MEASURING THE EFFECTIVENESS OF PUBLIC ACCOUNTS COMMITTEES 1

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1 MEASURING THE EFFECTIVENESS OF PUBLIC ACCOUNTS COMMITTEES 1 ABSTRACT Benchmarks and methods of self-assessment can help build public confidence and strengthen the capacity of parliaments to manage increasing demands as well as assert greater institutional independence. As parliaments face increased public scepticism, it has become an imperative to re-connect with the electorate and to demonstrate how legislatures in general, and financial oversight committees in particular, can demonstrate their contribution to combatting inequality and inefficient public expenditure. The Inter-Parliamentary Union (IPU), UNDP, Commonwealth Parliamentary Association (CPA), the National Democratic Institute for International Affairs (NDI) and the Canadian Parliamentary Centre have been at the forefront of working with parliaments to produce assessment frameworks. Each of these organisations have adopted different approaches to performance assessment but have all approached the task from the perspective of the legislature as a whole rather than individual committees. Very little work has so far been carried out on how to focus benchmarks on individual parliamentary committees and, especially, financial oversight committees. Recognizing the diversity of practice across legislatures globally, 23 benchmarks are proposed, which are aspirational rather than prescriptive, for a Public Accounts Committee (PAC) or other parliamentary committee exercising similar ex post oversight functions might be grouped into four broad generic areas: Organization Powers, functions and procedures Accessibility and transparency Relationships with the Supreme Audit Institution (SAI) Niall Johnston Parliamentary Strengthening Specialist Phone: niall@nialljohnston.org 1 This paper was approved by the General Assembly of the Asia Regional Association of Public Accounts Committees (ARAPAC), held in Kathmandu, 11 September

2 Background The powers and functions of legislatures vary significantly and achieving consensus on what a democratic parliament actually is (or should be) has proved difficult. In recent years a debate has begun on the potential benefit of an internationally agreed system of parliamentary benchmarking. Benchmarks and methods of self-assessment can help build public confidence and strengthen the capacity of parliaments to manage increasing demands as well as assert greater institutional independence. For donors, the use of benchmarks and standards can justify both their expenditure on parliamentary development and the effectiveness of these aid interventions. Inter-Parliamentary Organizations (IPOs) can use the assessment frameworks as an opportunity to codify their wider programmes and best practice guides and to share experience of member parliaments. Several benchmarks or good practice guides have been produced but the tools developed for legislatures to date have different purposes and ask different questions. Some sets of standards seek to codify good practice for purposes of self-assessment while others seek to identify the minimum criteria for being a democratic parliament. Both methods are more at the stage of assessing where a legislature is at the moment (against international criteria), providing examples of issues to consider, and stimulating intense debate about what kind of institution the organisation should become. Neither approach is designed to rank legislatures against others: the purpose is to improve the functioning of that legislature. In the end-of-conference statement from the March 2010 International Conference on Benchmarking and Self-Assessment for Democratic Parliaments, participants noted the paradox between the triumph of democracy both as an ideal and as a set of political institutions and practices, and the disillusionment developing with the rules of democracy in practice. There was also agreement that the core values of a democratic parliament is one that is representative of the political will and social diversity of the population, and is effective in its legislative, oversight and representational functions, at the sub-national, national and international levels. Crucially, it is also transparent, accessible, and accountable to the citizens that it represents. 2 Assessing effectiveness requires some form of criteria and measurement of performance. A benchmark is a standard by which something can be measured or judged. The benefit of using benchmarks to review performance is that, if done properly, it enables the institution to be more aware of how it can improve its performance. This requires an honest and open approach to new ideas as well as the ability to be self-reflective and self-critical: institutions that are open to change and new ways of doing things are healthier and more robust than those that are not. They also help to ensure their own relevance and effectiveness in the longterm. 3 The Inter-Parliamentary Union (IPU), UNDP, Commonwealth Parliamentary Association (CPA), the National Democratic Institute for International Affairs (NDI) and the Canadian Parliamentary Centre have been at the forefront of working with parliaments to produce assessment frameworks. Each of these organisations have adopted different approaches to 2 Participants Statement at the International Conference on Benchmarking and Self-Assessment for Democratic Parliaments, Paris, 2-4 March Duffy, B & Thompson, M (2003) Innovative committee methods: Case studies from two Parliaments, Australasian Study of Parliament Group Annual Conference, July 2003, p. 47 2

