EUROPEAN COURT OF AUDITORS
Luxembourg, 29 May 2012
Speech by Vítor Caldeira, President of the European Court of Auditors
Celebration of the 150th anniversary of the establishment of the Turkish Court of Accounts
Ankara, 29 May 2012
“The Role of Supreme Audit Institutions in Ensuring Transparency and Accountability”
Check against delivery. The spoken version shall take precedence.
Dear President AKYEL,
Ladies and gentlemen,
I would like to thank the President of the Turkish Court of Accounts for kindly inviting me to be here today. I am delighted to participate in the celebration of the 150th Anniversary of the Turkish Court of Accounts, an institution which has a remarkable history, from the Ottoman Empire to today’s Constitutional Republic, and with which we enjoy an excellent relationship of cordial and fruitful cooperation.
On my behalf and on behalf of all the Members of the European Court of Auditors, I would like to congratulate the Turkish Court of Accounts on its anniversary.
Ladies and gentlemen,
It is an honour and a pleasure to talk here today about the role of public auditors in ensuring transparency and accountability. It is very relevant for all our institutions, in particular at the present time as our governments and central banks continue to struggle against the newly re-ignited financial crisis and try to restore the confidence of markets and citizens.
In this context, I would like to focus my speech on the important contribution that enhancing transparency, accountability and public audit can make to restoring public confidence.
The crisis that started in the banking sector in 2007 spread to the whole financial system. It weakened the world economy and continues to threaten the financial stability of the euro area. The reputations of financial institutions, national governments, and the European Union have been damaged and public trust and confidence has been eroded. That confidence is unlikely to be fully restored until governments have had time to repair their reputations by implementing effective crisis measures and carrying out longer term reforms to improve governance. So how can transparency, accountability and public audit help?
As international standards for supreme audit institutions remind us, accountability and transparency are essential elements of good governance. Transparency is about ensuring that there is adequate information for public scrutiny of public activities. Accountability is about ensuring that the performance of public bodies is judged, and where it is found to be insufficient those bodies are required to improve.
In this way, good transparency and accountability arrangements can help create a virtuous circle. They help ensure that improvements in governance take place over time and become publicly recognised. Restoring confidence requires both these elements, the improvement and its public recognition.
And that is why public audit has an important role to play: it facilitates both these elements. Public auditors do this in two main ways. First, we provide transparency in the form of independent information and assurance about the management of public funds that helps parliaments to hold governments publicly to account and identify areas for improvement. Secondly, public auditors can provide advice to policy makers to ensure that reforms for improving governance arrangements make adequate provisions for transparency and accountability.
In fact it could be argued that providing advice of this type is a core function for a supreme audit institution. As the Lima declaration makes clear, “audit is not an end in itself but an indispensable part of a regulatory system”. Furthermore our international standards now make clear that we should conduct our work so as to “promote accountability and transparency over public activities”, report publicly on the results of our work, and communicate effectively with the media and public.
It is therefore essential for public auditors to give due consideration to the serious issues of transparency and accountability that have been raised by the financial crisis and the response of policy makers to it. In fact, any measures against the crisis should respect the principle that where public funds are at stake there should be adequate arrangements for transparency, public accountability and public audit.
This principle can be seen as deriving from the Lima declaration, which provides that “all public financial operations, regardless of whether and how they are reflected in the national budget, shall be subject to audit by supreme audit institutions. Excluding parts of financial management from the national budget shall not result in these parts being exempted from audit by the supreme audit institution”.
Let us not forget that these principles also apply to supreme audit institutions themselves. We should aim to lead by example, by fostering transparency and accountability in our own institutions. This should be done by providing clear, reliable, relevant and timely information regarding our status, mandates, strategy, activities, financial management, and performance. This transparency should also extend to audit findings, conclusions and recommendations, and public access to information.
Ladies and gentlemen,
In the struggle against the financial crisis, restoring the confidence and trust of markets and citizens is crucial. Supreme audit institutions have an essential role to play in this process: Given the complexity and global nature of the increasing challenges we face today, it is extremely important to increase cooperation between our institutions. This will enable us to act as a community of professionals, by sharing experience and best practice, further developing common audit approaches and standards, and jointly analysing the risks involved in public finance and its management. In my opinion, it is in this particularly difficult context that a network of cooperation between the supreme audit institutions - based on a trio of fundamental values, namely accountability, transparency and trust - becomes essential.
The Turkish Court of Accounts is an active and effective part of this community. Like the European Court of Auditors, the Turkish Court of Accounts is a member of INTOSAI and EUROSAI. But in addition the Turkish Court of Accounts is also a member of the Asian regional group, ASOSAI. It was with great interest that I participated last year in the first joint meeting between the two regional groups hosted by the Turkish Court of Accounts, to discuss the topic of “basic approaches and challenges for ensuring transparency and accountability”.
It is therefore not surprising that the revised law on the Turkish Court of Accounts emphasises its obligation “to carry out the duties of examining, auditing and taking final decision stemming from laws, in the framework of accountability and fiscal transparency in the public sector”.
For many years now, the Turkish Court of Accounts has cooperated successfully with fellow institutions, benefiting from the experience of others as well as making a valuable contribution to the various initiatives. The Network of EU Candidate and Potential Candidate Country supreme audit institutions plays a vital role as a forum for multilateral cooperation in parallel with the accession processes. For instance, in this context the Turkish Court of Accounts hosted a President’s meeting last year; which led to the adoption of the Istanbul Agreement, stressing the supreme audit institutions’ commitment to international standards for public sector audit.
A very tangible example of the cooperation between the Turkish Court of Accounts and my own institution is the traineeship programme. Thanks to this programme, to date 19 auditors of the Turkish Court of Accounts have worked for several months in the European Court of Auditors which has thus benefited from their unique experience and enthusiasm. I do hope that the programme is equally enriching for these auditors and the Turkish Court of Accounts in general.
Ladies and gentlemen,
Considering the challenges posed by the economic and financial crisis, restoring the confidence and trust of citizens and businesses is vital. By cooperating and coordinating their efforts to ensure accountability and promote sound management and transparency, independent audit institutions can help to maintain public trust in government and the way it manages public finances.
In this the Turkish Court of Accounts has a key role to play. I again congratulate you on your 150th anniversary and wish you all the best for the future!
Thank you for your kind attention.