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Conclusions from the Regional Konference

2nd Regional Conference of Supreme Audit Institutions (SAI)

Role of Supreme Audit Institutions in Monitoring Political Party Financing

Podgorica, 18-19 June 2012

Conclusions from the Regional Conference

Conference participants agree that organisation of the 2nd Regional Conference of Supreme Audit Institutions represents an important impetus for further development of regional cooperation among supreme audit institutions and mutual exchange of experiences in auditing financial reports and business operations of political parties.

In most of the countries in the region, SAIs are also responsible for auditing financial reports of political parties, which mounts a series of challenges. Independence of SAI from a subject of an audit is a necessary prerequisite for performing audits, and this implies that SAIs enjoy financial, functional, and organisational independence in order to be able to rise to all the challenges resulting from audits of political parties' financial reports. Transparency is one of the most efficient ways to strengthen integrity in the area of political party financing and combating illicit activities.

In order to rise to all the challenges that conference participants indicated, the following conclusions are recommended:

  1. Development of legislative framework and definition of Supreme Audit Institutions' role in performing audits of political parties should be approached in a systemic, coordinated manner, bearing in mind the strategic goals set as targets in this area, as well as international standards (GRECO, UN, EU). Enhancement of regional cooperation contributes to exchange of experiences and to improvement of SAI's efficiency in the field of adoption of quality regulations, but also in exchanging experiences in performing audits of financial reports and financial operations of political parties.
  2. Quality of performed audit and possibility of appropriate action following recommendations depend on clearly, legally determined competences of institutions, adequate secondary legislation framework, as well as preparatory activities conducted within each institution. One of the problems identified in practice in some countries includes the existence of dual supervisions and overlapping of competences in executing same functions, which hinders the efficient performance.
  3. Bearing in mind the necessity to improve financial operations of political parties and align them with accounting standards, SAI can play an important role with regard to instructing political parties through recommendations contained in reports on auditing financial reports of political parties.
  4. There are differences in performing annual, regular audits of political parties and audits of election campaign financing. In most of the countries there is not a single identified body in charge of monitoring political activities during election campaigns. Therefore, it cannot reliably be determined if there are correlations between registered funds and the extent of political activities during an election campaign. This issue is additionally complicated by the fact that in-kind contributions and donations from private sources during election campaigns are difficult to monitor. However, this issue is also present in regular business operations of political parties receiving donations from private sources. This issue should be solved by having another body perform the competence of checking and monitoring origins of funds as regards private sources, and not supreme audit institutions.
  5. It is recommended to enhance cooperation with the NGO sector and other civil society organisations in order monitor political activities during campaigns and thus be in a position to compare the data with those resulting from submitted reports.
  6. Suppression of negative impact of money in politics can be accomplished in one of the following three ways: introduction of rules, prohibitions, limits; subsidies from the budget with which all parties are brought in an equal position and their independence from private sources of financing is ensured, and enhancement of transparency and supervision by state authorities and civil society.
  7. Supervision by citizens, civil society organisations and media can contribute to identification, as well as to decrease in undisclosed donations. Findings of audit reports have to be made public and understandable to all citizens.
  8. Recommendations resulting from audit findings supported by the Parliament ensure stronger pressure for their application, i.e. implementation.
  9. Efficient cooperation with other state authorities, exp. taxation authority, public prosecutor's office, misdemeanour bodies, etc. can also contribute to accomplishing higher level of combating corruption in the field of political party financing.

Sanctions for violation of provisions of laws on financing political parties and/or election campaigns are recommended to be proportionate to the gain that can be obtained by violating the law.