3 performance assessment but have all approached the task from the perspective of the legislature as a whole rather than individual committees. Very little work has so far been carried out on how to focus benchmarks on individual parliamentary committees and, especially, financial oversight committees. References to material already available can be found at Annex A. This paper draws heavily on Commonwealth good practice. It is recognised that not all ARAPAC members come from this tradition but, given that the Public Accounts Committee (PAC) system, which can be found in a number of non-commonwealth countries across Asia, is derived from Westminster, it is hoped that Commonwealth good practice might inform the development of benchmarks appropriate for all ARAPAC members. The Commonwealth (Latimer House) Principles 4 govern issues such as the harmonious balancing of power and the interaction between parliament, the Executive and the judiciary in democratic societies. They set out in detail the consensus arrived at by representatives of the three branches of government in the Commonwealth on how each of their national institutions should interrelate in the exercise of their institutional responsibility. The Principles specify restraint in the exercise of power within their respective constitutional spheres so that the legitimate discharge of constitutional functions by other institutions is not encroached upon. The Commonwealth Principles were finalised by Commonwealth law ministers and endorsed by Commonwealth Heads of Government at their summit in Abuja, Nigeria, in December The Principles have been distilled from the Latimer House Guidelines on Parliamentary Sovereignty and Judicial Independence. These were drawn up in 1998 by four prominent Commonwealth organisations: the Commonwealth Parliamentary Association, the Commonwealth Legal Education Association, the Commonwealth Magistrates' and Judges' Association and the Commonwealth Lawyers' Association. This paper provides guidance on benchmarks that could be adopted by ARAPAC. Suggested Benchmarks Recognizing the diversity of practice in ARAPAC member countries, the Study Group recommends that possible benchmarks, which are aspirational rather than prescriptive, for a PAC or other parliamentary committee exercising similar ex post oversight functions might be grouped into four broad generic areas: Organization Powers, functions and procedures Accessibility and transparency Relationships with the Supreme Audit Institution (SAI) Under each heading, a number of possible benchmarks are set out below together with the rationale for each recommendation a list of the benchmarks can be found at Annex B. 4 Commonwealth (Latimer House) Principles. May

4 Organization Global good practice suggests that membership of committees should reflect the balance of political parties in the parliament this principle is common practice in many countries. There should also be a transparent method for selecting the chairs of committees. It is recommended that the assignment of committee members on each committee shall include both majority and minority party members and reflect the political composition of the legislature as far as practicable. It is further recommended that there should be a transparent method for selecting or electing the chairs of committees. Committee members may not always have the in-depth knowledge or expertise necessary to treat specific issues or complex legislation. They may therefore wish to consult or employ experts to help them in their work. Each committee should have the legal mechanisms and financial means in place to allow them to consult experts. In a number of parliaments, the mechanism to employ experts requires that committees go through the Speaker to ensure fair and proper use of financial resources. It is recommended that committees shall have the right to consult and/or employ experts. Adequate non-partisan professional staff is a prerequisite for the well functioning of any parliament. Parliamentarians may not have the expertise in a certain subject being examined in committee and they do not have the time to do research on all subjects on their own there is a need to support both individual members and committees with good quality and accessible research. It is recommended that the legislature should have an adequate nonpartisan professional staff to support its operations including the operations of its committees. It is the norm in parliaments today that distinctions are drawn between partisan and nonpartisan staff. If this does not happen, parliamentarians, particularly those in opposition, may not receive adequate staff support. It is critical to have a neutral staff to perform administrative functions, give advice on procedural issues, or provide research. Beyond the head of the parliamentary service and his or her staff, which should always be non-partisan it is for a parliament to decide which positions are partisan and which are not. It is recommended that the legislature draws and maintains a clear distinction between partisan and non-partisan staff. All legislatures need sufficient research, library and ICT facilities and, in some cases, parliaments may have agreements with outside organizations to use their libraries rather than maintaining an internal capacity. Similarly parliaments may partner with think tanks and institutes for specialized research needs. It is recommended that members and staff of committees have access to sufficient research, library, and ICT facilities. Powers, functions and Procedures MPs have a heavy workload and must be able to plan accordingly, and in advance, in order to consult the public, and prepare for and carry out their functions efficiently and effectively. It is recommended that adequate advance notice of meetings and the agenda for the meeting be provided. 4

