Friends,
Recommendations emerging from a Workshop organized by me last month are placed below for comments and suggestions.
Dhirendra Krishna IA&AS (Retired)
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SOCIAL AUDIT
ROADMAP FOR EFFECTIVE PUBLIC ACCOUNTABILITY
26-27 JULY 2011
SUGGESTIONS EMERGING FROM THE WORKSHOP
1. The Institute of on Public Auditors of India (IPAI) organized a workshop on SOCIAL AUDIT- ROADMAP FOR EFFECTIVE PUBLIC ACCOUNTABILITY on 26-27 July 2011. Schedule of the Workshop and the List of Participants are attached. The topics considered in the Workshop included "Citizen's initiatives in Social Audit of MGNREGA, Sarva Shiksha Abhiyan, Public Distribution System, Analysis of Government Budget and Accountability and Evaluating the Performance of MLAs by Non-Government Bodies" etc. Based on the discussions and dissemination of success stories of social audit in the Workshop, recommendations for the Roadmap for Social Audit have been framed for the consideration of:
a. Central Government Ministries and Departments concerned,
b. State Governments
c. C&AG
d. Institute of Public Auditors of India
2. In the Inaugural session, Shri Vinod Rai, Comptroller and Auditor General of India stressed upon the need for formulating new methodologies for emerging areas in Audit. Interaction with civil societies and incorporating findings of Social Audit in audit reports would enable Government audit to consider citizen's perspective about the performance of development schemes. There is need for sustained pressure to improve transparency and public accountability in administration. Mr. Vinod Rai mentioned that there have been several innovative measures in Kerala for democratic decentralization such as improvements in participatory planning and empowerment of PRIs by devolution of powers. Women play an important role in such measures. He also pointed out that effective democratic decentralization and Social Audit are closely intertwined.
3. Dr Mihir Shah, Member, Planning Commission, stressed the need for exploring all options for improving the performance of development schemes so that the financial outlays result in desired outcomes. Benefit of the schemes of socio-economic development should reach persons excluded from rapid economic growth. Development schemes should be demand–driven, instead of following top-down bureaucratic approach. Social Audit by citizens is one of the options for improving delivery systems that needs to be further explored. Objectives of Social Audit should be clearly defined. It enables public scrutiny of outputs and outcomes, including physical verification of assets: these aspects are generally ignored in audit based on scrutiny of records. Social Audit is also linked with disclosure and dissemination of information by grass root public authorities under RTI Act. Government should create an enabling atmosphere, where Social Audit can be carried out without fear or favor, including protection to whistle-blowers. Funds should be earmarked to support it, such as O.5% of funds for MGNREGA earmarked for "Society for Social Audit, Accountability and Transparency" in Andhra Pradesh, where it has been demonstrated that benefits outweigh the expenditure on institutionalized Social Audit.
4. C&AG and the Member Planning Commission invited proposals for professional developments, leading to growth of citizen's participation by implementing Social Audit Video recording of the proceedings of the Workshop, papers presented in the Workshop, materials distributed for consideration, and the suggestions from some of the Participants are available with IPAI, which can be made available on request.
5. LEGAL BASIS OF SOCIAL AUDIT:
a. Social Audit emanates from citizens' right to access public records under the regime of transparency and public accountability, initiated by the Right To Information Act 2005. Every public authority is required to disclose and disseminate information under section 4 of the RTI Act, for effective public accountability. Such disclosures should enable public scrutiny and Social Audit by the citizens.
b. Social Audit is mandated by law in MGNREGA. The Ministry of Rural Development on 30.6.2011 based on the premise that "audit of schemes includes Social Audit" has issued a Gazette Notification on "MGNREGA Audit of Scheme Rules".
c. It would be only appropriate if other development schemes of Central and State Governments, which are initiated by administrative orders, were modified to amend their audit practices, incorporating Social Audit. Comprehensive audit procedures should be framed delineating practices to be followed by (i) Statutory audit, (ii) Internal Audit (iii) Social Audit and (iv) Field Inspection by monitoring agencies. These should be complementary, and overlap should be avoided. Rules should be framed in consultation with C&AG and legal status should be accorded to audit, including penal consequences for non-production of records and to ensure prompt follow up actions on audit findings and recommendations.
d. There should be clear legal mandate for carrying out Social Audit in all development schemes, in lines with the rules recently notified for MGNREGA. If any changes were required in laws and orders relating to Panchayati Raj Institutions in some of the States, changes would be needed to empower them to conduct social audit of all development schemes.
