The Role of SAIs in the Extractive Industries and the Importance of Building Partnerships

SAIs provide a unique check on the way governments manage a country’s natural resources. Yet it is only when the results of audit have been made public, citizens are able to hold the custodians of public resources accountable. For that, SAIs cannot rely of government process alone, but must lever the engagement of media and civil society.

ISSAI 12 defines that SAI delivers value and benefit to SAIs in a least three different ways, by:

  • Strengthening the accountability, transparency and integrity of government and public sector entities
  • Demonstrating ongoing relevance to citizens, Parliament and other stakeholders and
  • Being a model organization through leading by example[1]

Similarly, strong and effective Supreme Audit Institutions can contribute to better and more transparent oversight of the Extractive Industries (EI), improve governance and help to ensure that governments manage natural resources in the best interest of the public. SAIs’ mandate and contribution span the entire EI value chain, from the development of strong legal frameworks, to fair and transparent revenue collection and distribution, and the monitoring of environmental impact and sustainable policies.

How SAIs can make a difference

There are numerous issues and topics a SAI can address when auditing the EI sector. SAIs may point to institutional overlap or unclear lines of responsibilities in the legal framework, as SAI Uganda did in its Environment audit report on regulation and monitoring of drilling waste in the Albertine region  (Uganda 2014).  The SAI may audit whether the process of handing out contracts and licenses was transparent and designed to attract the most competent companies, as Norway did in its 2010 Report on the awarding of production licenses in the petroleum sector (Norway 2010). SAIs could also follow the revenue flow and reconcile public figures as SAI Ghana did in its Audit on financial management of the petroleum fund (Ghana 2015)[2].

In Latin America, a group of eight SAIs carried out a joint audit on public revenue from the industry in 2013. Similarly, in 2015 a group of SAIs from English-speaking Africa conducted parallel audits on the government’s implementation of national content policies in the oil and gas sector in their respective countries. These are just a few of many examples of how SAI reports can contribute to better governance and accountability in the sector. The WGEI website features a long list of other audits and examples, categorized by the value chain. For oil and gas audit reports, see   . For mining reports, see

SAI challenges

Strong SAIs help promoting the accountability, transparency, efficiency and effectiveness of public administration. Independent, effective and credible SAIs therefore contribute to open and stable democracies by building public trust in government institutions. In many countries however, the effectiveness of the SAI is hampered by the same deficiencies it is set up to combat. Many SAIs are unable to operate with the necessary independence, and many lack the resources, mandate or competence to audit the sector, or they are denied access to necessary data. These problem are further compounded by the international nature of the extractive industries and the proprietary characteristics of contracts and licenses that make public disclosure difficult. Perhaps most importantly, many good SAI reports never make it through parliament or into the public eye.

Yet it is only when SAIs’ audit results have been made public, citizens are able to hold the custodians of public resources accountable. According to the recent Global Survey of SAIs[3], 48% of national legislatures do not hold public hearings in which audit reports are  reviewed and scrutinized. Where parliament review audit reports, the backlog is often significant, making the findings lose relevance as time passes. In Uganda for example, the parliament to date has not debated any of the Value for Money reports issued on the country’s EI sector.

Levering partnerships

Whilst recognizing the need for full independence of SAIs from all interested parties in the EI sector, a constructive engagement between SAIs, the media and civil society organizations is critical to SAIs impact. The INTOSAI WGEI has recognized this and has made it a strategic priority to strengthen its engagement with these stakeholders. Its current work plan proposes a number of activities aimed at supporting SAIs in enhancing the effectiveness and impact of EI audit through media and civil society engagement.  Briefing notes and bite-size information packages on SAIs’ role in the extractive industries, talking points and training material for joint EI risk assessments and workshops, are amongst the products underway.

Similarly, SAIs should develop strategies for engaging and levering the engagement of media and civil society organization in following up their EI reports. In Uganda for example, media coverage of reports on waste management and local content policies stirred public debate that enforced corrective action – even if the reports were never officially concluded in parliament. Also in Uganda, annual workshops gathers stakeholders from government, industry, civil society and media for a joint discussion on sector risks. This is helping to raise awareness about sectoral challenges and the role of the Office of the Auditor General in the sector. Increased knowledge on the part of media and civil society in turn helps to promote better and more accurate coverage and utilization of audit reports. Other SAIs could consider pursuing similar strategies.

[1] ISSAI 12; The Value and Benefit of SAIs

[2] For a more comprehensive list of existing EI audit reports, please see www.wgei.org

[3] INTOSAI Development Initiative, Global Survey

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