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International cooperation between SAIs to help develop capacity in public sector audit — the Swedish experience

International development cooperation is an integral part of the mandate of the Swedish National Audit Office (Swedish NAO). In Sweden, Parliament has granted the NAO an appropriation for the capacity development of supreme audit institutions (SAIs) in developing countries, so the Swedish NAO is engaged in bilateral and regional support projects in Africa, Asia and the Western Balkans. Isabelle Berglund, Project Manager, and Hazim Sabanovic, Liaison Officer for the Western Balkans, present some of their experiences and lessons learnt from this type of project.

By Isabelle Berglund and Hazim Sabanovic, Swedish National Audit Office

Leadership commitment

Based on years of experience and continuous evaluation of international capacity development projects, the Swedish National Audit Office (Swedish NAO) understands the importance of a committed leadership, strategic dialogue with different stakeholders, and a balance between planning and continuity on the one hand and flexibility on the other, just to mention a few key success factors.

All these factors can lead to positive synergies throughout the life cycle of a cooperation project. Some are more tangible in bilateral cooperation projects, others in multilateral or regional work. In this article, I illustrate this through examples from the bilateral and regional partnerships the Swedish NAO has built in the Western Balkans. SAIs are knowledge-based organisations. Auditors General and audit managers play a central role in linking employees’ skills into a coherent organisational capacity. This requires leadership that not only believes in the need for development, but also has a vision of where they want this development to lead.

Since taking office in 2016, the Auditor General of Kosovo, Besnik Osmani, has shown strong ownership of his office’s development processes. He has a clear vision of how he wants his office to develop and has secured partners who support this goal. In working with international partners, such as the Swedish NAO, the National Audit Office’s (KNAO’s) management continuously show that they own their development process and, at times, say ‘no’ to proposals from their partners. Their ability to decline unwanted support emphasizes their commitment to development in line with their vision. This contributes to the sustainability of the office’s development — with or without the support of international partners.

Engaging the whole SAI

Kosovo’s management group working on strategic planning during a workshop in Stockholm, from left to right Ilir Salihu, Imri Smetishti and Emine Falizu. Source: Swedish National Audit Office.

Experience has shown that it is important to consider the whole organization in a change process. Even when engaging in the development of specific aspects of an organization, such as performance audit capacity, we have found that sustainability is significantly improved if a broader approach to the SAI’s capacity is used. As a new field for many SAIs in the Western Balkans, the development of performance audit must be internally driven, with a strong will to produce performance audit reports with impact.

The bilateral project between the SAIs of Bosnia-Herzegovina and Sweden included training for audit staff with different levels of experience, with the aim of producing good robust audit reports. Training was also offered to managers and to staff in the methodology and quality assurance departments to enable them to support an effective audit process. The Swedish NAO also promoted performance audit in relation to parliaments, academia and the media. This comprehensive approach has proved successful. After the first pilot audits were published in 2008, it was only a few years before the department was publishing around 15 to 20 performance audit reports annually.

A similar result may be seen in Kosovo, where the SAI plans to publish 13 performance audit reports this year. When the Swedish NAO first started cooperating with the Kosovo NAO, the project was limited to performance audit. Over time, the partnership has evolved into a full-scale institutional capacity development project. As part of the cooperation, a leadership program is now offered to all top- and mid-level managers — including support functions. This has proven valuable not only because it creates management networks, but also because it ensures that all managers have a common understanding of how to lead change and speak the same language.

Continuity and flexibility — advantages and challenges

Capacity development takes time, regardless of its scope. A long-term commitment allows time to build trust and a better understanding of the context of the partner SAI. The long-term aim of the Swedish NAO’s international development cooperation is that the partner organisation will be able to work in accordance with international auditing standards, conduct high quality activities and continuously adapt to a changing environment.

The Swedish NAO has been involved in a bilateral project with Bosnia-Herzegovina since the introduction of external public sector audit. Between the start of the cooperation, in the year 2000, and its conclusion in 2016, this cooperation went through different phases of development. The partnership now continues under the umbrella of regional cooperation.

This partnership has shown that cooperation can — and should — be a long-term commitment, to ensure that methods and processes are sufficiently adapted to the development pace and context of the partner organisation. One challenge is working to promote sustainability in operations from the start and to plan for a positive end to the cooperation. It is difficult to maintain the same drive for effective change over many years. As part of managing this risk, the Swedish NAO normally works with project periods of no more than three years at a time and monitors and regularly evaluates results.

Capacity development projects are unpredictable, requiring adaptation and responsiveness to new conditions. The Swedish NAO’s designated appropriation from Parliament to engage in international development cooperation enables us to be both a long-term and flexible partner. The appropriation allows us to make changes in a project to address changed preconditions or priorities for the SAI.

This has been the case with the Western Balkans’ Parallel Performance Audit (PPA) project, which included six different SAIs. For more details, see the September 2018 issue of the ECA Journal, page 44. Adapting to participants’ needs, the number of workshops in the project was adjusted, and an optional workshop was tailored to each participating SAI. We — colleagues from the European Court of Auditors and the Swedish NAO — also wrote a synthesis report, based on the conclusions from the national reports. These adjustments presented a challenge initially but turned the PPA project from a straightforward regional training process into a major regional performance audit product, which received attention from mass media in the region.

Multilateral cooperation contributes to learning

Regional cooperation provides conditions for learning and exchange, which supplement bilateral cooperation. Shared cultural heritage in the Western Balkans, similar challenges linked to a shared context and a similar bureaucratic history all provide an efficient platform for learning from each other, stimulating new approaches and solutions to common problems. During the PPA project, all participating SAIs worked together towards the same goal. The audit teams benefited from cooperating and sharing experiences from their own audit environments. This has created a strong professional network, which is alive and functions well, both inside and outside the project.

Driving forces and stakeholder coordination

Each capacity development project takes place within the context of a changing environment, often with multiple donors or partners involved in the SAI and in the public financial management context in the country. At the same time, organizations at an early stage of development may not have a clear vision of their change process. In countries with an SAI trying to position itself in the accountability chain, the level of success in the coordination between different stakeholders may significantly aid or hinder the development of the SAI.

In Kosovo, there is a process of legislative change related to the Civil Service Law, which, if passed in its current form, could jeopardize the independence of the SAI. The Swedish NAO is working with international organizations, including the EU Delegation in Kosovo, to ensure that legislative changes comply with the principles of SAI independence in the Lima Declaration. Bosnia-Herzegovina and other countries in the region have similar historical experiences.

Capacity building to find symbiosis between rules and practice

In the Balkans and other parts of Eastern Europe, the EU plays a central role in driving development forward, since EU support is often linked to certain reform requirements for candidate countries. One risk is that the EU requirements bring about formal decisions, structures and processes in accordance with EU legislation, but the capacity to act according to these decisions, structures and processes is lacking. EU requirements could also help support the SAIs’ independence and strengthen their role in the country. As capacity development partners, we play a role in supporting this development.

This article was first published on the November-December 2018 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.

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