PARLIAMENT-SAI RELATIONS AS ONE OF THE PRIORITIES OF LONG-TERM DEVELOPMENT OF STATE AUDIT

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PARLIAMENT-SAI RELATIONS PARLIAMENT-SAI RELATIONS AS ONE OF THE PRIORITIES OF AS ONE OF THE PRIORITIES OF LONG-TERM DEVELOPMENT OF LONG-TERM DEVELOPMENT OF

STATE AUDITSTATE AUDIT

DR. RECAI AKYELDR. RECAI AKYEL

PRESIDENTPRESIDENT

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ContentContent

Importance of Parliament – SAI RelationsImportance of Parliament – SAI Relations General overview of Parliament – SAI General overview of Parliament – SAI

RRelationselations Relations between Turkish Parliament Relations between Turkish Parliament

(TGNA) and Turkish Court of Accounts (TGNA) and Turkish Court of Accounts (TCA)(TCA)

History of relationsHistory of relations Relations at presentRelations at present TGNA-TCA relations from the point of applicable TGNA-TCA relations from the point of applicable

legislationlegislation

ConsiderationsConsiderations

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Importance of Parliament – Importance of Parliament – SAI RelationsSAI Relations

There are certain priorities in the There are certain priorities in the long-term development of state long-term development of state audit. audit.

The most significant priority is the The most significant priority is the nature of the relation between nature of the relation between parliament and SAI. parliament and SAI.

Parliamentary support is needed in Parliamentary support is needed in ensuring and sustaining progress in ensuring and sustaining progress in the operations of supreme audit. the operations of supreme audit.

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General Overview of General Overview of Parliament – SAI RelationsParliament – SAI Relations

PUBLIC

PARLIAMENT

SUPREME AUDIT INSTITUTION

PUBLIC ADMINISTRATIONS

Election

Furnishes public administrations with the authority to collect revenue and spend.

Authority to audit, report and take final decision on behalf of the Parliament.

Submit documents related to revenues and expenditure for audit.

Reports audit results.

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Basic foundations of Parliament – Basic foundations of Parliament – SAI SAI rrelations are as follows:elations are as follows:

Oversight over the power of the purse Oversight over the power of the purse Enhancing accountability in public Enhancing accountability in public

management management

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The results that parliaments desire to The results that parliaments desire to obtain through the agency of SAIs are obtain through the agency of SAIs are primarily as follows:primarily as follows:

Whether public administrations’ budgets are used as Whether public administrations’ budgets are used as intended;intended;

Whether expected outcome is achieved; Whether expected outcome is achieved; What needs to be done to achieve objectives.What needs to be done to achieve objectives.

The primary function of SAIs is to prepare The primary function of SAIs is to prepare and submit parliaments and submit parliaments objective objective reports with appropriate qualityreports with appropriate quality in line in line with such expectations. with such expectations.

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Parliaments essentially exercise Parliaments essentially exercise political oversightpolitical oversight over budget. over budget. SAIs, on the other hand, perform SAIs, on the other hand, perform professional, impartial and professional, impartial and independentindependent audit to supplement audit to supplement this role. this role.

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Parliament is the main addressee of SAI audit Parliament is the main addressee of SAI audit reports, though SAI has some other reports, though SAI has some other stakeholders. Therefore, the relation between stakeholders. Therefore, the relation between parliaments and SAIs should be based on this parliaments and SAIs should be based on this understanding.understanding.

Administrative and budgetary operations are Administrative and budgetary operations are more effectively performed when parliaments more effectively performed when parliaments support and follow the implementation of support and follow the implementation of actions, which are stated in SAI audit reports actions, which are stated in SAI audit reports and required to be performed by public and required to be performed by public administrations. administrations.

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There is a direct relationship There is a direct relationship between the effectiveness of SAI between the effectiveness of SAI audit reports and the interest shown audit reports and the interest shown by the Parliament. by the Parliament.

Another indication of Parliament’s Another indication of Parliament’s interest in SAI reports is that it has interest in SAI reports is that it has established the structure for follow-established the structure for follow-up process and follows it up process and follows it consistently. consistently.

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History of TGNA-TCA History of TGNA-TCA RelationsRelations

TCA, the supreme audit institution of TCA, the supreme audit institution of Turkey, was established in 1862. Turkey, was established in 1862.

Until 1876, it submitted results of its Until 1876, it submitted results of its examinations to the Ministry of examinations to the Ministry of Finance. Finance.

