The Parliament dismissed the head of the Accounting Chamber. Why will the leadership positions in this body be of particular importance in the coming years?

Source: Економічна правда

On 10 April, the Verkhovna Rada dismissed the head of the Accounting Chamber, the body that controls state budget revenues and expenditures. Valeriy Patskan's position is likely to be taken by former Deputy Finance Minister Hennadiy Plis.

In a time of war, when budget expenditures are skyrocketing, the independence, transparency, and accountability of the Accounting Chamber (AC) are of particular importance. It will play a particularly important role in the post-war reconstruction of Ukraine, as more than USD 700 billion may be spent on rebuilding the country.

Who manages the Accounting Chamber and how? How can this body influence government institutions, and is it possible to change its work before the state starts spending hundreds of billions on reconstruction?

The Accounting Chamber: who are these people?

Appointment of the members of the Accounting Chamber, and especially its head, is always accompanied by complicated political negotiations and ‘bargaining’. And, of course, high-profile dismissals of previous leaders to facilitate the ‘passage’ of new ones.

For example, in 2018, the former head of the Rada, Roman Maguta, resigned simultaneously with the suspicion of abuse of power by the National Anti-Corruption Bureau (NABU). In particular, he was accused of fraud with official housing worth UAH 1.5 million. However, he was acquitted in early April 2023.

A similar fate befell the former Speaker of the Rada, Valeriy Patskan, who was served with a notice of suspicion by the NABU in autumn 2022 for illegally receiving UAH 117,65 thousand in compensation for housing. He then submitted his resignation to the Parliament.

However, he later withdrew his resignation because it was unclear whether he would remain a member of the Accounting Chamber after leaving office. At the end of December, MPs registered a draft resolution on the motion of no confidence in the Head of the Accounting Chamber. On the second attempt, it was supported.

However, as in any collegial body, the Chamber's leadership is not limited to its chairman. According to the law, the number of members of this body should be 13. In addition to the aforementioned chairman, there is now a deputy and 7 members. The seventh member, Gennadiy Plis, was appointed by the Parliament in December 2022.

By the way, there are rumors on the sidelines of the parliament that Hennadii Plis may become the head of this body.

Currently, four positions of members remain vacant. And in 2024, six members of the Accounting Chamber are up for re-election.

The absence of four members of the Accounting Chamber poses serious risks to the entire institution. The parliament does not announce competitions for their appointment, and if it does, it delays them.

Apart from Plis, the last time the members of the HC were appointed was in 2018, and one of them, Cesar Ohon, turned 65 last August and should have been dismissed by law. However, this has not yet been done.

Given all these problems, the delay in filling the body with the required number of members may even call into question the normal functioning of the Accounting Chamber.

Real and hidden powers

Every year, the Accounting Chamber conducts performance audits, and financial audits, and analyses the implementation of the law on the state budget for the current year. The body operates in the form of meetings, where the responsible member of the Accounting Chamber presents a report, which is approved by a collegial decision.

The Accounting Chamber can influence the activities of all public authorities. For example, in 2020, it revealed the inefficiency of the ARMA in managing seized assets, and in 2021, it found shortcomings in the healthcare sector and many other areas.

In 2021, the Accounting Chamber approved 63 reports, inspected 490 facilities, and over UAH 590 billion of public funds. The report for 2022 has not yet been published.

The audits and reports of the Accounting Chamber result in criminal proceedings, disciplinary sanctions, and many other negative consequences for those who misuse budget funds. In addition, the identified shortcomings may become the basis for changes in a certain area and improvement of legislation.

Informally, the Accounting Chamber's reports can be an effective tool for political struggle, political pressure on government agencies, and economic pressure on business.

What contributes to this? According to a study by the Institute of Legislative Ideas, the Accounting Chamber has critical shortcomings that facilitate abuse.

The first one is the lack of a work planning procedure in the Accounting Chamber and frequent changes in the audit plan. This contributes to the fact that some bodies are audited several times in a row without any clear reasons, while others are not audited at all.

Proposals to the plan are made by the members of the Accounting Chamber at their own discretion, often without proper justification. This has been the subject of public criticism of the body more than once.

The second is the lack of methods that would establish the criteria of ‘efficiency’ or ‘inefficiency’ of the use of budget funds.

For your understanding, 39 performance audits are planned for 2023. The absence of a procedure for their conduct will lead to the fact that they will be different in scope, structure, and quality. This is what is happening now.

For example, the audit of Prozorro.The sale caused a certain resonance at the time, as the increase in salaries was one of the grounds for recognizing inefficient use of funds.

The third drawback is the institutional aspect of the Accounting Chamber. Each of its members is assigned separate areas of activity, so the same member of the Chamber conducts audits of the same state bodies.

On the one hand, this allows them to get a deeper insight into the essence of their work and give a more professional assessment of expenses, but on the other hand, it may negatively affect the objectivity and assessment of the facts presented, including the establishment of ‘friendly’ relations with the audited bodies.

The fourth is productivity. According to rough estimates, the average cost of each audit is about UAH 18 million.

And, by the way, some important audits were never completed in previous years. Among them:

• an audit of the efficiency of the use of subventions from the state budget to local budgets for the creation of new, construction and repair works, reconstruction of existing sports complexes, sports palaces, and swimming pools;
• audit of the effectiveness of the use of funds allocated to the National Agency for the Prevention of Corruption for management and administration in the field of corruption prevention and for financing the statutory activities of political parties;
• audit of the effectiveness of the use of funds allocated for management and administration in the field of archives;
• Analysis of the Antimonopoly Committee's provision of state protection of competition in business and public procurement.

The absence of a final decision on the reports raises questions about the time, human, and financial resources spent on audits. Resources are spent, but no results are achieved.

Moreover, not all members of the current Accounting Chamber attended the meetings in 2022. This affected the number of approved audit reports and the work of the body in general.

Relations with MPs

The Accounting Chamber works on behalf of the Verkhovna Rada. The Parliament appoints and dismisses members of this body and controls its activities. However, in practice, problems arise.

They are related to the appointment of new members of the Accounting Chamber, which is a political issue. The absence of agreement on a candidate by the majority of the parliament will not automatically allow his or her appointment.

Another important aspect is the direct interaction between the Chamber and the Parliament. It is the responsibility of the committees to amend the legislation and exercise parliamentary control over the results of the identified violations. However, according to the study, only 5 committees considered issues based on the results of the Chamber's control measures. The other 15 did not.

This shows that the committees often do not care about the Chamber's performance. That is why it should be understood that the responsibility for the activities of the body and its effectiveness lies not only with the Chairman of the Accounting Chamber but also with all its members and the Parliament.

How to improve the quality of the Accounting Chamber's work

The first step is to elect new members of the Accounting Chamber in a transparent and open competition. The Verkhovna Rada should select professionals with the necessary experience and skills, who are politically neutral and unbiased.

This will affect the quality of their budget audits in the future. Especially the use of funds received for the reconstruction of Ukraine from partners and confiscated from the aggressor.

Second, the Accounting Chamber should approve all the necessary internal documents for conducting audits. Starting from planning to methods of conducting them.

This will increase the efficiency of audits, transparency, and accountability of this body. In addition, it will limit the broad powers of the Chamber members and allow them to unify their activities within a certain framework.

Third, the Accounting Chamber should improve the efficiency of cooperation with the Parliament. On the one hand, the Rada should pay more attention to the conclusions prepared by the Chamber and take all necessary measures within the framework of its control function. On the other hand, the Chamber itself should initiate the expansion of cooperation with the Parliament.