6. ADVANTAGES OF SOCIAL AUDIT:
Review and discussions on case studies and in situ models of citizens' initiatives in Social Audit presented in the Workshop led to the inference / conclusion on the following administrative advantages of Social Audit:
a) Social Audit strengthens participatory democracy. It can be used as a vehicle for empowering the common man, who is ultimate beneficiary of social welfare schemes. It can, in turn, strengthen Gram Sabhas, which is the weakest link in Panchayati Raj.
b) It facilitates direct social accountability through face-to-face audit by the beneficiary / user, the perspective of beneficiary of development schemes being of utmost importance.
c) Once the Social Audit process becomes a regular and integral part of the welfare schemes, leakages of resources and dilution of outcomes would naturally go down.
d) Social Audit enables people to know the extent of available resources, which are allocated for their benefit of the community, and would enable people to formulate local plans as appropriate to the local situation.
e) It is one of the most rounded forms of audit as all the key actors can explain their part in the planning and management of the programmes and can interact and clarify relevant issues. Also it deals with the output in all its aspects rather than only with abstract accounts. It traces the audit trail in its entirety. It enables audit review of outcomes and benefits of financial outlays.
f) It can help assess the impact of development projects in clearer and concrete details.
g) Social Audit is a means of redressing public grievances.
h) Through a demand led process, it can lead to improved record keeping and accounting.
i) It can be used as a basis for formal audit; extends the reach of audit and gives it reality check.
j) Social Audit can effectively contribute to policy modifications and mid-course corrections, on the basis of problems faced in implementation
k) Social Audit is the most critical ingredient of rights-based Development.
7. It emerged from the deliberations in the Workshop that the existing audit and accounts practices do not necessarily reflect whether overall objectives of the programmes were achieved, as it is largely confined to review of records.Social Audit results in effective verification of physical outcome, which is overlooked in conventional audit of public funds. With devolution of funds to PRIs, ULBs and autonomous agencies, vast amount of public expenditure remains beyond the administrative controls. Effective Social Audit, including by the beneficiaries of development schemes, can ensure public accountability of grass-root public authorities. In light of the above, there is need for preparing Social Audit Guidelines for all social welfare schemes, which should be incorporated in the institutionalized audit practices. Audit of Schemes Rules 2011 for MGNREGA, issued by Ministry of Rural Development, may be suitably adopted for framing audit rules in this regard.
8. IMPLEMENTING SOCIAL AUDIT
a. Social Audit reports should be widely disseminated, read out in Jan Sunwai in Gram Sabha and action on earlier reports should also be disclosed in public to foster public confidence. The workshop was informed that Andhra Pradesh has initiated the establishment of mobile courts for swift action against erring officers; such measures would have salutary effect. It is natural that officers deriving undue benefit from lax systems would be unenthusiastic of transparency, effective public accountability and Social Audit: this should be overcome by persuasion, public vigilance and strict enforcement of statutory provisions.
b. Linkage of Social Audit with the audit by the C&AG, if and when taken up, internal audit and the oversight of the vigilance department should be mandated in audit rules.
c. Peoples participation in social audit would depend upon:
i. Appropriate systems and procedures
ii. Capacity building
iii. Enabling atmosphere and facilitation
iv. Effective and prompt action on Social Audit findings.
v. Improvement in disclosure and dissemination of information under Section 4 of RTI Act 2005, to enable public scrutiny of expenditure on development schemes.
vi. Social Audit should be constructive and support the administrative processes, instead of rendering itself into mere faultfinding or negative approach.
d. There is need for transparency in arriving at and in follows up of audit findings of Social Audits and Action Taken Reports (ATR), to establish public confidence and sustained interest in social audit process.
9. SUGGESTIONS FOR CENTRAL AND STATE GOVERNMENT MINISTRIES / DEPARTMENTS CONCERNED WITH DEVELOPMENT SCHEMES
a. There is need to establish / revamp audit and monitoring processes of all development schemes by including Social Audits by the beneficiaries as part of the implementation process. "Audit of Schemes Rules" should be framed, in consultation with the C&AG, including for Social Audit.
b. There is need for capacity building for Social Audit. Independent Social Audit Units are required to be formed in States to facilitate the evolution and proper conduct of Social Audits through sustained learning process.
c. It would be advisable to involve professional bodies such as National Institute of Rural Development, (NIRD) Hyderabad, Institute of Rural Management, (IRM) Anand and Institute of Public Auditors of India, (IPAI) New Delhi, in framing Social Audit Guidelines for development schemes with active encouragement and participation of representatives of the CAG. Pilot projects for Social Audits of major schemes would be helpful in developing such Guidelines, which can lead to replicable Guidelines. NGOs and civil societies can also help in evolving Social Audit Guidelines and documents required for the purpose.
d. There is need for short-term training programs to address the professional needs of persons involved in promoting social audit, including:
· Audit staff of IA&AD concerned with Social Audit / Local Bodies Audit and the staff of Government Departments entrusted with Internal Audit, for fostering a pro-active approach in the promotion, institutionalization and management guidance of social audit.
· Officers of State Governments, including those mandated to promote Social Audit, in accordance with the 30.6.2011 Notification on Social Audit of MGNREGA.
