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Kay Scheller: Transparency, impact and sustainability through external audit

Mr President of the National Council, Ladies and Gentlemen, Dear Colleagues,

 

Let me express my sincere thanks for this invitation.

I am honoured to speak to you about the contribution of our audit institutions to more effective government in the service of our citizens.

The external government audit function plays a key role in our democratic countries governed by the rule of law.

Irrespective of the way in which they are organised, government audit institutions naturally do not occupy first place in the state structure. They have neither legislative nor executive functions and are therefore not in a position to steer debates.

Nevertheless, audit institutions play a key role that is significant for the state, its citizens and society in general. One important reason is that many audit topics concern issues that matter to the citizens.

If policymakers intend to build a road, audit institutions at first do not have a mandate to evaluate this decision as such. We will speak out, however, if the planned road violates existing regulations, concerning, for instance, nature conservation, or if traffic statistics show that the road is not necessary at all.

In order to solve problems and deliver a direct service to the citizens, two approaches are essential. Here I presume a democratic context where solutions should be legitimate, effective and – ideally – sustainable.

One approach is the political process: competing for the best ideas, discussing the best options, formulating visions and solutions.

This process is usually complex. Conflicting interests clash or – even better – meet. Rarely, the focus lies only on the merits of the case, the problem as such. Policymaking is just as much about reconciling interests.

Problem-solving, however, also requires a fact-based, objective and unbiased approach. This is where external auditors come in. Their informed opinion is expected and respected when it comes to government operations and their impact.

Precisely because audit institutions do not have a policymaking mandate and do not side with any political party, they can play a key role.

Public audit is governed by law and guided by clear and sound criteria, namely those of performance and compliance.

Besides making proposals for improvement, our audit mandate has two effects which are important for our democracies: We contribute to the accountability of executive government. And: By advising Parliament, we counterbalance to a certain extent the information advantage that the Government has over Parliament.

In our loud and sometimes volatile times, the approach of independent government audit may be a rich source of findings, reflections and sustainable solutions.

This role, of course, comes with a great deal of responsibility – also vis-à-vis the citizens.

Therefore, audit institutions must remain credible and do a good job. To do so, we must lead by example.

We must comply with the standards we apply to others. We must view ourselves critically and have the will to accept change.

Usually, we make recommendations. This should not keep us from listening, from taking hints seriously and from considering audit suggestions. We must ask ourselves again and again what is relevant and important.

Three years ago, we started a process of fundamental change in the German SAI. In 2017, we reached a first important milestone by implementing a reform.

Our aim was and is to maintain and enhance the impact and effectiveness of our institution.

This means

  • responding more flexibly and faster to external challenges. We have for example set up new audit units in the field of migration and information technology;
  • aligning our audit divisions better to essential policy areas;
  • improving our processes and communication; and
  • ensuring that our own administration remains lean and effective.


Here I wish to emphasize the contribution made by other Supreme Audit Institutions in our European family. Our colleagues from Austria, the Netherlands and Switzerland provided valuable advice during our change process.

Now we are maintaining our efforts and we are testing new strategies and tools. Not only must we continue to audit appropriately. We must also focus on the right questions and topics.

Occupying relevant audit fields is key for the reception and impact of our institutions.

Where do we wish to make that impact? Where do we expect a particular benefit not only for Parliament and executive government but also for the citizens?

Guiding principles may help us do so.

One of these principles is the goal of sustainability.

Sustainability – a demand that in some way has always been part of the genetic code of our institutions’ audit criteria.

Good value for money also means: Parliament and executive government should have a clear idea about the mid- and long-term effects as well as the cross-boundary impact of laws and their execution.

Watch out for possible adverse effects on other public goods or future generations.

This applies to nearly all areas of government activity – ranging from the big picture, the sustainability of public finance in general, to government programmes such as pension or energy policy down to specific grant-funding operations or public procurements.

This means for audit institutions: many, many potential audit approaches and issues.

The German SAI’s audit strategy concerning sustainability is based on three pillars.

Firstly, this topic will be a focal point of our audit work in various fields in the years to come.

Secondly, we are interested in the way in which the Federal Government implements its sustainability strategy which it developed as a result of the 2015 UN resolutions.

Thirdly, the perspective of Goal 16 of the UN Sustainable Development Goals will also be an important starting point for our audits.

Cross-cutting issues call for cross-cutting conclusions and overarching recommendations. Our aim is to identify common issues and central themes in the various areas audited.

We have adopted guidelines with uniform criteria and a questionnaire divided by audit fields.

Has sustainability been set as a goal at all? Are there indicators to measure sustainability? Does the programme or project have an impact on other areas; are there unintended effects?

Not only are we looking for answers about how the Federal Government handles sustainability.

We are also interested in findings which reveal cross-boundary impacts of government operations and provide greater insight into the mechanisms of cause and effect.

Conflicting policy goals are not unusual. For example in the case of the three goals of the German energy policy: environmental impact, security of supply and affordability.

Identify and exploit sustainability potentials. This is one audit strategy to help government operations become more focused and effective.

When it comes to solving problems and providing services to the citizens, taking a sustainability perspective can enhance the value of our work. It neatly complies with our fact-based and solution-oriented approach. And it can contribute to improving the legitimacy and acceptance of change.

To live up to this challenge we must review our own structures and activities regularly and critically.

Thank you for your attention.

© 2018 Bundesrechnungshof