Dynamic planning as a means of embracing rapid change — the experience of the Tribunal de Contas of Portugal
Agreeing on a strategy for your audit institution is one thing, but two elements are key to successfully implementing it: ownership and the flexibility to adapt when needed to internal or external changes. Since October 2020 José Tavares has been President of the Tribunal de Contas of Portugal. In his article he describes how both aspects have played a role in the development of their new 2020–20222 strategy and adjusting it to the COVID-19 crisis.
By José F.F. Tavares, President of the Tribunal de Contas of Portugal.
Our mandate: setting the framework for developing our 2020–2022 strategy
The Tribunal de Contas (Court of Auditors) is the supreme audit institution (SAI) of Portugal, and is one of the ‘judicial model’ SAIs. Like other SAIs of this type, we are able to carry out all types of audit and, in addition, we are vested with the power to rule on the liability of the persons accountable by law in the event of irregularities or mismanagement.
It is against this background that we prepare, design and approve our strategies and plan our audit work. In this framework, during the year of 2019, the Tribunal prepared its strategy for the period 2020–2022.
Developing the Strategic Plan 2020–2022: a participative process
The key word when it comes to describing the preparatory work that led us to the approval of the Strategic Plan 2020–2022 is participation (see also Figure 1). This involves the views of the different internal actors but also takes into consideration the opinion of the addressees of the Tribunal’s work on where to focus and invest in the external and independent financial control of public finances.
Figure 1 — Strategic planning: open to participation
As for the stakeholders, we had just developed a comprehensive self-assessment of the institution, using the Supreme Audit Institution Performance Measurement Framework tool (INTOSAI SAI-PMF), as developed by the INTOSAI Development Initiative. The results of the interviews carried out with a number of leading figures and institutions during that self-assessment were important, and taken into consideration for the purpose of establishing the 2020–2022 strategy. Besides this, every year, we carry out a survey of stakeholders to obtain their feedback on how satisfied they are with our work.
Several initiatives were taken within the Institution. An informal plenary sitting was held to allow a relaxed and totally free discussion among the Members of the Tribunal on strategic planning. A preliminary document with an analysis of the internal and external environment and main risks was prepared for this purpose, presented and discussed during this meeting, both in plenary session and in small groups.
From these workshop debates several modifications, additions and more precise formulations were incorporated in the document and, with the support of our Department for Research and Planning, we were able to draft a first risk matrix. The collection of contributions continued with a meeting to which all the managers of the Departments of the Tribunal, our leading auditors, were invited. The meeting we organised followed a similar set-up to the one held for the Members.
Building on all these contributions, the Tribunal identified the potential risks (internal and external) affecting its control activity, and prepared a risk assessment matrix, including probability and impact scales to establish the related risk rate, thus ranking the priorities for the period (see Figure 2).
Figure 2 — Matrix for external risks
The outcome: four major strategic objectives for 2020–2022
Our Tribunal thus adopted four major strategic objectives to be achieved in the three year period from 2020–2022:
- Objective 1: enhancing citizens’ trust in public financial management;
- Objective 2: contributing to sustainable financial management;
- Objective 3: increasing the level of accountability of public managers;
- Objective 4: reinforcing the impact of the Tribunal.
Table 1 provides more details on the priorities to be addressed under each of these goals.
Table 1 — Strategic goals and priorities
Trust, sustainability, accountability and impact are key dimensions that characterise the four strategic objectives we formulated. For the strategy’s implementation, we identified several priority action axes, which aim to respond to the risks and challenges identified, namely those related to preparation for the digital society, sustainable development, as well as the impacts of demographic evolution and climate change.
At the same time, our strategy illustrates our commitment to contributing to a trajectory of rigour and sustainability for Portuguese public finances; and the need for significant investments in the modernisation and reorganisation of our structure and modus operandi, as well as in the qualifications and rejuvenation of our human resources.
Through this important strategic instrument, our institution is commiting itself to reinforcing its policy of transparency and openness towards society, and developing a more integrated and articulated approach to the various aspects of financial control.
Our approach to planning: from a strategic plan to the annual plan
Our approach to planning starts from the strategy, and we apply a number of planning principles throughout the process:
- coherence and coordination between the different planning instruments (from the Strategic Plan down through the Operational medium-term Plan to the Annual Plan);
- evolution towards more detailed medium-term plans, which are nevertheless also designed to remain flexible and adjustable;
- a top-down approach to Strategic Planning, where the direction to follow comes from leadership, balanced with a bottom-up input, obtained through a strong emphasis on participation;
- strengthening risk analysis in the process of identifying the Strategic Goals and priorities;
- matching the activities planned with the resources in place, mainly human capital and funds; and
- systematic, continuous and regular monitoring, through strategic, institutional and operational indicators enabling us to spot, at any moment, the necessary adjustment measures.
Our 2020–2022 Strategic Plan: adjustments needed due to COVID-19
As I stressed above, at the Tribunal de Contas of Portugal we consider flexibility to be a permanent concern, seeing it as the ability to adjust to rapid and unforeseen changes that are typical in a globalised, interconnected and digitalised reality.
The year 2020 taught us a hard lesson about the need for adaptability and flexibility. To face the effects of the pandemic, SAIs and all the public sector had to rapidly adjust their working methods to continue operations.
The Tribunal readjusted its 2020 Action Plan and Audit Programme, by shifting the focus of its work towards Covid-19-related aspects and we also reviewed our Strategic Plan and the medium-term Operational Plan for 2020–2022, given the changes to risk assessment and other adjustments we had made. A new priority linked to the effects of the pandemic on the economic, financial and social situation of the country was included. As a result, we identified 27 new tasks and we delayed others. Some tasks were cancelled in light of the burden they would cause to public entities at the centre of the crisis, or because they had become superfluous, given our current predicament.
We are addressing the pandemic from different perspectives, such as through:
a. newly planned performance audits, targeting the worst affected sectors, such as health, social security, labour and employment;
b. monitoring and assessing the progress of public finance as a whole;
c. shifting the focus of previously planned audits, by adding an analysis of the consequences of Covid-19;
d. implementing different methods of controlling contracts now exempt from a priori control;
e. identifying risks in the management of emergency situations and alerting the public sector to them; and
a. taking advantage of the mandatory rendering of accounts to collect and report the effects of the Covid-19 crisis.
A decisive priority for the next years is the audit of EU funds, namely those arising from the European Recovery Plan resulting from the Covid-19 pandemic (see Figure 3). We will strive to maintain a high level of audit pressure in respect of the sound management of the spending of the funds allocated to the country.
Figure 3 — EU coronavirus response
Looking ahead
In line with the principles of its planning system, the Tribunal de Contas will continue to evolve, and to address changes in the public audit environment as they appear. The risk matrix is a living document, and we intend to observe reality with a view to providing an adequate foresight analysis that will enable us to update our strategy and planning instruments. We are already developing a lessons learned exercise relating to the planning model, so that it can be improved and simplified.
To maximise the impact of our work, whole-of-government audits and collaboration between the different audit domains of our institution will be strengthened through various methods, such as:
- focusing on common themes;
- performing cooperative audits within the Tribunal;
- incorporating contributions or information and data from different sectors of our institution.
The cherry on top will be the completion of the integrated information system (already operational) to support our planning, programming, monitoring and reporting activities.
This article was first published on the 1/2021 issue of the ECA Journal. The contents of the interviews and the articles are the sole responsibility of the interviewees and authors and do not necessarily reflect the opinion of the European Court of Auditors.
