Realistic Audit Recommendations

5.4.2 Realistic Audit Recommendations

A realistic audit recommendation is related to acting on information in audit reports. Realistic recommendation can be defined as recommendations from auditors that are concrete and applicable to improve performance in the management and administration of auditees. Audit recommendations are provided in performance audits to improve economy, efficiency and effectiveness in managing audited entiti es‘ resources.

73 This is based on Article 4 of the draft Law on State Confidential (GOI 2007a).

Regulations and Rules for Realistic Audit Recommendations

The new auditing state finances standard (BPK RI 2007g: 88) requires auditors to convey recommendations on corrective measures to improve performance in problem areas of public sector agencies (Paragraph 24). Based on this standard, audit recommendations are to provide potential corrections, to improve compliance with laws and regulations, and to encourage follow up of previous recommendations that were not done. In providing constructive and realistic recommendations, the BPK standard provides guidelines that are: (i) aimed at problem solving, (ii) oriented to real and specific actions, (iii) aimed at authorities to take action, (iii) focused on concrete solutions, and (iv)aimed at reasonable expenses/costs.

Therefore, the new audit standard (2007) provides direction for recommendations topromote continuous improvement and performance accountability of the public sector focused on efficiency, quality and results.

Survey Results on Realistic Audit Recommendations

This section discusses respondents‘ perceptions about whether or not BPK auditors provided realistic recommendations. Figure 5.5 (below) shows the survey results indicated

mainly positive responses. Sixty per cent of BPK auditors ‗agreed‘ and 3 per cent ‗strongly agreed ‘, while for auditees 52 per cent ‗agreed‘ and 4 per cent ‗strongly agreed‘. However, the results also revealed ‗neutral‘ responses with this category selected by 54 percent of Members of Parliament, 36 per cent of auditors and 33 per cent of auditees. Moreover,

‗disagree‘ was selected by 19 per cent of the Members of Parliament, 1 per cent of auditors and 11 per cent of auditees.

Figure 5.5 Survey Results of ‘BPK Auditors Provide Realistic Recommendations’

Strongly Agree

Pe rce ptions

Auditors

Auditees

Members of Parliament

Overall responses

Source: Fieldwork survey from 5 th November 2006 to 25 th March 2007.

Some of the negative views of the auditees from government entities were expressed as follows:

 “The audit findings and recommendations of BPK were the same every time”

(19/3/2007).  “Not all the audit recommendations were possible for implementation” (19/12/2006).  “Not all the auditors’ recommendations could be implemented; we need

recommendations to solve our organis ation’s problems” (10/01/2007).  “Not all BPK’s recommendations were easy to implement” (4/2/2007).  “Some recommendations from BPK were not easy to implement or were not clear.

We needed more explanations from BPK ” (14/2/2007).  “Not all the audit reports of BPK could be followed up soon, because we need a

long process in the case of corruption ” (28/02/2007).  “Auditors only provided their findings as the problems, without explained what causes, how the effect and how to solve the problems ” (20/08/2009).

These excerpts indicate three points. Firstly, audit recommendations were not followed up by auditeesas the same recommendations were again suggested in subsequent reports. Secondly, auditor recommendations were not applicable. Thirdly, audit recommendations were not oriented to realistic actions. These criticisms imply that auditors were unable to provide constructive and realistic recommendations. This indicates a lack of expertise and professionalism in providing recommendations as required by the audit standard.

A high official from BPK argued that a lack of honesty and accountability in providing public services and public performance made audit recommendations more difficult to implement (Interview B2). Moreover, a senior BPK auditor with more than 10- years of auditing experience argued the following (Interview B3):

BPK‘s findings were informed to auditees without potential recommendations. They contain only facts, criteria, causes and effects. After we get comments from auditees

on these findings, the audit team provides a draft of audit reports including recommendations to be discussed with their supervisor and Board of Members. After that, the final audit reports and recommendations are published.

This excerpt indicates that auditors analyse the phenomenon and problems with auditees before providing audit reports in order to provide constructive and realistic recommendations. In addition, an auditor from ‗a BPK regional office‘ (Interview B21) explained as follows:

Before providing audit recommendations, there was no communication between auditors and auditees. BPK‘s audit recommendations were made after auditors completed auditing and came back to BPK‘s office. Audit results were discussed with team Member s, supervisors and BPK‘s high officials. After that, final audit reports were submitted to Parliament and auditees. Audit recommendations were made only to reduce the ‗causes‘ of the organisation‘s problems but not to address the real causes of problems. Lack of auditors‘ ability to provide realistic recommendations

affected the difficulty of auditees in implementing them. This statement confirmed the process of providing recommendations as stated by the prior

informant. Besides, the auditor acknowledged the incompetence of BPK auditors in providing constructive recommendations that are easily and practical for auditees to carry out.

To summarise, realistic and constructive audit recommendations to improve public administration and performance are essential for effective audit reports. The research revealed that auditees found difficulties in following up audit reports and recommendations. Moreover, there was lack of responsiveness of auditees to make changes for improvement To summarise, realistic and constructive audit recommendations to improve public administration and performance are essential for effective audit reports. The research revealed that auditees found difficulties in following up audit reports and recommendations. Moreover, there was lack of responsiveness of auditees to make changes for improvement

auditees. As a result, BPK recommendations do not change from year to year.