15 October 2023
By Katja Hemmerich
This week, the UN’s Independent Audit Advisory Committee (IAAC) presents its report to the Fifth Committee, as do the Ethics Office and the Office of Internal Oversight Services (OIOS). This is in addition to the Joint Inspection Unit (JIU) and Board of Auditor (BOA) reports that are considered later this month. The proliferation of audit functions in international organizations over the last 20 years mimics a similar evolution in many motional public sectors, which has sometimes been referred to as an ‘audit explosion’.
The audit explosion is also one of the root causes of ‘accountability overload’ from which most public servants at the national and international levels suffer. In this case, we are using the term audit very broadly to include formal audits, evaluations, inspections, and internal control statements - all of which come with their own paperwork and input requirements from civil servants. As much as it feeds the 'accountability overload', the audit explosion also offers windows of opportunity for change agents. So this week’s spotlight explores how managers in the UN can leverage the audit explosion to facilitate and institutionalize their change initiatives. We also provide change agents with a checklist for engaging constructively with audit functions.
To understand how to leverage audit mechanisms, it’s important to understand how the audit explosion has qualitatively changed the audit function. Traditionally, audits were focused primarily on ensuring compliance with rules and standards, particular in relation to financial matters. However, as public sector reforms spread through national governments and international organizations with the intent of making them improve the quality of services and their efficiency, audit and oversight functions have expanded to include assessing performance and results.
“Public sector auditing has undergone significant change… shifting from providing oversight of proper management of resources, financial oversight and compliance to a more consultancy like role, in which management matters, including value-for-money and efficiency and effectiveness audits, are paramount.” - Mattei, G. et al., (2021), "Exploring past, present and future trends in public sector auditing research: a literature review", Meditari Accountancy Research
How the audit explosion can be leveraged by change agents in the UN
Understanding which audit or oversight mechanisms undertakes compliance versus performance reviews, allows change makers to proactively build them into a potential change strategy. For instance, if you as a manager have concerns or concerns have been raised by staff or donors, but it’s not clear what the problem is, compliance or performance reviews can help identify the problem and its root causes. Alternatively, if there is a shared understanding of the problems across most stakeholders and you’ve started to put an improvement or change process in place to address those problems, performance audits and evaluations can be helpful in validating that you’re on the right track or indicating where you might need changes.
The additional benefit that both audits types have is that implementation of their recommendations by your office or organization is monitored in multiple ways, and always by the governing body. Audit recommendations can therefore be a useful tool to demonstrate to member states, donors, senior leadership and other stakeholders that your office needs to take a certain direction or work towards particular outcomes. By validating and reinforcing your change strategy, or validating that there is a problem your office needs to address, audit recommendations can institutionalize change processes and make it more difficult for bureaucratic spoilers to undermine your change initiative. Under Secretary-Generals in the Secretariat, for instance have an indicator in their Compact with the SG about ensuring implementation of OIOS and BoA recommendations. The IAAC reports to the Fifth Committee on implementation rates of all oversight bodies, in addition to the reports of those oversight mechanisms, which also highlight where implementation of recommendations is lacking. The same applies to the Executive Boards of UN agencies, funds and programmes. (For an interesting example of how audit functions have been used by ITU to help validate their need for organization-wide change and navigate complicated administrative politics, see our 30 July spotlight.)
The very pragmatic challenge is being able to coordinate and plan for these audits or evaluations so that you can leverage them at the right time. The need for greater coordination across audit mechanisms is expressly highlighted by the IAAC, and has also been noted by external studies of audit functions in international organizations:
“Multiple actors in charge of auditing, overlapping competencies, and different types of audit, including inspection, anticorruption, and risk management, characterize auditing in IOs and underline a growing trend… Coordination of all these intervening oversight bodies has become a relevant issue.” - P. Monfardini et al., (2019), Too big to be audited? The new world of auditing in international organizations.
A further complication is that many use different standards and approaches. Consequently, managers, especially mid-managers often feel caught by surprise and unsure of what an audit is looking for, other than their mistakes. Those perceptions are legitimate. Understanding the goals of a specific audit function and a specific audit can help shift to a more constructive engagement between managers and auditors. (Our Factsheet on UN accountability mechanisms can be a good starting point).
