed.
“The National Audit Office exists outside government, and we’re funded directly by Parliament, so the UK government has no control over our funding. That’s an absolutely crucial element of independence,” said Davies. “Clearly I have to show that I’m using all of those resources responsibly, and we take that very seriously.”
The Agsa is able to raise funding through its audit reviews, charging auditees for its services. “That gives us a level of independence that certainly allows us to plan our affairs properly and in the long term, of course, like anyone else, we also have to demonstrate that we’re using those monies in a way that’s responsible, and we’re also subjected to scrutiny.”
However, fees are only imposed after consultation in Parliament, based on the hours anticipated to be spent and on the staff that will be deployed to those audits, Maluleke emphasised. “My team members must make sure that they are accountable for the hours that they are using and therefore the fee that they are charging for that audit.”
These governance arrangements mitigate any risk of a conflict of interest arising, Maluleke added.
As is the case at home, the UK AG is appointed through a parliamentary process, where the committee makes a recommendation after rigorous interviews with nominees. “Because the chair of the Public Accounts Committee is always in opposition, there is a bipartisan recommendation across the parties,” said Davies.
The process in South Africa is similar. “There’s also a multi-party committee of Parliament that runs this process,” said Maluleke. “They advertise, they shortlist, they interview, and it’s all done in the full glare of the public.”
Another very important aspect for both panellists is that they each have a fixed, non-renewable term – 10 years for the UK and seven for South Africa.
“It’s a long term of office, which means that civil servants can’t just wait for me to leave. They have to realise I’m literally there keeping an eye on them all the time. But also non-renewable is important because I’m not having to make myself popular with anybody so that I get reappointed, and I can just get on with my job, report what needs to be reported, and not be concerned whether anybody likes it,” said Davies.
The South African AG enjoys the same advantages. “The Constitution provides for very clear imperatives around security of tenure, so there are specific grounds on which I could be dismissed, but I can’t be dismissed for doing my work. It allows me the space to do what I’m supposed to do, without fear, without favour, and without prejudice, and indeed, my impartiality is then guaranteed.”
So much so, in fact, that in 2021 the World Bank (WB) ranked Agsa and the Seychelles Office of the Auditor-General as the only two national audit offices that enjoy full independence to carry out their mandate in their respective countries.
In its Supreme Audit Institutions Independence Index: 2021 Global Synthesis Report, released on 4 August 2021, the WB assessed supreme audit institutions (SAIs) in 118 countries and published the results in the report that aimed to inform and better equip WB task teams and development partners to support the strengthening of SAIs in client countries, and addressing the lack of independence of some SAIs.
SAIs are ranked on a scale from A to E, where A is a perfect score of 10, indicating that all independence indicators were met, and E falls between 0 and 5.5, indicating the opposite situation. Only South Africa and Seychelles were up to the top standard.
