Hearings in Federation Council Mark New Era in Parliamentary Oversight in Russia and Successful Conclusion to Parliamentary Centre Pilot Project

 “A very important and remarkable event”. That is what the Deputy Chairman of the Russian Federation’s supreme audit institution, the Accounting Chamber (AC), termed the hearings held by the upper house of the Russian Parliament, the Federation Council (FC). On May 27, 2004, for the first time ever, the Federation Council’s Commission on Interaction with the AC, which has a mandate similar to the Public Accounts Committee (PAC) of the Canadian House of Commons, held a hearing to consider two performance audit reports tabled by the AC . (In Canada, performance auditing asks whether programs were run economically and efficiently and whether the government has the means to measure their effectiveness ).

The Parliamentary Centre has served as the implementing agency for the innovative two-year pilot project designed to strengthen parliamentary oversight and financial control in Russia. Using its knowledge of the Russian political landscape, the Centre designed the pilot project (together with the Accounting Chamber) and has advised and guided the technical assistance provided by its Canadian partners, the Office of the Auditor General (OAG) and the Public Accounts Committee (PAC) of the House of Commons. The Centre has also used its own expertise in the area of parliamentary oversight to assist the FC and the AC.

In Canada, the Office of the Auditor General has been conducting performance audits since 1977. The findings of its reports make their way to the Public Accounts Committee, which holds hearings on the reports and issues recommendations to the Government. Despite the fact that certain aspects of the Canadian system of oversight differ from the Russian reality, certain aspects of the Canadian experience proved useful for our Russian partners. For a Parliamentary Centre seminar presentation on the applicability of the Canadian experience to the Russian reality, click here . For a seminar presentation made by Ronald Thompson, Assistant Auditor General of Canada , on “ Interaction between Parliament and Organs of External Control” , click here .

Assistance Provided to Russian Partners

Guided by the OAG, the Accounting Chamber developed performance audit methodology that was employed in two pilot audits—the first performance audits of their kind for the Accounting Chamber. The findings of these test audits were submitted for consideration by the FC Commission. The Parliamentary Centre and the OAG organized and facilitated study tours and workshops designed to familiarize Accounting Chamber audit staff with the OAG’s performance audit methodology, reporting and investigating methods and presentations of audit reports.

While the audit methodology and two audit reports were being prepared by the Accounting Chamber, the Parliamentary Centre was working closely with the FC Commission to strengthen its capacity to hold hearings on the Accounting Chamber’s pilot performance audit reports. With the participation of appropriate Canadian experts and practitioners as well as Parliamentary Centre experts, workshops were organized for Russian parliamentarians and their staff in Moscow to examine the operation of the PAC and raise awareness about the role of parliament in overseeing budgetary expenditures. The FC Commission even designed its rules of procedure guided by the PAC’s own rules of procedure.

Pilot Project Achieves Results

The project achieved substantial results. Prior to the development of this pilot project, the Accounting Chamber was conducting compliance and attest audits, but not focussing on whether programs were achieving value-for-money. Although the pilot project began working with one of twelve audit directorates, awareness about the importance of developing performance auditing spread quickly, with the Accounting Chamber’s Chairman, Sergei Stepashin, aiming to have value-for-money audits conducted in all twelve audit directorates by 2005. In the Federation Council, there was no body dedicated to reviewing AC reports until early 2002. Given the legal right of the AC to communicate its audit findings directly to the Government of the Russian federation (this is not the case with the OAG in Canada), senior AC officials and members of the Russian Parliament saw little need to involve Parliament in reviewing AC reports. The pilot project has raised the awareness of both the Accounting Chamber and Federation Council about the role parliament can play in adding credence to the Accounting Chamber’s findings and pressuring the government to implement the Accounting Chamber’s recommendations. As AC Deputy Chairman Semikolennykh pointed out at the hearing, foreign experience demonstrates that performance auditing is of great interest to parliamentarians (more so than other types of auditing), as it provides feedback about how the government is delivering programs. This increased level of awareness will have a positive impact on the development of the larger system of accountability in Russia, since Russian President Vladimir Putin is aiming to develop a system of results-based budgeting (rather than simple line-item budgeting) by 2005.