5 The Commonwealth (Latimer House) Principles state that parliaments should have: a committee structure appropriate to the size of parliament, adequately resourced and with the power to summon witnesses, including ministers. Governments should be required to announce publicly, within a defined time period, their responses to committee reports. 5 It is recommended that committees shall have the power to summon persons, papers and records, and this power shall extend to witnesses and evidence from the Executive branch, including officials and ministers. 6 While a committee may decide to invite other MPs to participate in its discussion or evidence sessions, this should not extend to participation in any votes or decision-making processes. This benchmark is seen as an agreed Commonwealth and international norm for all democratic legislatures as, should non-committee members be able to vote, a majority party in parliament could swamp a committee at the time of the vote and thus undermine the work of the committee. It is recommended that only MPs appointed to the committee should have the right to vote in the committee. Oversight of the Executive is one of the core functions of the legislature. As set out above, all committees should include both majority and minority party members and reflect the political composition of the legislature as far as practicable. It is recommended that the committees shall provide meaningful opportunities for opposition parties to engage in effective oversight of government expenditures. A legislature cannot effectively oversee the Executive if it is denied access to the necessary information held by the Executive. The Commonwealth (Latimer House) Principles state that: (i) a committee structure appropriate to the size of parliament, adequately resourced and with the power to summon witnesses, including ministers. Governments should be required to announce publicly, within a defined time period, their responses to committee reports; (ii) standing orders should provide appropriate opportunities for members to question ministers and full debate on legislative proposals. 7 It is recommended that the committees shall have access to records of Executive branch accounts and related documentation sufficient to be able to meaningfully review the accuracy of Executive branch reporting on its revenues and expenditures. Committee hearings should be held in public with any exceptions being clearly defined and provided for in the Rules of Procedure although it is usual that administrative and deliberative meetings of committees will be held in private. Committees may also meet in private when reviewing sensitive material related to national security, or at the request of a witness, or for the protection of a witness, when hearing evidence on sensitive matters. It is recommended that committee hearings be held in public. It is critical to the transparency of the parliament that, while voting in a committee will take place in a closed session of the committee, the results of the votes, or the records of the proceedings, should be public. It is recommended that the record of votes of a committee shall be in public. 5 Commonwealth (Latimer House) Principles. May See Annex, Art. VI, 2, a (i) 6 Within the Westminster system, it is conventional that parliament will usually summon Accounting Officers directly rather than through a Minister. 7 Commonwealth (Latimer House) Principles. May See Annex Art. VI, 2, a (i) and (ii) 5

6 Witnesses, including whistleblowers, should be able to report instances of corruption or other wrongdoing without fear of reprisal. It is recommended that the legislature shall protect informants and witnesses presenting relevant information to committee inquiries about corruption or other unlawful activity. Furthermore, witnesses should have the protection of parliamentary privilege to ensure they are able to give information to the committee without fear of legal action. Accessibility and Transparency Article VIII of the Commonwealth Principles seeks to ensure broader public participation in the legislative process this is especially true for committees. In addition to individual citizens, the Commonwealth Principles also promote broader participation of civil society. Participation is essential for good governance as it improves information flow, accountability, due process, and gives voice to those most directly affected by public policy. The Constitution of South Africa states that The National Assembly must facilitate public involvement in the legislative and other processes of the Assembly and its committees. In Canada, the Estimates Committee of the House of Commons annually conducts cross-country consultations on the federal budget. In New Zealand, committees in the House of Representatives hold public hearings when examining draft legislation and attempt to hear all members of the public who wish to appear before them. It is recommended that opportunities should be given for public input into committee inquiries. Information must be given in a timely manner so that the public can participate effectively in the legislative process - both the government and the committee may choose to provide this information. Citizens and civil society groups should have adequate time to review the information, respond and have their views heard and considered by the committee. It is recommended that information is provided to the public in a timely manner regarding matters under consideration by the legislature. When considering public access to committees, it is important to underline the responsibility of MPs to reach out to their constituents and educate the public and the media on the work of the committees. Only an educated public can truly profit from access to the legislature. Such outreach would also encourage the two-way flow of information between MPs and constituents, and promote greater understanding of the work in the committees, which may in turn promote greater public confidence in the legislature as a whole. It is recommended that the committees promote the public s understanding of their work. The Commonwealth (Latimer House) Principles state that Conflict of interest guidelines and codes of conduct shall require full disclosure by ministers and members of their financial and business interest. 8 For such disclosure to be effective, it must be public. It is recommended that committee members should be required to disclose relevant business interests if there is potential for a perceived conflict of interest. Many parliaments today have a non-partisan media relations office or staff tasked with communicating with the media. A media relations facility serves both as a liaison for media reporting on parliament s activities, and as a resource for parliament when seeking to provide information to the public. Committees may need to develop media strategies for reaching out to the public when holding public hearings or inquiries. It is important to underline the value 8 Commonwealth (Latimer House) Principles. May See Annex Art. V (2a). 6