In 1876, it gained a constitutional In 1876, it gained a constitutional status and entrusted with the duty to status and entrusted with the duty to submit results of its examinations to submit results of its examinations to the Parliament. the Parliament.

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History of TGNA-TCA History of TGNA-TCA RelationsRelations

Below-mentioned functions of TCA Below-mentioned functions of TCA are preserved in the Constitutions of are preserved in the Constitutions of 1876, 1924, 1961 and 1982 :1876, 1924, 1961 and 1982 :

Auditing on behalf of the Auditing on behalf of the Parliament;Parliament;

Reporting to the Parliament; Reporting to the Parliament; Taking final decision. Taking final decision.

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TURKISH GRAND NATIONAL ASSEMBLY

TURKISH COURT OF ACCOUNTS

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TGNA-TCA Relations at TGNA-TCA Relations at presentpresent

Followings are the legal documents Followings are the legal documents of significance in terms of TGNA-of significance in terms of TGNA-TCA relations:TCA relations:

The Constitution of The Constitution of the the Turkish Republic Turkish Republic (1982)(1982)

Public Financial Management and Control Public Financial Management and Control Law No.5018 (2003)Law No.5018 (2003)

TCA Law No.6085 (2010)TCA Law No.6085 (2010)

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TGNA-TCA Relations at TGNA-TCA Relations at presentpresent

TGNA authorizes public administrations TGNA authorizes public administrations to acquire revenue and make to acquire revenue and make expenditure through the Budget Law it expenditure through the Budget Law it approves and the TCA to audit whether approves and the TCA to audit whether this power is used appropriately in this power is used appropriately in accordance with the rules and accordance with the rules and procedures stipulated in the procedures stipulated in the Constitution and the laws No. 5018 and Constitution and the laws No. 5018 and 6085. TCA submits the results of such 6085. TCA submits the results of such audits in the form of various reports. audits in the form of various reports.

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Powers of TGNAPowers of TGNA

According to Article 87 of the Constitution, According to Article 87 of the Constitution, among the functions and powers of TGNA are among the functions and powers of TGNA are the enactment, amendment, and repeal the enactment, amendment, and repeal of laws, debating and approving the draft of laws, debating and approving the draft budget and the draft final accounts law budget and the draft final accounts law and making decisions on the printing of and making decisions on the printing of currencycurrency. .

As per Article 5 of the Law No.5018, As per Article 5 of the Law No.5018, public public financial management financial management is is conducted in conducted in line with the budget appropriated by line with the budget appropriated by TGNA. TGNA.

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Power of the PursePower of the Purse Article 34 of the Law No.6085 lists the Article 34 of the Law No.6085 lists the

functions of TCA as follows: functions of TCA as follows: • Submitting reliable and sufficient information Submitting reliable and sufficient information

to the to the TGNATGNA and the public concerning the and the public concerning the activity results of public administrations, as activity results of public administrations, as required by the power of the purse;required by the power of the purse;

• Executing public financial management in Executing public financial management in line with laws, and protecting public line with laws, and protecting public resources;resources;

• Evaluating the performance of public Evaluating the performance of public administrations; administrations;

• Establishing and generalizing accountability Establishing and generalizing accountability and fiscal transparency. and fiscal transparency.

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TCATCA As per the Article 160 of the Constitution, the TCA is As per the Article 160 of the Constitution, the TCA is

charged with auditing, on behalf of the TGNA, all the charged with auditing, on behalf of the TGNA, all the revenues, expenditures and properties of the State, revenues, expenditures and properties of the State, with taking final decisions on the accounts and with taking final decisions on the accounts and transactions of those responsible, and with exercising transactions of those responsible, and with exercising the functions required of it by law in matters of the functions required of it by law in matters of examining, auditing and taking final decision. examining, auditing and taking final decision.

The Law No.5018 recognizes the TCA, which is The Law No.5018 recognizes the TCA, which is entrusted with the duties stipulated in the entrusted with the duties stipulated in the Constitution, as ex-post external auditor. (Article 68)Constitution, as ex-post external auditor. (Article 68)

The Law No.6085 stresses on the functional and The Law No.6085 stresses on the functional and institutional independence of the TCA, which institutional independence of the TCA, which performs external audit function on behalf of the performs external audit function on behalf of the TGNA. (Article 3)TGNA. (Article 3)

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Final Accounts – Statement of Final Accounts – Statement of General ConformityGeneral Conformity

According to the Article 161 of the According to the Article 161 of the ConstitutionConstitution;; the preparation, the preparation, implementation and control of implementation and control of central government budget is central government budget is governed by laws. governed by laws.

