- The Working Group was set up in 1993 with the following terms of
reference:
- to identify and examine problems confronting SAIs in the audit of
privatisation;
- to exchange information on the range of experience within the Working
Group’s membership in resolving these problems, having regard to relevant
work in INTOSAI regions; and
- to facilitate the provision of information on this subject to INTOSAI
members.
- At XVI INCOSAI it was agreed that, in the period leading up to XVII
INCOSAI in October 2001 and acting within the ambit of their terms of
reference, the Working Group should:
- monitor the effectiveness of the guidelines on best practice for the audit
of privatisations adopted by XVI INCOSAI;
- continue to facilitate the exchange of information between SAIs on
completed audits in the privatisation field; and
- develop guidance on the audit of public/private partnerships, and
concessions, and on economic regulation.
Purpose of this Note
- This note introduces the draft agenda for the seventh meeting, and the
various papers attached for discussion at that meeting which were
contributed by members of the Working Group, or prepared by the secretariat
in the light of comments received from members, by 4 May 2001. The note
follows the order of items in the agenda (below) and the various papers
attached also follow that order.
Draft guidelines on best practice for the audit of economic regulation and
of public/private finance and concessions
- As agreed at the seventh meeting in Buenos Aires in September 2000, both
sets of draft guidelines were circulated to the INTOSAI membership. Those
SAIs who commented welcomed the guidelines and a number offered drafting
comments/suggestions. These, together with a number of editorial changes,
have been incorporated in the revised drafts below. New material is shown at
this stage in lighter and underlined type, for ease of reference.
- If the Working Group are content with the revised texts, the next stage
will be to submit both sets of guidelines to XVII INCOSAI for adoption. This
guidance on the audit of two key areas of change and development in the
supply of services – contracts with the private sector and the regulation
of essential utilities – is likely to be of particular interest given that
one of the key themes of XVII INCOSAI will be the contribution of SAIs to
administrative and government reforms.
- Translations into the other INTOSAI official languages (Arabic, French,
German and Spanish) of the drafts circulated to the INTOSAI membership have
been prepared and entered on the Working Group’s website. We are very
grateful to the SAI of Argentina for undertaking the Spanish translation.
The secretariat will arrange for the translations to be completed and hard
copies of the final texts to be prepared in the usual booklet form in all
INTOSAI languages in time for distribution at XVII INCOSAI.
Hungarian Privatisation
- Dr Árpád Kovács, President of the Hungarian State Audit Office and Host
of the eighth meeting of the Working Group, will make a presentation on
privatisation and its audit in Hungarian. And Mr Akos Macher will address
the meeting on the reorganisation of the State Privatisation and Holding
Company.
Role of the State as Partner in Private Business
- The principal item is the report on the outcome of the survey of Working
Group members on the role of the state as a minority shareholder in private
businesses. Eleven members responded to the survey. The replies of each SAI
are being entered on the Group’s website. The report summarises these
replies, highlighting key aspects of such shareholdings. The report also
gives examples of examinations which SAIs have carried out. It suggests
(paragraph 53) that the Group might wish to develop guidance on a number of
issues, including how the state might manage the risks involved, what skills
and incentives might be needed, and how the SAI can carry out constructive
examinations.
- The second item is a paper by the SAI of the UK setting out how public
bodies in the UK are being encouraged to enter into partnerships with
private sector businesses, often taking the form of minority shareholdings,
aimed at exploiting the commercial value of state owned assets, for example
intellectual property owned by public research bodies.
Using the Privatisation Audit Guidelines
- Two SAIs (Denmark and Albania) will give updates on presentations they
gave at previous meetings on progress in privatisations in their countries.
The SAI of Denmark will present a midway report on the audit of the
privatisation of harbours. And the SAI of Albania will present a paper on
the challenges currently posed by privatisation in Albania.
Auditing in an outsourced environment
- This paper, by Mr Pat Barrett, Auditor-General for Australia, considers a
wide range of issues relevant to how the public sector relates to the
private sector to achieve public outcomes. The paper includes details of
audit experiences, the lessons that have been learned so far, and the
on-going challenges for public sector auditors.
Using the Public/Private Finance and Concessions Guidelines
- Two SAIs will be presenting papers on how they have been auditing the
operation of contracts between the public and private sector for the supply
of public services, and the extent to which they have found the draft
guidelines helpful in this task. The paper by the SAI of Poland (enriching
audit methodologies) shows how the guidelines have been applied in a number
of audits and the extent to which the SAI has found them useful. The paper
by the SAI of Hungary (auditing concessions contracts) sets out examples of
the audit of such contracts in Hungary, the relevance of the guidelines, and
the lessons learned from these audits.
Privatising Regulation
- In his paper on the possible use of market forces in the management of
regulation, Dr Ilan (SAI of Israel) examines ways in which, where regulation
is required for the good of the public, market forces (for example the need
for professional liability insurance, and the concern of suppliers for their
reputation) might be utilised as means of enforcing regulation, as an
alternative to direct enforcement by the state.
Information Exchange
- At the Buenos Aires meeting, members of the Group were invited to send to
the SAI of India contributions to the digest of completed privatisation
audits, to enable the SAI of India to make a progress report at the eighth
meeting. In addition, the secretariat have prepared a further paper, with
recommendations, on the use being made of the Working Group’s website.
Report to XVII INCOSAI and future work programme
- The discussion will bring together the outcome of the Group’s
deliberations on two important aspects. First, the Group’s report to XVII
INCOSAI on the outcome of their work in pursuit of their remit from XVI
INCOSAI (November 1998) – in particular the 2 sets of new guidelines, the
extent to which the 1998 privatisation audit guidelines have proved to be of
value, and facilitating further exchanges of information (including the
website). Second, the Group’s future work programme – options so far
identified include developing guidance on the audit of the state’s
minority shareholdings, further examination of ways in which regulation in
the public interest can be carried out by private sector bodies or left to
market forces, and contractual issues arising from the procurement of public
services from the private sector.
Dates of future Meetings
- As previously announced, the ninth meeting of the Group will be hosted by
Mr Bjarne M
ø