· Officers of Central and State Governments, who may be entrusted with conduct and management of Social Audits for improving the delivery systems of development schemes of socio-economic importance.
· "Transparency Officers" to be appointed in all public authorities as per the directions of Central Information Commission for implementing Section 4 of RTI Act, (to disclose and disseminate information for effective public accountability and citizen's participation in democratic governance).
· Training of officials of PRIs, to enable them to promote, oversee and manage Social Audits as per Guidelines to be evolved.
· Representatives / officials of interested NGOs and Resource Persons who could facilitate Social Audits.
e. Facilitation and promotion of Social Audits will remain the primarily the responsibility of respective State Governments. However centrally co-coordinated efforts are needed to ensure sustained professional developments and implementation of measures to promote Social Audit. It would be appropriate for the Central Government to initiate measures for Social Audit of all Centrally Sponsored Schemes; this would provide impetus to similar measures by the State Governments in not only such schemes, but also in respect of development schemes initiated by them.
f. The Workshop felt that all stakeholders need to improve their understanding of Social Audit: What is the theory of Social Audit? What are the assumptions underlying this theory? What are the causal pathways from Social Audit to improved delivery of the intended outcomes? The empirical work that has already been done in Andhra Pradesh and Rajasthan can be of great help in answering these questions. Once the answers to the above questions are in position, the stakeholders will be in a position to identify the missing/weak links in the causal chain of Social Audit. These missing/weak links will differ from one development intervention to another, and from one place to another. Detailed information on the missing/weak links in the causal chain of Social Audit will serve as the building block for identifying the various inputs, including capacity building, that are required to make Social Audit play the role it can in improving the delivery of the intended outcomes. Theoretical framework of Social Audit is at nascent stages of formulation and the definition would have to be refined by practical experience.
g. Deeper understanding about civil society organisations at the grass roots is required / will be advantageous for their effective involvement and capacity building in Social Audit. Every State Government and District Authorities would have to make their own assessment of local non-government organisations. In rural areas, the district functionaries are located very far from the villages and talukas where the beneficiaries live. Jan Sunwais are effective but they are generally pushed from outside by NGOs who perform the functions of spokesmen, and take the local authorities to task by highlighting examples of local people who were excluded from the benefits arising out of government programmes as is their due. Relatively speaking, such NGOs are very small in number and they select the villages from where they choose to operate –not necessarily a representative cross-section of what happens in hundreds of villages in different districts and sub-divisions of the state.
h. Effective and positive contribution by them would depend upon local group dynamics and therefore it would be an evolutionary process in participatory democracy. Complexities of effective public accountability of grass-root public accountability have local variations that have to be addressed at District and sub-district levels. Local authorities have to work towards practical measures for citizen's empowerment, to audit public expenditure, along with other measures for promoting democratic decentralization, participatory planning and empowerment of PRIs. In a wide range of development related activities, disclosure and dissemination of information is required to involve citizens in their development processes as partners to the Government initiatives. Whereas educated persons are able to articulate their perspective and press for their demands, NGOs help the illiterate / underpriviliged beneficiaries. In practice, the number of NGOs may be small and may not cover vast populations of poor and under-privileged intended beneficiaries. Therefore the role of "facilitators" of Social Audit assumes importance.
i. The Andhra Pradesh model of entrusting Social Audit facilitation to a society by earmarking 0.5 % of MGNREGA funds to it needs careful consideration by all States, especially in view of the recently issued Gazette Notification mentioned earlier for (a) Qualitative improvements in Social Audit of MGNREGA in other States and (b) Establishing similar institutionalized mechanism for other development scheme and (c) Effective "Social Audit Unit" to facilitate conduct of social audit of all development schemes by Gram Sabha.
10. SUGGESTIONS FOR CONSIDERATION OF THE OFFICE OF THE C&AG
a. Comprehensive audit review of Social Audits of MGNREGA by CAG's staff would be helpful to identify problems in implementation of legally mandated Social Audit. Improvements would emerge from such a critical appraisal. Andhra Pradesh is following a system different from other States. Kerala has comparatively higher degree of democratic decentralization and more effective checks and balances are in place. Comprehensive audit review by C&AG could highlight best practices, while pointing out deficiencies in implementation.
b. Regional Training Institutes could play an effective role for imparting training to selected Government officers in financial management and issues relating to transparency, accountability, decentralization and Social Audit. Training resources with State Governments can be supplemented by such initiative, including with the help of retired officers of IA&AD. Annual Work Plan of the Regional Training Institutes may include training in Social Audit, in addition to supplementing the training by "Social Audit Units" established by the State Governments.