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According to the Constitution, draft final accounts is According to the Constitution, draft final accounts is submitted to the TGNA by the Council of Ministers. submitted to the TGNA by the Council of Ministers. The TCA submits its statement of general conformity The TCA submits its statement of general conformity to the TGNA within seventy-five days of the to the TGNA within seventy-five days of the submission of the draft final accounts in question. submission of the draft final accounts in question.

The draft final accounts is placed on the agenda of The draft final accounts is placed on the agenda of the Budget Committee together with the Draft the Budget Committee together with the Draft Budget Act for the new fiscal year. The Budget Budget Act for the new fiscal year. The Budget Committee submits the draft Budget Act to the Committee submits the draft Budget Act to the Plenary Assembly in conjunction with the draft final Plenary Assembly in conjunction with the draft final accounts; the Plenary Assembly considers and accounts; the Plenary Assembly considers and decide on the draft final accounts in conjunction decide on the draft final accounts in conjunction with the draft Budget Act for the new fiscal year. with the draft Budget Act for the new fiscal year. ((Article 164)Article 164)

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Pursuant to the Law No.5018, the Pursuant to the Law No.5018, the TGNA exercises its power of TGNA exercises its power of approving the implementation results approving the implementation results of the Central Government Budget of the Central Government Budget Law through the Final Accounts Law. Law through the Final Accounts Law.

Upon prepared by the Ministry of Upon prepared by the Ministry of Finance, the Draft Final Accounts Finance, the Draft Final Accounts Law is submitted to TGNA and the Law is submitted to TGNA and the TCA. (Article 42)TCA. (Article 42)

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Pursuant to Article 43 of the Law Pursuant to Article 43 of the Law No.5018 and Article 41 of the Law No.5018 and Article 41 of the Law No.No.60856085; the TCA submits the ; the TCA submits the Statement of General Conformity, Statement of General Conformity, which it prepares for the public which it prepares for the public administrations within the scope of administrations within the scope of central government, to the TGNA at central government, to the TGNA at latest in seventy-five days after the latest in seventy-five days after the submission of the Draft Final Accountsubmission of the Draft Final Accountss Law. Law.

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The TCA prepares the Statement of The TCA prepares the Statement of General Conformity by taking into General Conformity by taking into account the implementation results of account the implementation results of the budget law stated in the draft Final the budget law stated in the draft Final AccountAccountss Law, external audit reports, Law, external audit reports, the administration accountability reports the administration accountability reports and the general accountability report. and the general accountability report. The TCAThe TCA,, in this statement in this statement,, gives its gives its opinion on whether the charts and opinion on whether the charts and documents in the draft Final Accounts documents in the draft Final Accounts Law conform to those given in the public Law conform to those given in the public administrations' accounts and submits administrations' accounts and submits itit to the TGNA. to the TGNA.

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Auditing of State Economic Auditing of State Economic Enterprises (SEEs)Enterprises (SEEs)

The principles governing the auditing, by the TGNA The principles governing the auditing, by the TGNA of the accounts of public establishments and of the accounts of public establishments and partnerships in which more than half of the capital partnerships in which more than half of the capital directly or indirectly belongs to the State, is directly or indirectly belongs to the State, is regulated by law. (the Constitution, Article 165)regulated by law. (the Constitution, Article 165)

SEEs, which were previously subject to the audit of SEEs, which were previously subject to the audit of Prime Ministry High Auditing Board as per the Law Prime Ministry High Auditing Board as per the Law No. 72, are now within the audit scope of the TCA as No. 72, are now within the audit scope of the TCA as required by the Law No.6085. required by the Law No.6085.

Annual audit reports pertaining to audited Annual audit reports pertaining to audited organizations are submitted to the TGNA by the organizations are submitted to the TGNA by the President of the TCA to be discussed by the relevant President of the TCA to be discussed by the relevant committee, as stipulated in the Law No.6085. committee, as stipulated in the Law No.6085. (Article 43)(Article 43)

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President of TCAPresident of TCA Article 160 of the Constitution states that the security Article 160 of the Constitution states that the security

of tenure of the President and members of the TCA is of tenure of the President and members of the TCA is governed by law. Within this context, there are governed by law. Within this context, there are various arrangements made in the Law No.6085. various arrangements made in the Law No.6085.

As per Articles 13-16 of the Law No.6085, the TCA As per Articles 13-16 of the Law No.6085, the TCA President and members are elected by the General President and members are elected by the General Plenary of the TGNA. Plenary of the TGNA.

