Ernesto Jeger Governance Adviser DFID June 2007 How Governments and Development Partners Can Work Effectively to Achieve Results Working with SAIs in Brazil to improve accountability through performance audit 1 Palace Street, London SW1E 5HE Abercrombie House, Eaglesham Road, East Kilbride, Glasgow G75 8EA

Page 1 Reasons for development partners working with SAIs Starting point for co-operation on broader PFMA reforms; The Lima Declaration of Guidelines on Auditing Precepts (1977) DFID WP (2006) DFID Governance Paper (2007), IDB MOS(2003) and WB SAI Strategy (2004) and WB GAC Strategy (2006). Aid Effectiveness Agenda: Harmonization and use of country systems Institutional architecture within which SAI reform can be set Resources and goodwill to be involved in capacity development initiatives exist across the international SAI community. Since 1993, the WB and the IDB have designed 15 loans to strengthen external audit agencies in Latin America

Page 2 A Decade of Working with SAIs in Brazil DFID TC ( ) “Development of Performance Audit Techniques – TCU” DFID TC ( ) “Improving External Control with Focus on Reducing Social Inequalities” – TCU and TCEs Bahia and Pernambuco IADB ( ) – “Programme to Support Modernization of the TCU” U$ 5 million loan IADB ( ) – “Programme for the Strengthening of External Control of States and Municipalities (PROMOEX)” U$ 38.6 million loan World Bank grants ( ) “AAA Brava” and “AAA Good Governance”

Page 3 First Step: Understanding the wider reform context in which the SAI operates A Federal country: Decentralised policy, management and service delivery provide an important opportunity for local participation and strengthened accountability The role of social control The need for better quality of public expenditure The new public management (1995) Privatization and creation of regulatory agencies (1996) Law of Fiscal Responsibility (2000) and Multy-Year Plan (PPA) Commitment with poverty and inequality reduction through new social programmes (2003) and the Plan for Accelerating Growth (PAC 2007)

Page 4 Second Step: Obtaining a good understanding of the SAI’s current situation Constitution 1988 – performance or value for money audit TCE-Bahia accredited by WB (1987) and IDB (1994) to carry out audit on multilateral lending. TCU creates SEFID (1998) and SEPROG (2001) Improving diagnosis and analysis: Institutional appraisal to select TCEs Bahia and Pernambuco to join DFID project IDB Promoex diagnosis (stakeholders perception's survey) WB SFAA (Ceara) and planned subnational PEFA in selected states

Page 5 Third Step: Support the Brazilian SAIs in developing practical ways to take forward reform Focus on performance auditing (DFID) Development of innovative audit techniques: Environmental auditing; Audit of regulatory agencies, Audit of social programmes, Audit of multilateral lending (DFID, WB, IDB) Focus on improving administrative efficiency: Strategic and organisational development; Information technology; Equipment and infrastructure; Human resource management; Capability building and training (IDB) Emphasis on social oversight (DFID) Sub-national auditing (DFID, WB, IDB) Integrated initiatives addressing the M&E system and the entire budget cycle: revenue, spending, control, and accountability (WB)

Page 6 Easy wins Civil Society participation in the planning stage of the audit work TCU has published more than 60 reports in user friendly formats; Internet disclosure “Dialogo Publico” events (IDB) Evaluation of flagship programmes: Cadastro Unico, Zero Hunger and Bolsa Familia The importance of getting stakeholders to take up and act on the findings of SAIs audit work. Key elements in the SAIs’ approach which encourage this are: Inclusiveness Positive messages Accessibility Monitoring and follow up

Page 7 Successful reform techniques undertaken in Brazil DFID Resident Adviser Study visit to UK (NAO and Audit Commision) Train the trainers approach Distance learning training (IDB) Shadow training Twinning projects (WB Ceara SWAp)