The Ingredients for Success

A roundtable hosted on March 3, 2004 by the Canadian International Development Agency , the project’s funding agency, looked at the ingredients that have made the project a success. An edited transcript of the roundtable is available by clicking here.

A representative of the Accounting Chamber, Galina Anisimova (Director of the Methodological-Analytical Department) thanked the Canadian partners for their continuing support, professionalism, and enthusiasm that have been critical for the success of the pilot project. She highlighted the excellent foundation that the Canadian partners had established for the AC by providing Canadian performance audit methodology and by highlighting the relations between the OAG and internal audit bodies. (For a seminar presentation made by David Rattray, Assistant Auditor General of Canada , on Interaction between the External Auditor and Organs of Internal control: The Canadian Experience, click here) .

She added that the constructive comments, which the Accounting Chamber received from the OAG, significantly increased the quality of the Russian draft of the performance audit manual. She concluded by saying that there has been a significant change in the “culture of financial control” in Russia since the Pilot Project began.

David Rattray, Assistant Auditor General of Canada, discussed several key indicators of the success of the pilot project. First, he mentioned demonstrable support at the highest level among Russian and Canadian partners. The second indicator of success was the successful transfer of performance audit methodology from the OAG to the AC. Mr. Rattray mentioned several tangible examples, such as the fact that performance audit methodology was successfully adapted to Russian realities and that senior AC officials demonstrated buy-in by joining OAG officials on the podium during training sessions for Accounting Chamber staff. A third indicator was that tangible results emerged, namely the performance audit manual and the two performance audit reports. Mr. Rattray concluded by saying that the cornerstone of sustainable performance auditing had been laid in Russia through the Pilot project.

Geoff Dubrow, Program Director, Eastern Europe, Parliamentary Centre, began by defining the Parliamentary Centre’s role in the pilot project. He noted that the Centre had worked diligently not only to ensure that support existed at the highest levels of the Accounting Chamber and Federal Assembly, but also that there was sufficient capacity (especially at the middle-management level) in the Accounting Chamber to carry out the program. He highlighted the strength of the program’s design, in which the Centre reached beyond the Russian Parliament to include the Accounting Chamber, seeing the importance of developing institutional linkages between the two organizations (similar to the linkages that exist in Canada between the OAG and PAC). From a results-based management perspective, the Centre developed a set of realistic goals for the project that it believed could yield tangible results. For example, rather than working to develop performance auditing in the entire Accounting Chamber, with its twelve audit directorates, the Centre designed the pilot project to focus on one particular audit directorate responsible for auditing the Russian north. Similarly in the Federation Council , the Centre started working with one specific committee tasked with receiving the Accounting Chamber’s reports.

Future Prospects for Strengthening Parliamentary Oversight in Russia

The Parliamentary Centre is now seeking to develop an accountability-strengthening program in the Russian Federation, to further strengthen parliamentary oversight and performance auditing at the federal level and to introduce it at the regional (or provincial) level. The Accounting Chamber and Federation Council are planning to share the experience they have gained with the regional accounting chambers and regional legislatures respectively, further widening the results achieved by this pilot project. The Centre will be adding value by continuing to share Canadian experience and looking at the lessons learned at the federal level. To paraphrase Boris Preobrazhenskiy, former deputy Chairman of the FC Commission, the recently concluded pilot project will have an impact well beyond its stated goals and objectives. (For a Parliamentary Centre seminar presentation on “ Performance auditing and Accountability: Canadian and Russian Experience”, click here . For a seminar presentation by Ronald Thompson, Assistant Auditor General of Canada on "How Performance Auditing Serves the Parliament of Canada; and Federal-Provincial Cooperation Among Legislative Auditors in Canada”, click here . Both presentations were made at a seminar on adopting performance auditing at the regional level in the Russian Federation in May 2004).

Additional Information

For more information about our Russian and Canadian partners and about the pilot project, click here

For a comparison between the structure and mandate of the Russian Accounting Chamber and the Office of the Auditor General of Canada and the relationship of the audit offices to Parliament, click here .

For information about the development of Public Accounts Committees in the Russian Federal Assembly, click here .

For an edited transcript of the CIDA-hosted roundtable on the “Success of the Pilot Project to Strengthen Parliamentary Oversight in the Russian Federation”, click here .