What do key stakeholders expect from your SAI in a few years? What threats will emerge and what opportunities will present themselves? It is impossible to fully know although you can predict some aspects with quite a lot of certainty. What do you do to make sure you minimize threats and embrace opportunities? To tackle such issues, 12 SAIs in ASOSAI have strengthened their strategic management processes through the IDI Initiative on Strategy, Performance Measurement and Reporting (SPMR).
Staying relevant in a world that is continuously evolving
What is the longest period that went by where nothing unexpected happened which impacted on the organization you work in? Either presenting itself as a shiny opportunity or as a threat lurking and manifesting itself. Most likely not a very long time. The important question is how do organizations face uncertainties? Do they make or break you?
On the one extreme, you would have tech companies that are at the forefront of embracing uncertainty and innovation which they also must in their context to remain relevant and stay in business. SAIs are a different type of organization and not subject to the same fast-paced developments. But the environment SAIs are operating in is still subject to change. It is therefore critical for any SAI, within their own context, to ensure they remain relevant and provide value to its stakeholders.
Traditionally the core function of SAIs has been to conduct audits. Which it still is, but so many nuances have emerged and are being put into practice: new audit approaches such as real-time audits, citizen participatory audits and approaches to account for big data and new technology just to mention some. SAIs are increasingly engaging in research. Performance audits and IT audits have become more prominent for many SAIs. This demonstrates clearly how the role of SAIs is not static but is being redefined, including how an SAI can contribute to positive changes in the public sector and finally provide value to its citizens. And it will influence the expectations from key stakeholders which may view the SAI in a different light compared to a few years back.
To ensure relevance within new realities the SAI needs to look both outwards and inwards. Inclusiveness is key and SAIs need to continuously be in touch with their stakeholders and apply foresight to identify opportunities and threats, on which they then can react. Additionally, the SAI needs to have a thorough overview of its internal capacities in terms of strengths and weaknesses to know which strengths to leverage on and which weaknesses to address.
It is important to note that it will not be relevant for all SAIs to embrace all emerging trends. It is a matter of prioritizing within each SAI’s context and opportunity space.
And therefore, you should engage in strategic management. To become flexible and robust organizations having strong processes in place. To plan for certainties, take advantage of opportunities, minimize threats, prioritize, monitor implementation, and change course if necessary.
SPMR Initiative in ASOSAI
The criticality of strategic management has led IDI to develop its initiative on Strategy, Performance Measurement and Reporting (SPMR). To respond to the needs of SAIs the SPMR initiative presents a fresh and broader scope holistically looking at strategic management. Within the initiative, SAIs are supported through a whole strategic management cycle to ensure the different elements all work together like a fine-tuned machinery.
The global roll-out of the initiative started in 2019 and IDI has since 2019 supported 12 SAIs in the ASOSAI region to strengthen their strategic management processes.
Illustration 1: participating SAIs in the global roll-out of SPMR first round
The SPMR initiative could not have been implemented without the support and collaboration from several key stakeholders.
IDI would therefore like to take this opportunity to express our gratitude to all stakeholders who have supported the implementation of this initiative in the ASOSAI region. The initiative has been delivered in collaboration with the ASOSAI Capacity Development Administrator (SAI Japan). The Swiss State Secretariat for Economic Affairs (SECO) has co-founded the initiative. Ms. Dechen Pelden from the Royal Audit Authority of Bhutan and Mr. Jerrick Hernandez from the Guam Office of Public Accountability have functioned in their valuable role as resource persons and supported the implementation. The Office of the Auditor General of Norway has provided peer support. And finally, the immense efforts from the participating SAIs were key for the initiative’s success.
The SPMR Team within the Commission on Audit of Philippines are sharing some reflections on how the SPMR has provided value for their SAI.
The SPMR approach
The SPMR initiative presents an outward-looking perspective acknowledging that SAIs do not operate in a vacuum but are an important and integral part of the public financial management system in any country. Fundamental questions to ponder have been why does an SAI exist and what should an SAI aim at achieving? Is it for instance good enough if an SAI produces high-quality audit reports but the recommendations are not being implemented? It is a good result at some level. On the other hand, it is an implication that the SAI does not effectively contribute to positive changes in the public sector. Then it is a question of whether the SAI could do more? Acknowledging that there can be external impediments to why recommendations are not being implemented the IDI approach supports the notion that the SAI should identify which positive changes in the public sector the SAI can contribute to. And in the next step identify concretely how the SAI can facilitate such changes.
