The Supreme Audit Institution conducts audits of PPP projects – Perspective from international experience

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Deriving from practical requirements and international experience, many experts recommend that it is necessary for delegating authority and strengthen the independent overseeing capacity of SAIs, expanding the audit plan for investment projects carried out by public-private partnership (PPP) method, applying a combination of three types of financial, compliance and performance audit to assess the overall economy, efficiency and effectiveness of the project.

Many countries are requested to audit PPP projects. Photo material

SAI has mandate to audit PPP projects

The National Audit Office of China performs an audit of a PPP project when it is permitted by the local government because the PPP project involves a public sector partner. Although the Chinese State Audit Law and the ministries' legal documents have not yet specified that PPP project audits are compulsory, the guidance of the Chinese State Committee emphasizes the auditing of all projects involving civil servants and projects that use public funds.

With the Canadian Auditor General’s Office (CAG), this agency is tasked with auditing the management of public infrastructure projects under the responsibility of federal / provincial or territorial governments, whether the project is formed in the traditional way or PPP. The CAG also has the right to audit all transactions that the government participates in, especially if it is related to the distribution of revenues.

Many other countries also specify the responsibility of the SAI for PPP projects. For example, in Indonesia, the PPP project is categorized in public finance, so carrying out the PPP audit is the responsibility of BPK. Or the SAI of Kuwait performs the function of auditing PPP projects under the Law on Public - Private Partnerships. In Germany, the Federal Court of Audit is authorized to audit PPP project contracts and public expenditures, even projects will be analyzed for economic feasibility and the PPP projects are selected only if they bring about benefits higher than common public projects conducted in traditional way, etc ...

It is a series of evidence given by experts and researchers to affirm the role of SAIs in auditing PPP projects in the world. Because PPP projects involve the public sector (public resources), PPP projects should be audited to ensure that public resources are used in an economical, efficient and proper manner.

Researching international experiences, Prof. Dr. Nguyen Mau Banh (University of Civil Engineering) and Assoc Prof.Dr. Nguyen Thi Phuong Hoa (National Economics University) argue that the PPP projects involve many users, thus having a wide impact on society. The rational interests of both suppliers and users should be guaranteed, so auditing is a way to achieve that goal.

It is necessary to perform all 3 types of audits

From international experience, experts said that for PPP projects, it is necessary to perform all three types including financial, compliance audit and performance audit. Some countries even through compliance audits to work out suspicion of fraud or corruption in PPP projects.

According to Mr. Tran Kim Loc – Director General of Department for International Cooperation (SAV), many countries have promoted the role of SAI throughout the cycle and process of implementing PPP projects. Same views, Prof.Dr. Nguyen Mau Banh and Assoc. Pros.Dr. Nguyen Thi Phuong Hoa cited, when auditing the  Sydney Trans-City Tunnel Project, Auditor General of New South Wales (Australia) analyzed the process of contract formation, contract adjustment and whether the project's cost is reasonable for the people or not. Since then, the agency has concluded that the Project charges high fees, traffic levels are lower than expected and lack transparency in contract adjustments. Similarly, through audits of 12 EU-funded PPP projects in France, Greece, Ireland and Spain, SAIs also concluded that the projects were left behind the schedule with overweighted capital and actual effectiveness lower than expected.

Ms. Le Minh Huong - Institute of Strategy and Financial Policy - said that, considering the role of the supreme audit institutions, in some jurisdictions, the audit agency must sign a PPP contract before it can be implemented. In fact, Prof.Dr. Nguyen Mau Banh and Assoc. Prof.Dr. Nguyen Thi Phuong Hoa said that auditing before signing PPP contracts is also highly appreciated in Europe. Also, the World Bank has recently given recommendations, PPP contracts need to be verified and signed by SAI in regards to the terms of the contract (time, costs, responsibilities of the parties, etc ...).

For the project implementation period, SAIs focused on risks such as too high costs, delayed progress, unexpected problems, poor quality materials, payment, etc. This section has a positive effect on the operation of the PPP project after completion. An audit of the PPP project operation phase is often carried out with the risks of operating and maintaining assets formed from the project, especially if the PPP contract is long-term and of high cost.


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