c. C&AG may consider earmarking some funds for promoting Social Audit, so that field units of the Indian Audit and Accounts Department encourage / facilitate advocacy and advisory role, and involve NGOs by conducting training programs. Accountant Generals may enter into MOU with reputed Civil Society Organizations, NGOs and citizen groups with active participation of concerned State Governments for involving them in Social Audit of areas outside the reaches of Indian Audit and Accounts Department. Selected Social Audit findings may find inclusion in the performance audit reports of the CAG, which will indeed be subject to the due process of verification and audit evidencing, as required.This will also provide the necessary credence and acceptability to the process of social Auditing.
d. Establishment of an administrative arrangement in IA&AD to monitor and oversee systematic and established procedures of implementation of Social Audit, including verification of measures for transparency and implementation of the statutory provisions of Social Audit would lend credence to the process. The findings of such verifications may be highlighted in audit reports suitably to support the requisite administrative measures.
e. Problem of ensuring clear and acceptable audit evidence before incorporating findings of Social Audit in Audit Reports / Inspection Reports would pose be a major challenge, to be addressed through established audit processes. Recommendations of the Task Group on Social Audit have wide implications and these have to be implemented with specific administrative measures and reforms.
f. The Workshop endorsed the recommendations of the Task Force Report on Social Audit and hoped that they will be taken up for implementation early, including appointing public auditors as observers for important Social Audits in States.
11. PROFESSIONAL CONTRIBUTION BY IPAI
a. In the inaugural session, C&AG pointed out that in recent years there has been a rise in the number of civil society organizations that articulate public discontent and it is essential to channelize this democratic upsurge into constructive channels. Social Audit is one of the tools available to channelize public discontent / criticism into effective administrative actions and corrections. This can also address practical problems of implementing socio-economic development schemes in rural India. Professional developments are needed to evolve systems and procedures that facilitate effective and transparent monitoring of the planning and implementation of social welfare programmes to reduce the possibilities of corrupt practices and waste of public money. C&AG said the government should go for Social Audit of its people-friendly flagship programmes such as MNREGA, NRHM, SSA, etc. There is no reason why their implementation is not evaluated or audited by the people. Suggestions of the C&AG in his address may form the basis for further professional developments in Social Audit by IPAI.
b. IPAI may undertake a pilot project on Social Audit to develop expertise in this area and to progress towards the evolution of Guidelines to help Central and State governments in implementing Social Audit. These Guidelines could evolve on the basis of practical experience in Social Audit; but initial documentation is needed to set the process moving. It will be useful if IPAI could initiate a Pilot Social Audit Project, with the help of a suitable civil society organization for professional advancement in this niche area. Social Audit has gained importance due to (i) Rising importance of civil societies and exponential increase in number of NGOs that can be associated in Social Audit, (ii) Rising level of literacy that enables greater democratic participation of citizens, (iii) Increase in I.T. penetration and computer awareness, (iv) Improved communications, (iv) General awareness that financial outlays on schemes of socio-economic developments are not resulting in desired outcomes.
c. IPAI may prepare a set of Guidelines, based on available materials and the Pilot Study for Social Audit suggested above, and make them available to NGOs, Civil Society Organizations and Government Agencies concerned with Social and Development programmes and social audit.IPAI may approach Planning Commission or other appropraite agencies to access funding for such efforts.
d. IPAI may develop a Training Package for Social Audit and conduct a series of training schemes on Social Audit for the benefit of officials from Government Agencies, Civil Society Organizations and others on cost recovery basis.
e. Workshop proceedings have been recorded and up-to-date material for distribution to Participant has been collated. This may be edited into training material for:
i. Training for audit staff, to sensitize them about issues relating to transparency, public accountability, RTI Act and Social Audit.
ii. Training for volunteer members of IPAI, to enable them to enhance their expertise on Social Audit for research in the area and rendering advise to public authorities.
f. IPAI can assume professional leadership by initiating Internet Groups of Social Audit, with Membership base of (i) Government officers entrusted with facilitating social audit, (ii) Trainers in social audit involved in capacity building (iii) Members of Gram Sabha entrusted with social audit, (iv) NGOs and citizens interested in social audit. This can serve as a platform for exchange of views on practical problems and exchange of success stories. Internet Groups may also have members who do not have access to Internet and bring out publication to them, responding to their quarries, problems and professional needs. This should serve as a platform for inter-state comparison, to promote learning.
g. IPAI can develop a platform for professional development such as exchange of information and perspectives, sharing replicable success stories, involving NGOs, recommendations to public authorities, etc. Internet Group with focus on AUDIT BY CITIZENS can be initiated, on the same lines as "Solution Exchange" of UNDP.
h. IPAI may frame comprehensive proposal for grant-in-aid for socio-economic research to the Planning Commission, with focus on Social Audit to improve delivery systems. C&AG may be requested to sponsor projects to delve into implementation issues arising from the recommendations of Task Group on Social Audit. IPAI can also assist C&AG in organizing training programs at large scale.
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