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sharing in governance of extractive industries

Strengthening collaboration between the EITI and Supreme Audit Institutions

Authored by Sam Bartlett

On the eve of the 45th EITI Board meeting in Addis Ababa, the EITI International Secretariat and the Office of the Auditor General of Norway hosted a workshop on strengthening collaboration with Supreme Audit Institutions (SAIs). The workshop brought together EITI and SAI representatives from Ethiopia, Ghana, Malawi, Mozambique, South Africa, Sierra Leone, Tanzania, Uganda, Zambia and Zimbabwe.

Supreme Audit Institutions (SAIs) are important actors in the governance of the extractive industries. Their mandate is typically established in the country’s constitution or parliament and has traditionally focused on oversight of public expenditure. However, the role and scope of SAIs are evolving. SAIs are increasingly undertaking:

  • Financial audits to assess the reliability and accuracy of the financial reporting of public entities.
  • Compliance audits to assess compliance by public entities with laws and regulations.
  • Performance audits that take a broader, more comprehensive view on the reliability, effectiveness, efficiency and economy of policies and programmes, including meeting national development goals and the UN Sustainable Development Goals.

In countries that rely heavily on revenues from the extractive industries, SAIs play an essential function in the management of public funds and in safeguarding the quality and credibility of government financial information. This often includes a substantial role in the oversight of state-owned enterprises.

Recognising this influential role, the International Organisation of Supreme Audit Institutions (INTOSAI) has established a working group (WGEI) to act as a focal point for capacity building and the development and dissemination of best practices. 

Three ways the EITI can support the essential work of SAIs

Workshop participants explored opportunities for the EITI to support the work of SAIs, which tackles essential questions regarding the effectiveness of public administration. While the EITI addresses what was paid, the work of SAIs digs deeper into the question of whether the right amount was paid. Participants identified a number of opportunities for the EITI to support and reinforce this work. Here are three examples:

  1. Data and analysis. EITI Reports include extensive information that can be used by SAIs. In countries like Ghana, Tanzania and Zambia that have implemented the EITI for several years, time series data can be a valuable resource in enabling SAIs to undertake financial, compliance and performance audits.
     
  2. Work planning and risk assessments. SAIs typically take a risk-based approach to developing their audit programmes. EITI Reports could support this process, as they often include important observations and recommendations on areas where public financial management and other internal controls need to be improved. 
     
  3. Raising public awareness and support. The primary audience for SAI reports is often parliaments. However, collaboration with the EITI can help increase broader public awareness of the work undertaken by SAIs and help mobilise resources or support for their programmes. 

How are SAIs supporting the EITI? 

From its inception, the EITI has sought to stand on the shoulders of existing institutions and systems in implementing countries. In 2005, the Report of the International Advisory Group (IAG) noted that the EITI’s “criteria and principles becoming the normal way of working in all the relevant extractive industries” and that the ultimate goal for EITI was for its work to be mainstreamed. i.e. making data available in open data formats.

In the preparation of the 400+ EITI Reports that have been published to date, there has often been extensive engagement with SAIs. SAIs have participated as government representatives on EITI multi-stakeholder groups (MSGs), and have been engaged in data collection and assurance work as part of EITI reporting. 

A key feature of EITI reporting is examining the audit and assurance procedures in companies and government entities participating in the EITI reporting process. This includes analysis of relevant laws and regulations, including any reforms that are planned or underway, to determine whether these procedures are in line with international standards. EITI Reports often include recommendations that are directly relevant to the work of SAIs. However, success in following up on the recommendations has been mixed. 

In 2019, the EITI Standard was revised to move away from standalone EITI Reports and place greater emphasis on strengthening government systems, for example its requirement for "an assessment of whether [company] payments and [government] revenues are subject to credible, independent audit", with public access to the supporting documentation.

This approach further emphasises the importance of engaging SAIs throughout the EITI implementation process. Long-standing EITI members like Tanzania and Zambia are exploring opportunities to deepen their engagement with SAIs to help reduce the cost of EITI implementation while improving the timeliness and reliability of information. Countries that are considering EITI implementation for the first time, like Uganda and Zimbabwe, are collaborating with their SAIs from the outset to ensure that these synergies are maximised.

The workshop closed with country-level discussions focused on developing specific proposals for strengthening collaboration. The EITI International Secretariat looks forward to providing further support and sharing best practice examples with all EITI implementing countries, and further collaboration with WGEI and Office of the Auditor General of Norway.

This blog was published on the EITI website on 18 October 2019.

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