May 3, 2012Doug Hadden
Doug Hadden, VP Products
I summarized a notion of citizen audit in public financial management at the International Consortium on Governmental Financial Management (ICGFM) Spring Conference on Monday. The conference subject, “PFM in the 21st. Century,” is an ideal venue to discuss the impact of transparency and social media in government. And, a number of attendees were fascinated with the concept. Many countries do not have sufficient government auditors. Audit limitations could be overcome by enabling citizens, businesses, media and NGOs. There are compliance, fraud and performance citizen audit dimensions. Citizen audit is enabled through open data (proactive disclosure of public financial management information on the Internet) and social media collaboration (Internet enabled feedback and discussion.) Will local government lead to citizen as auditor? Will this become a civic duty?
Compliance Use Cases
Fiscal discipline in government is partly achieved through following good practices. Public financial management in practice should follow government rules. This can be audited by citizens:
- Procurement: Identify any procurements that did not follow government standards such as not enough time to respond, illegal requirements, not enough bids solicited etc. Procurement transparency requires e-procurement portals.
- Budget Preparation: Identify any elements in budget preparation that did not follow rules such as not enough time for the legislature to consider the budget or improper support for budget estimates. Budget preparation transparency requires open budgets and the publication of budget books.
- Recruitment: Identity improper government recruiting that does not follow civil service rules. Recruitment transparency requires e-recruitment portals.
- Financial Reporting: Identify late government reporting such as failure to close accounts and report in a timely manner that does not follow the government financial law. Financial reporting transparency requires the publication of budgets, budget books and public accounts.
Citizens can audit government financials to identify cases of fraud and corruption. Civil society can be trained to analyze government financial information. Audit opportunities include:
- Revenue and Tax: Identify whether corporate taxes have been properly paid and entered the government treasury. Revenue transparency requires revenue portals and support for EITI.
- Civil Service Expenditures: Identify whether senior public servants or politicians have incurred unreasonable personal and travel expenditures. Civil service expenditure transparency requires reporting on web portals.
- Procurement: Identify whether companies have illegally manipulated the procurement process. Procurement transparency requires e-procurement portals that display winning bidders.
- Bribery: Enable citizens to report when a public servant requested a bribe. Bribery transparency requires anonymous web site reporting.
The audit function in government has matured to focus in government efficiency and effectiveness. This is an emerging opportunity for citizen audit.Performance audit opportunities include:
- Citizen outcomes: Enable citizens to report on government outputs and outcomes such as taking pictures of infrastructure program progress or reporting
- Participatory budgeting: Enable citizens to participate in the budget preparation process, possibly policy formulation.
- Government results: Enable citizens to evaluate whether government objectives were achieved and whether outcomes were aligned to objectives.
The advantage to government is that of citizen performance audit can enable improving performance measures. That’s because performance measures in government is so difficult to find because there is no bottom line like the private sector (profit) – as I described in an earlier post.