The Law No.6085 stipulates the duties of the The Law No.6085 stipulates the duties of the President as follows:President as follows:

The President informs the TGNA Plan and Budget The President informs the TGNA Plan and Budget Committee at least twice a year and where necessary, Committee at least twice a year and where necessary, related Committees with regard to the activities of the related Committees with regard to the activities of the TCA. TCA.

The President or the deputy president assigned by the The President or the deputy president assigned by the President is present during the discussions on the reports President is present during the discussions on the reports of the TCA in the TGNA.of the TCA in the TGNA. (Article 21) (Article 21)

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Functions of TCAFunctions of TCA

Functions of the TCA are specified in Functions of the TCA are specified in the Law No.6085 as such:the Law No.6085 as such:

To audit the activities, decisions and To audit the activities, decisions and transactions of public administrations transactions of public administrations within the framework of accountability and within the framework of accountability and to submit accurate, sufficient, timely to submit accurate, sufficient, timely information and reports to the TGNA on the information and reports to the TGNA on the results of these audits; results of these audits;

To submit the Statement of General To submit the Statement of General Conformity to the TGNA. (ArticleConformity to the TGNA. (Article, 5)., 5).

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Those Responsible and Cases Those Responsible and Cases of Responsibilityof Responsibility

With respect to those responsible and With respect to those responsible and cases of responsibility, the Law cases of responsibility, the Law NNo.6085 o.6085 stipulates as follows:stipulates as follows:

““Those assigned duties and vested with authorities Those assigned duties and vested with authorities for the acquisition and utilization of all types of for the acquisition and utilization of all types of public resources shall be responsible for their public resources shall be responsible for their effective, economic and efficient acquisition, effective, economic and efficient acquisition, utilization, accounting and reporting as well as for utilization, accounting and reporting as well as for taking necessary measures to prevent misuse of taking necessary measures to prevent misuse of these resources. Whether this responsibility shall these resources. Whether this responsibility shall have been fulfilled shall be stated in the reports of have been fulfilled shall be stated in the reports of Turkish Court of Accounts to be submitted to the Turkish Court of Accounts to be submitted to the Turkish Grand National Assembly.”Turkish Grand National Assembly.” (Article 7)(Article 7)

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TCA Reports to be Submitted TCA Reports to be Submitted to TGNAto TGNA

According to the Law No.6085, followings are According to the Law No.6085, followings are the reports to be prepared by TCA following the reports to be prepared by TCA following the audits and submitted to the TGNA:the audits and submitted to the TGNA:

External Audit General Evaluation Report, (Article 38)External Audit General Evaluation Report, (Article 38) Accountability General Evaluation Report, (Article 39)Accountability General Evaluation Report, (Article 39) Financial Statistics Evaluation Report , (Article 40)Financial Statistics Evaluation Report , (Article 40) Statement of General Conformity, (Article 41)Statement of General Conformity, (Article 41) Reports on SEEs, (Article 43)Reports on SEEs, (Article 43) Reports on issues that the TCA considers to be worth Reports on issues that the TCA considers to be worth

sending to the TGNA after its audit and examination, sending to the TGNA after its audit and examination, (Article 42)(Article 42)

Reports related to audit demands from the TGNA (Article Reports related to audit demands from the TGNA (Article 45)45)

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External Audit General External Audit General Evaluation ReportEvaluation Report

Article 68 of the Law No.5018 envisages that the Article 68 of the Law No.5018 envisages that the external audit general evaluation report to be external audit general evaluation report to be prepared by the TCA shall be submitted to the prepared by the TCA shall be submitted to the TGNA. TGNA.

Article 38 of the Law No.6085 states that the Article 38 of the Law No.6085 states that the external audit general evaluation report is external audit general evaluation report is prepared through consolidating the reports prepared through consolidating the reports prepared by heads of audit groups as a result of prepared by heads of audit groups as a result of regularity and performance audit of public regularity and performance audit of public administrations and sent by the President of the administrations and sent by the President of the TCA to the TGNA together with the Statement of TCA to the TGNA together with the Statement of General Conformity. Moreover, results of General Conformity. Moreover, results of external audit may also be submitted to the external audit may also be submitted to the TGNA as separate reports arranged in terms of TGNA as separate reports arranged in terms of administrations or topics.administrations or topics.