7 of having a non-partisan media relations facility in order to ensure fair coverage and access. It is recommended that the legislature should have a non-partisan media relations facility. The activities of PAC s are aimed at achieving improved financial management practices and accountability within the public sector and public funded institutions in the implementation of the budget. They need to have a framework according to which they can plan, monitor implementation and assess and report on their performance. An effective performance measurement system (PMS) should specify the committee s goals, objectives, inputs, resources, activities, processes, outputs, performance indicators and outcomes. Each committee should assess its performance at least once every year in a manner that is consistent with its aspirations for performance effectiveness. It is recommended that the committees have a performance measurement system to assess their effectiveness and performance. Relationships with the SAI In many countries, the reports of the Supreme Audit Institution (SAI) are tabled late thus making effective oversight impossible. Ideally, the financial audit report should be tabled within three months of the end of the fiscal year. It is critical that the SAI s independence be protected, and that its reports be tabled expeditiously in the legislature. It is recommended that SAI reports be tabled in the legislature in a direct and timely manner. It is often observed that lack of resources is a common complaint and cause of delays in the SAI producing reports. The committee should ensure that audits are conducted, and the reports tabled, in a timely manner and that the SAI is provided with sufficient resources to accomplish this. This view is reinforced in the recommendations of a CPA Workshop on Parliamentary Oversight of Finance and Budgetary Process which concluded that, It is important that Auditors-General should submit audit reports in a timely fashion but without compromising either the content or quality of these whether they relate to annual or special reports. 9 It is recommended that the PAC ensure that the SAI shall be provided with adequate resources and legal authority to conduct audits in a timely manner. While a committee s recommendations are not binding, it is expected that the Executive will implement them. In most countries, the Executive is obliged to provide a formal response to a committee s recommendations within a specified period. Follow-up on PAC recommendations is critical to achieve improved financial management and control within the public sector and public-funded institutions. It is essential that the committee has a formal follow-up procedure to determine and monitor action taken by government on the PAC s recommendations. It is recommended that the committee has a formal procedure for following up on its recommendations. 9 CPA Workshop on Parliamentary Oversight of Finance and Budgetary Process, Nairobi Kenya, December

8 Annex A References Canadian Comprehensive Auditing Foundation Parliamentary Oversight Committees and Relationships, 2010 Canadian Parliamentary Centre African Parliamentary Index Commonwealth Parliamentary Association Recommended Benchmarks for Democratic Legislatures, 2006 Recommended Benchmarks for Asia, India and South-East Asia Regions Democratic Legislatures, 2010 European Commission Engaging and Supporting Parliaments Worldwide European Parliament Benchmarking for Parliaments International IDEA Assessing the Quality of Democracy: A Practical Guide Inter-Parliamentary Union Parliament and Democracy in the Twenty-First Century: A Guide to Good Practice, 2006 National Democratic Institute for International Affairs Toward the Development of International Standards for Democratic Legislatures, 2007 Southern Africa Development Community Organisation of PACs Good Practice Guide for Public Accounts Committees in SADC, 2009 World Bank Group Benchmarking and Self-Assessment for Parliaments UNDP Benchmarking and Self-assessment for Democratic Legislatures,

9 Annex B Recommended Benchmarks 1. The assignment of committee members on each committee includes both majority and minority party members and reflects the political composition of the legislature as far as practicable. 2. There is a transparent method for selecting or electing the chairs of committees. 3. Committees have the right to consult and/or employ experts. 4. The legislature has an adequate non-partisan professional staff to support the operations of its committees. 5. The legislature draws and maintains a clear distinction between partisan and nonpartisan staff. 6. Members and staff of committees have access to sufficient research, library, and ICT facilities. 7. Adequate advance notice of meetings and the agenda for the meeting is provided. 8. Committees have the power to summon persons, papers and records, and this power extends to witnesses and evidence from the Executive branch, including officials. 9. Only MPs appointed to a committee have the right to vote in the committee. 10. The committees provide meaningful opportunities for opposition parties to engage in effective oversight of government expenditures. 11. Committees have access to records of Executive branch accounts and related documentation sufficient to be able to meaningfully review the accuracy of Executive branch reporting on its revenues and expenditures. 12. Committee hearings are held in public. 13. The record of votes of a committee is public. 14. The legislature protects informants and witnesses presenting relevant information to committee inquiries about corruption or other unlawful activity. 15. Opportunities are given for public input into committee inquiries. 16. Information is provided to the public in a timely manner regarding matters under consideration by the legislature. 17. Committees promote the public s understanding of their work. 9

10 18. Committee members are required to disclose relevant business interests if there is potential for a perceived conflict of interest. 19. The legislature has a non-partisan media relations facility. 20. Committees have performance measurement systems to assess their effectiveness and performance. 21. SAI reports are tabled in the legislature in a timely manner. 22. The SAI is provided with adequate resources and legal authority to conduct audits in a timely manner. 23. Committees have formal procedures for following up on their recommendations. 10

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