Download this Paper Open PDF in Browser

Eyes Wide Shut? The Politics of Autonomous Audit Agencies in Emerging Economies

73 Pages Posted: 27 Apr 2007  

Carlos Santiso

United Kingdom Department for International Development (DFID); Center for the Implementation of Public Policies for Equity and Growth, CIPPEC; Center for Democratic Governance, CGD, of Burkina Faso; African Development Bank; Inter-American Development Bank

Date Written: May 31, 2007

Abstract

What explains the effectiveness of autonomous audit agencies (AAAs) in emerging economies? How relevant are they for improving fiscal governance and curbing corruption? AAAs are autonomous state agencies tasked with overseeing government finances. They are a critical component of the system of checks and balances in financial governance. However, in many developing countries, they often fail to fulfill their prescribed roles. This article models and measures the effectiveness of AAAs in Latin America, developing an index to evaluate their performance, and assesses their reform over time. It examines the cases of Argentina, Brazil and Chile, which illustrate the three models of AAA and three distinct trajectories of reform (or lack thereof). The article finds that, while the choice of institutional arrangements for government auditing matters, political economy factors condition the effectiveness of AAAs and shape their reform. Moreover, dysfunctions in government auditing are systemic, rather than agency specific. What matters most is the quality of the agencies' insertion in the system of financial oversight, in particular their relations with the legislatures. Reforming AAAs must therefore consider the country's trajectory of institutional change, the functioning of the system of fiscal control, and the culture of public administration. These research findings have important policy implications. They contribute to the emerging political economy literature on the role of political institutions on financial governance.

Keywords: Government auditing, corruption, political economy, fiscal institutions, financial governance, public budgeting, fiscal control, legislative oversight, Latin America, Argentina, Brazil, Chile

JEL Classification: H11, H61, O54, P16

Suggested Citation

Santiso, Carlos, Eyes Wide Shut? The Politics of Autonomous Audit Agencies in Emerging Economies (May 31, 2007). Available at SSRN: https://ssrn.com/abstract=982663 or http://dx.doi.org/10.2139/ssrn.982663

Carlos Santiso (Contact Author)

United Kingdom Department for International Development (DFID) ( email )

Abercrombie House
Eaglesham Road, East Kilbride
Glasgow, G75 8EA
United Kingdom
+44 0 1355 84 4000 (Phone)
+44 0 1355 84 4099 (Fax)

HOME PAGE: http://www.dfid.gov.uk/

Center for the Implementation of Public Policies for Equity and Growth, CIPPEC ( email )

Argentina

Center for Democratic Governance, CGD, of Burkina Faso ( email )

Burkina Faso

African Development Bank ( email )

15 Avenue du Ghana
P.O.Box 323-1002
Tunis-Belvedère
Tunisia

HOME PAGE: http://www.afdb.org

Inter-American Development Bank ( email )

1300 New York Avenue NW
Washington, DC 20577
United States

HOME PAGE: http://www.iadb.org

Paper statistics

Downloads
450
Rank
52,024
Abstract Views
2,027