Effective Public Sector Accountability
1.1 In this paper the Australasian Council of Auditors-General (ACAG) proposes that certain principles should be considered essential to the effective operation of a public sector accountability regime.
1.2 The paper commences with a general discussion on the elements of good governance, of which accountability is one.
1.3 The discussion on governance draws on material developed by The World Bank and contained in its study titled "Governance: The World Bank's Experience".
1.4 The second part of the paper proposes six principles for effective public sector accountability. (In that part, the principles themselves appear in bold italics and the discussion of the principles appear in normal type).
2. The Elements of Good Governance
2.1 The term "governance" means different things to different people. As the ethos, experience and interests of people vary, so too, do their perceptions of what constitutes good governance. Among the many definitions of "governance" that exist, the one that appears the most appropriate from ACAG's viewpoint is "the manner in which power is exercised in the management of the State's affairs".
2.2 Four basic elements of good governance are suggested:
(i) accountability (ii) participation (iii) predictability and (iv) transparency.
2.3 Accountability: By accountability is meant the imperative to make public officials answerable for their behaviour and responsive to the entity from which they derive their authority. Accountability also means establishing criteria to measure the performance of public officials, as well as oversight mechanisms to ensure that standards are met.
2.4 Participation: Participation is often related to accountability and, in representative democracies where citizens participate in government through the electoral process, public officials are accountable ultimately to the electorate. At the grass roots level, participation implies that government structures are flexible enough to offer beneficiaries, and others affected, the opportunity to improve the design and implementation of public programs and projects. At a different level, the effectiveness of policies and institutions impinging on the State as a whole may require the broad support and co-operation of the major stakeholders.
2.5 Predictability: Predictability refers to the (i) existence of laws, regulations and policies to regulate activities and (ii) their fair and consistent application. It requires the State and its agencies to be as much bound by, and answerable to, the legal system as are private individuals and enterprises. Predictability can be enhanced also through institutional arrangements to ensure an appropriate degree of autonomy for those agencies which ought to be insulated from political pressures.
2.6 Transparency: Transparency refers to the availability of information to the general public and clarity about government rules, regulations and decisions.
3. Principles of Accountability
3.1 The participants in the accountability regime would be identified and their roles and inter-relationships clearly defined and understood.
In the theoretical Westminster model of government, for example, public sector accountability can be thought of as a linked chain of participants each with unique accountability functions. Under the "chain of accountability" structure, the principal is the community and it is represented by members elected to the Parliament. Thus the Parliament, not executive government and its Ministers, becomes the constitutional surrogate of the community as the principal. Responsibility is then assigned to the executive government as a trustee. Executive government, within the discretion allowed by the legislature, further assigns discretionary power and responsibility through regulation, policy and administrative arrangements to the managers of public sector agencies.
A clear understanding by all participants of their roles and inter-relationships is an important part of this principle. It follows that the roles and inter-relationships referred to in the theoretical model described above must be clearly defined in practical terms suited to each environment. Participants can discharge their accountability functions effectively only if they know to whom they are accountable and for what. Likewise, they can hold others accountable only if they understand who is accountable to them and for what.
There is a common presumption that those entering public life either have or soon acquire a workable understanding of such matters. The findings of numerous investigations, inquiries and Royal Commissions provide ample evidence that this is not so.
3.2 Objectives would be specified for each participant in the chain of accountability below that of the principal (the community).
Objectives are the basis for what has to be done. They determine the key activities which must be undertaken, how that should be organised and the allocation of resources to tasks.
Objectives are a statement of expectation as to what should be achieved. Such a statement would exist for each level in the chain of accountability and is necessary in order to fully answer the question "Accountable for what?"
Ideally the objectives would be both qualitative and quantitative and specified in a time frame.
The specificity of the objectives would vary according to the level for which they are formulated, the general order being that at the highest level in the chain of accountability the objectives would tend to be broad and at the lowest level in the chain they would be quite specific.
3.3 To each participant in the chain of accountability would be delegated the authority and resources to achieve objectives effectively and efficiently.
In order to achieve the specified objectives each participant will need to be given the means, namely the necessary authority and resources.
By "authority", is meant the right to direct and the power to exact compliance. It is essential that the delegated authority equal the responsibilities assigned.
Likewise, those responsible for achieving objectives will be able to do so most effectively and efficiently when the necessary financial, physical and human resources are available.
3.4 Each participant in the chain of accountability would specify the reporting requirements which are to apply in respect of the responsibilities, authorities and resources which have been assigned or delegated by it.
Information is central to effective accountability. The delegation of power and autonomy should be matched by an appropriate requirement to report and account for its use. Actual performance would be judged against the objectives which were set at the policy-formulation, interpretation and execution levels. The reporting requirements would cover such things as type of report, format, content and reporting timetable.
3.5 Each participant would have the right to verify the information supplied to it in discharge of a reporting requirement.
Without the right to verify the information there can be no certainty as to the reliability or credibility of the information. Under the Westminster model of government there is usually an Auditor-General or equivalent who is responsible to Parliament for verifying the financial and related information which is presented to Parliament as part of the public sector reporting requirements.
Those levels below Parliament in the accountability chain may choose to establish alternative verification arrangements, although in many instances they may choose to use the Auditor-General for that purpose so long as that does not conflict with the Auditor-General's independence and responsibility to Parliament.
3.6 Each participant would have the authority and responsibility to judge the performance of those to whom responsibilities, authorities and resources have been assigned or delegated and to impose any sanctions - penalties or rewards - which may flow from such judgement.
Accountability cannot be said to exist in situations where judgement and sanction do not operate.
The need for sanction arises because it is in the general interest that useful actions be encouraged and their opposite discouraged. Application of sanction to acts of authority forms part of the conditions essential for accountability.
At the highest level, the community exercises its judgement of Parliamentary representatives at the periodic elections. At the Parliamentary level there are a variety of ways in which the actions of Ministers, officials and public bodies can be scrutinised. These include the Parliamentary Question Time, the committee stage in debate on bills and the committee system itself. The latter would include public accounts and expenditure review committees.