As is evident the approach strongly aligns to the objectives presented in INTOSAI-P 12 The Value and Benefits of Supreme Audit Institutions – making a difference to the lives of citizens.
This outward-looking perspective is visualized in the SAI Strategic Management Framework (SSMF). SSMF illustrates the value chain of how an SAI can affect change and ultimately make a difference in the lives of citizens.
Illustration 2: SAI Strategic Management Framework (includes only some examples of outcomes and outputs)
An SAI would first and foremost define its outcomes which are the positive changes in the external environment the SAI can considerably contribute to. Outcomes are largely outside the SAIs direct sphere of control and something the SAI can contribute to, though their achievement also relies on the actions of other stakeholders. The next step is to define the outputs. These are the direct products of the SAI that will contribute to the defined outcomes. Outputs are mostly under the direct control of the SAI. Then the SAI need to ensure the capacities are in place to produce the outputs by identifying the systems, processes and skills needed and the capacity gaps that should be addressed.
Through this initiative, the SAIs have identified their outcomes - outputs - capacities within their context and this results framework forms the backbone of the SAIs strategic plan. The results framework builds on a thorough analysis of strengths, weaknesses, opportunities, and threats.
To date the initiative has supported the ASOSAI SAIs in most of the key steps of a strategic management cycle. The initiative was kicked off with a critical first step on assessing the current situation. This was done by conducting a holistic SAI Performance Measurement Framework (SAI PMF) assessment and a stakeholder analysis. From this information the SAIs could identify most of their key strengths and weaknesses rooted mostly in the SAI PMF assessment and opportunities and threats rooted both in the stakeholder analysis and SAI PMF assessment. This information was analyzed together and used as a basis to develop the SAIs strategic plans. To ensure implementation of the strategic plan the SAIs have developed their operational plans which ensures that the strategic priorities are broken down into the day to day activities. And reporting templates have been revisited and revised to ensure reporting on own performance.
It is critical to note that a strategic plan and an operational plan are not set in stone. Sometimes the SAI would need to change its path either through smaller adjustments in its operational plan or larger adjustments of its strategic plan. A key part of the initiative has therefore been to support the SAIs in developing/revising their framework to monitor implementation largely through well-defined performance indicators, implementing a process for managing risks and concretely defining how change management applies to their SAI. These were all cross-cutting topics and are key tools to support implementation and decision making.
In the midst of delivering this initiative, the COVID-19 pandemic came out of the blue turning the world upside down and altering the environment SAIs operate in. This exacerbated the need for SAIs to have robust strategic management processes in place to be able to change direction when needed. The 12 ASOSAI SAIs had a unique opportunity to react to the implications caused by COVID-19 since they were already in a process of developing their strategic plans. Which illustrates how a threat can also present an opportunity. And many of the strategic plans are reflecting the new realities, to ensure the SAIs remain relevant or even better increase their relevance.
If you would like to read more about the SPMR approach we are referring you to the SAI Strategic Management Handbook which can be downloaded: Here
What comes next?
All processes and products the SAIs have worked on through this initiative will most likely not be perfect from the start. Perhaps they will never be perfect, and they are not meant to be perfect. This demonstrates the importance of a culture of continuous improvement and continuous monitoring and evaluation to enable this. In the years to come the SAIs would naturally need to tweak their products and processes. Participating in the initiative also entails that the SAIs have become better equipped to implement such processes for continuous improvement.
The key steps within the initiative which are outstanding is a knowledge-sharing workshop which will most likely take place in 2022. And to close the loop it is envisioned that the SAIs at the end of their strategic planning cycles conduct a repeat SAI PMF assessment. With the purpose of evaluating the implementation of the current strategic plan and will feed into developing the next strategic plan. Hopefully all SAIs will then be able to demonstrate stronger performance as a consequence of actively applying strategic management to manage their performance.