There are concrete ways that you can navigate the audit explosion, even at the mid-manager level. If confirmation of the need for change or validation of your change initiative helps you to deal with bureaucratic spoilers, you can always volunteer for an audit. Just be sure you know whether compliance or performance audits are needed and which mechanism is best suited for your needs. Like everyone else, audit functions need to plan their work, usually at least 12-18 months in advance. Often they will solicit offices or departments for suggestions on what should be audited, which is a great opportunity for change makers to seek support in institutionalizing their change. All of this should figure into your change implementation planning.
Negotiating a shared understanding between you and the auditors on what is going to be assessed is another way to constructively engage with the process so you get useful results. Auditors and evaluators have a vested interest in having their recommendations accepted and implemented, so they generally try to avoid imposing their perspective or recommendations on you and actually prefer to engage supportively. Being frank about your concern that there may be a need for change or a need to validate a new change initiative is generally appreciated by auditors. Ask them what they want to assess and why, and don’t be afraid to make your own suggestions for what should be assessed and why. Especially in the case of performance audits, there is generally no standard methodology and you can, and should, engage with auditors to understand and help refine their proposed methodology so that you are also confident that the evaluation will benefit your work.
Defining ‘good performance’ in international organizations is inherently difficult both for practitioners and researchers, and there are many elements that go into different definitions. While most change management training talks about creating new indicators and KPIs to better manage change, this is not always so easy in international organizations, which prefer to stick with the status quo. Therefore audits can be a useful tool to confirm that new KPIs are needed and recommend institutionalization of indicators that your team has been considering or testing. If you're dissatisfied with your current performance indicators, performance audits can be helpful in finding better ways to measure and define your results. Feedback from clients and beneficiaries is increasingly easy to collect through various technologies and social media and audit functions often have tools to help gather and analyze that data for you. This not only provides validation of your change process but it can help you design and institutionalize similar performance measurement tools going forward when this is recommended by an audit. All of this is only relevant for performance audits, however, since compliance audits by definition focus on measuring compliance against existing rules, regulations and indicators. This reinforces the need to understand what kind of audit is being undertaken in order to leverage its benefits.
Another point to keep in mind is that auditors generally don’t have the same level of subject matter expertise as you do, nor are they necessarily fully cognizant of all the elements of your mandate and any related political sensitivities. It’s therefore important to ensure that they are provided with this information right from the start. It's crucial that you include data and evidence for why your change initiative was needed or the concerns you are seeking to validate. Often it is also useful to assign a dedicated counterpart within your team to support the auditors and be available for questions. Ideally it should be someone well-versed in the strategic and operational elements of your work and who knows the history of your team and function and your change initiative, or the concerns that you may be seeking to validate.
Finally, as outlined above, implementation of the audit recommendations is something that is monitored systematically at the most senior levels of the organization. Therefore, it is in your interest to ensure the recommendations are clear and implementable. Often there are others outside your team who are responsible for some of the recommendations. This is a helpful element for the institutionalization of your change process - but only if everyone understand the recommendations in the same way. Therefore it’s important to take time to go through the recommendations and provide feedback on the language, and to listen to the other stakeholders and implementers so that their views are also reflected. Often auditors will propose, or ask for, a definition of when the recommendation is considered implemented, which should be clear and easily demonstrated. Confusion about when a recommendation is implemented can often lead to political decisions to close it early in order to eliminate pressure from all the aforementioned monitoring mechanisms and that may undermine your change process.
The change agents' checklist for dealing with audits
The audit explosion in international organizations, while creating additional work, also creates opportunities for change makers to institutionalize their change initiatives, or validate the need for change. Leveraging those opportunities does require that UN managers are able to navigate the often uncoordinated approach between the different audit and oversight functions. To help you do this, we have compiled the following checklist:
Determine whether a compliance or performance audit may be useful for your change initiative, and identify the relevant mechanism in your organization.
Volunteer to be audited by the appropriate audit mechanism
Ensure a shared understanding of what is going to be audited, and be frank with auditors about where you need help identifying the need for change or validating or course correcting your existing change initiative. Provide them with your evidence.
Provide auditors with all the info on your mandate and functions. This should include all the relevant legislative and policy documents.
Assign a dedicated staff member who understand your office and the change issues to be the dedicated counterpart for the auditors.
Dedicate sufficient time to go through the draft recommendations in detail and provide feedback. Listen to the concerns and feedback of other stakeholders and implementers of the recommendation and try to find language that captures a shared understanding of the recommendation and when it is considered implemented.