Legislative Oversight
Mozammal Hoque
Sr. Financial Management Specialist
AFTFM
The World
World Bank
Bank
The
January 12, 2005
Role of Legislature for
Ensuring Accountability
 Parliament’s have a constitutional obligation to ensure the fair
and effective implementation of the constitution, the laws, policies
and regulations through effective, timely oversight
 Ensure economic development and poverty alleviation
 Ensure accountability for use of public resources

Review the performance of the Government – review
government’s accountability for results

Ensure regulatory environment for ensuring financial
accountability in the private sector
 Carry out investigation on specific issues which affect financial
accountability in a country
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January 12, 2005
Conceptual Approach:
Key Actors and their Relationships
PUBLIC FINANCIAL ACCOUNTABILITY
Parliament
Auditor
General
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Examines
Executive
January 12, 2005
Legislative Systems
Parliamentary
System
Presidential
System
Hybrid System
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In a parliamentary system, the legislature is not as
independent as in the presidential system. In a
parliamentary system, the executive branch is an agent of
the legislature to manage state craft.
In the presidential system, the legislature is an
independent body. For example, the US Congress
declare the President budget “dead on arrival” and then
put its own budget. However, the President has Veto
power for challenging the legislators.
The French synthesizes both the President and Parliamentary
systems and reflects many characteristics of one or other
depending on whether the President and parliamentary
majority are from the same party.
January 12, 2005
Legislative Budget Process
Role
Budget
Making
Budget
Influencing
Budget
Approving
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Characteristics
Capacity to amend or reject the executive’s budget
proposal and capacity to formulate a budget of its own
(USA). This creates the scope for confrontation between
the legislature and executive branch of the government.
Capacity to amend or reject the executive’s budget
proposal, but lacks capacity to formulate and substitute
budget of its own – (Germany, Philippine, Poland,
Hungary, India).
Lacks capacity to amend or reject the executive budget
proposal to formulate a budget of its own. Confines itself
to assessing to the budget that is placed before it – (South
Africa, Israel, Namibia, United Kingdom, Canada)
Source: Legislature and Budget Process by National Democratic Institute
January 12, 2005
Constitutional Role and Political Traditions
Specific Constitutional Restrictions:
Constitutional
Role
- Can only decrease expenditures (UK, Canada, Ireland, France, Ghana)
- No net increase in expenditure (Greece)
- Government approve any changes ( Korea)
-No net increase in expenditures (Italy, Spain)
- Constitution in developing democracies are highly restrictive on the
legislature. In some cases, the Parliament may be hesitant to use such
powers (Malawi).
• Same political party in control of legislative and executive branches (USA)
Political
Traditions
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• Vote on the budget is automatically a vote of confidence in the
Government (UK, Canada).
• Coalition Governments (India, Bangladesh, Germany)
January 12, 2005
Influence of Various Forces and Factors
• Influence of party in power is common in preparing the
budget – For example, in Japan, the LDP plays a leading role
in preparing the budget, which reduces the role of the
Parliament.
• The interferences of lobbyist is not uncommon in influencing
government policy and may influence budgeting (USA)
•
Influence of donors is common in countries who are
dependent on donor’s resources for budgeting to a great
extent (Mozambique, Gambia)
• In some countries, the legislators are not allowed sufficient
time to review the budget.
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January 12, 2005
Trends in Parliamentary Review
of the Public Expenditures
• The role of legislature is declining in the OECD countries, but
increasing in some emerging economies in Africa ( South Africa,
Ghana, Uganda), Latin America ( Brazil, Colombia), countries in
transition (Poland, Moldova), etc
• Executive domination is common in budget preparation but legislatures
are developing means for asserting their role in the budget process
(South Africa, Uganda, Countries in Transition, Brazil)
• Many legislature have created an independent budget office responsible
to the Parliament (USA)
• Improved reporting to legislature (countries in transition)
• Review of performance audit reports (USA, Thailand, etc)
• Many legislature that are active in the budget process have strong and
active committees (UK, Uganda)
• More resources for the legislative review.
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January 12, 2005
Legislators Role –
Beyond Financial Accountability
 Parliament’s have a constitutional obligation to ensure the fair and
effective implementation of the constitution, the laws, policies and
regulations through effective, timely oversight.
 Parliament has a overall responsibility for promoting good
governance and good corporate governance.
 Review all Government Strategies including PRSP
 Legislators should review the performance Accountability of the
Government Ministries and Department (Central Government, State
Governments and Local Government Institutions).
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January 12, 2005
Parliament’s Role for
Accountability for Results
Budget or Finance Committee
Citizens
Auditor
General
Watch Dog
Group
Media
Civil
Society
Central
Bank
Parliament:
Oversight Functions
Public Accounts Committee
Standing Committees for Ministries
• Review Strategic Planning of the Government
• Review Medium-term Expenditure Framework
• Review Strategic Planning of Ministries
• Give a corporate look to ministries
• Review the budget (inputs), outputs and outcomes
• Review the performance reports of the ministries
• Review the broader administrative reforms
Guiding principles for success:
• Facilitate and avoid interfering
Donors
• Creating an environment of constructive dialogue
• Avoiding confrontation and all parties should work as a team
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• Setting examples for making the executives accountable.
Budget
Policy
Committee
January 12, 2005
Parliament’s Role for
Improving Accountability in the Private Sector
 More economic activities are carried out by the private sector
 General public invests billions of dollar in the capital market
based on trust.
 Parliament has a role that these investors are not cheated by
the powerful sections of the society who controls corporate
world by making institutional arrangements in place.
 The Parliament should be proactive in playing its role.
 Intervention of US Congress is very proactive. Examples-
-The Sarbanes-Oxley Act of 2002
- Public Company Accounting Oversight Board
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January 12, 2005
Challenges
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Time constraints of Legislators
Confrontational politics in the developing world
Capacity constraints
Capacity of Auditor General
Effective network of organizations
Resource constraints
Checks and balances in the systems
Decentralization
Better involvement of public & media
Better procedures for follow-up
Strengthen International linkages
Ethical standards – “ Ghost in the mustard”
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January 12, 2005
Uganda
Thailand
Argentina
Bangladesh
Challenges are country specific, depends
on the socio political environment and the
attitude of the political leadership in the
country.
Q&A and Discussions
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January 12, 2005