Assessing the provisions for accountability

Many of the provisions for accountability discussed in the previous section can be found in the statutes of the competition authorities and financial regulators that are taken into consideration in this study. However, as this section will demonstrate, there is also some significant variation in their presence. In terms of their status, the provisions are, like the provisions that stipulate the competences of the organizations, usually laid down in primary legislation which needs parliamentary approval. Hence, they can be regarded as provisions introduced by governments and parliaments together.

Data were collected for 25 competition authorities and 21 financial market regulators in the summer and autumn of 2013.2 The organizations are listed in Table A of the Appendix. To code the presence of the provisions, two main types of documents were assessed:

  • (i) the statutes that set out the design of the agencies, and
  • (ii) more general legislation on administrative procedures in the country.

Let us now take a closer look at the presence of the provisions. Accountability for finances

Provisions related to annual itemized budgets and annual financial reports are imposed on a minority of the regulatory agencies in the dataset. As Table 4.2 shows, 28 per cent of the competition authorities and 43 per cent of the financial regulators must submit an itemized budget to government, with governments having the ability to disapprove the budget in, respectively, 20 and 29 per cent of the cases. Provisions for budget documents are submitted to parliament slightly less often (Table 4.3). This may be due to the fact that the minister is often still responsible for the budget of a regulatory agency, and thus has an interest in keeping an eye on the finances of the organization. The itemized

Table 4.2 Annual itemized budget to government

Competition

authorities

Financial market regulators

Number

Percentage

Number

Percentage

No provisions

18

72

12

57.1

Submitting only

2

8

3

14.3

Approval needed

5

20

6

28.6

Total

25

100

21

100

88 Assessing the Mandatory Accountability of Regulatory Agencies

Table 4.3 Annual itemized budget to parliament

Competition

authorities

Financial market regulators

Number

Percentage

Number

Percentage

No provisions

19

76

17

81.0

Submitting only

3

12

3

14.3

Approval needed

3

12

1

4.8

Total

25

100

21

100

budget indicates how the organization is planning to spend the money with which it is entrusted - for instance, what amount of money will be spent on the costs of the organization itself, and what amount will be spent on the policy programmes.

The statutes of regulatory agencies also include obligations to submit an annual financial report to government and/or parliament. While annual budgets are the prospective part of financial information, annual financial reports are the retrospective part. Financial reports normally describe how an organization has spent the money with which it was entrusted. Furthermore, in the case of differences between the receipts and expenditure of an organization, the report justifies such discrepancies. As we can see in Table 4.4, 44 per cent of the competition authorities and 38 per cent of the financial regulators are required to submit an annual financial report to government or an individual minister. In 8 and 19 per cent of the cases, the report also needs the approval of government. Table 4.5 shows that slightly fewer regulators - 44 and 29 per cent - are required to submit an annual financial report to parliament, with the possibility for disapproval being present in 20 and 19 per cent of the cases.

Table 4.4 Annual financial reports to government

Competition

authorities

Financial market regulators

Number

Percentage

Number

Percentage

No provisions

14

56

13

61.9

Submitting only

9

36

4

19.1

Approval needed

2

8

4

19.1

Total

25

100

21

100

Table 4.5 Annual financial reports to parliament

Competition

authorities

Financial market regulators

Number

Percentage

Number

Percentage

No provisions

14

56

15

71.4

Submitting only

6

24

2

9.5

Approval needed

5

20

4

19.1

Total

25

100

21

100

Table 4.6 Annual financial reports to account office

Competition

authorities

Financial market regulators

Number

Percentage

Number

Percentage

Provision absent

1

4

0

0

Provision present

24

96

21

100

Total

25

100

21

100

Accountability for finances also takes a horizontal form. That is, regulators may have to submit their financial reports to a national account office, which then examines the spending and reports on its findings to politicians and the public at large. Provisions for accountability to audit offices are present in almost all cases (Table 4.6). The only organization for which such a provision was not found is a competition authority that takes decisions as a judicial body, without having any investigative powers.

As indicated in the previous section, downward mandatory accountability typically takes the form of requirements to publish information and justifications, without the audience having the formal power to sanction the conduct. In the case of financial accountability, this takes the form of requirements to publish the annual budget and the annual financial report. The former requirement is imposed on, respectively, 20 and 14 per cent of the competition authorities and financial regulators, while the latter requirement is more common and imposed on agencies in 28 and 29 per cent of the cases (see Tables 4.7 and 4.8).

Competition

authorities

Financial market regulators

Number

Percentage

Number

Percentage

Provision absent

20

80

18

85.7

Provision present

5

20

3

14.3

Total

25

100

21

100

Table 4.8 Publication of annual financial report

Competition

authorities

Financial market regulators

Number

Percentage

Number

Percentage

Provision absent

18

72

15

71.4

Provision present

7

28

6

28.6

Total

25

100

21

100

 
Source
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