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Accountability ReportsAccountability Reports

The Law No.5018 envisages that the The Law No.5018 envisages that the accountability reports prepared by public accountability reports prepared by public administrations are submitted to the TGNA in administrations are submitted to the TGNA in a report upon examination by the TCA. a report upon examination by the TCA. (Article 41)(Article 41)

As per the Law No.6085, the accountability As per the Law No.6085, the accountability general evaluation report to be prepared as a general evaluation report to be prepared as a result of examinations performed by heads of result of examinations performed by heads of audit groups on accountability reports is sent audit groups on accountability reports is sent to the TGNA and to relevant administrations to the TGNA and to relevant administrations by the Presidency of the TCA. (Article 39)by the Presidency of the TCA. (Article 39)

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Financial Statistics Evaluation Financial Statistics Evaluation ReportReport

According to the Law No.5018, the yearly According to the Law No.5018, the yearly financial statistics are evaluated by the TCA in financial statistics are evaluated by the TCA in March of the following year in terms of March of the following year in terms of preparation, publication, accuracy, preparation, publication, accuracy, reliability and conformity to the reliability and conformity to the predetermined standardspredetermined standards. The evaluation . The evaluation report prepared for this purpose by the TCA is report prepared for this purpose by the TCA is submitted to the TGNA and the Ministry of submitted to the TGNA and the Ministry of Finance. (m. 54) Finance. (m. 54)

Article 40 of the Law No.6085 covers the same Article 40 of the Law No.6085 covers the same provisions as mentioned above; however, this provisions as mentioned above; however, this article reads additionally as “The Minister of article reads additionally as “The Minister of Finance shall take the necessary measures in Finance shall take the necessary measures in accordance with the assessments stated in this accordance with the assessments stated in this report.”report.”

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Other ReportsOther Reports

Pursuant to Article 42 of the Law Pursuant to Article 42 of the Law No.6085;No.6085;

These are the reports prepared as a result These are the reports prepared as a result of audits and examinations other than the of audits and examinations other than the reports stipulated in other articles of this reports stipulated in other articles of this Law. The President of the TCA submits Law. The President of the TCA submits these reports to the TGNA or forward to these reports to the TGNA or forward to relevant public administrations. relevant public administrations.

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Audit Demands from the Audit Demands from the Turkish Grand National Turkish Grand National

AssemblyAssembly The Law No.6085 stipulates that the The Law No.6085 stipulates that the

audit demands by the Presidency of audit demands by the Presidency of the TGNA are fulfilled by the TCA the TGNA are fulfilled by the TCA regardless of whether they are regardless of whether they are subject to auditsubject to audit,, and results of such and results of such audits are reported to the TGNA. audits are reported to the TGNA. (Article 45)(Article 45)

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Other ProvisionsOther Provisions

Other provisions with respect to Other provisions with respect to relations with the TGNA are as follows:relations with the TGNA are as follows:

Accounting services of the TCA are executed by Accounting services of the TCA are executed by the accounting officer appointed by the the accounting officer appointed by the Speaker of the TGNA. (6085/Article 62)Speaker of the TGNA. (6085/Article 62)

The TCA is audited by a commission designated The TCA is audited by a commission designated by the TGNA. (6085/Article 79)by the TGNA. (6085/Article 79)

The TGNA is audited by a commission The TGNA is audited by a commission appointed by the TCA. (the Law on the appointed by the TCA. (the Law on the Establishment of TGNA General Secretariat, Establishment of TGNA General Secretariat, Article 14)Article 14)

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ConsiderationsConsiderations

There are certain priorities in the There are certain priorities in the long-term development of state long-term development of state audit. audit.

The most significant priority is the The most significant priority is the nature of the relation between the nature of the relation between the Parliament and SAI. Parliament and SAI.

Parliamentary support is needed in Parliamentary support is needed in ensuring and sustaining progress in ensuring and sustaining progress in the operations of supreme audit.the operations of supreme audit.

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ConsiderationsConsiderations Given its such powers as the enactment, Given its such powers as the enactment,

amendment, and repeal of laws; debating amendment, and repeal of laws; debating and setting the rules for drafting, and setting the rules for drafting, approval, implementation and control of approval, implementation and control of the budget; parliament is the most the budget; parliament is the most powerful organ of a country. Besides, powerful organ of a country. Besides, supreme audit institutions perform audits supreme audit institutions perform audits and prepare reports on behalf of and prepare reports on behalf of parliaments. Therefore, there needs to be parliaments. Therefore, there needs to be a positive, reliable and strong relations a positive, reliable and strong relations between the SAI and the Parliament. between the SAI and the Parliament.

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Documents

PARLIAMENT-SAI RELATIONS AS ONE OF THE PRIORITIES OF LONG-TERM DEVELOPMENT OF STATE AUDIT