Supreme Audit Office
CZECH REPUBLIC

Independence

The Supreme Audit Office (SAO) is established in the Constitution of the Czech Republic. It is an independent body that audits the management of state property and implementation of the State Budget. The status, jurisdiction, organisation and other details regarding the SAO is defined in Act No. 166/1993 Coll., on the SAO, as amended. The President of the Republic appoints head of SAO on the proposal of the Lower House. The procedure of terminating the appointment of head of SAI is:

1. Dismissal by the President of the Republic on the proposal of the Lower House (the Chamber of Deputies) when he/she does not perform his/her duties for more than six months or if the Disciplinary Chamber of the SAO proposed his/her recall in its decision;
2. upon delivery of his/her letter of resignation to the President of the Republic;
3. upon the court ruling depriving him/her of his/her legal capacity or curtailing his/her legal capacity;
4. upon court ruling convicting him/her for a crime.

The qualification prescribed for appointment of the head of SAI are:

• Citizenship of the Czech Republic;
• full legal capacity;
• full integrity, probity, no criminal record, experience and moral quality providing a guarantee that he/she will perform his/her duties properly;
• university graduation;
• age of 35 at least.

The period of tenure is nine years for the appointed head of SAO. There is no prescribed age limit.

The various conditions of service of the Head of the SAO to secure independence are:

• Special procedure for appointment
• Special procedure for removal
• Fixed tenure
• Control over resources/budget

The relationship of the SAO with the branches of the government is as follows:

1.    Ministries and other executive bodies belong to the most frequent auditees. The Government is entitled to propose to the SAO the subject of an audit but this suggestion is not binding for the SAO.

2.    Parliament should be the main addressee of the SAO "audit reports". Both of  the houses of Parliament and their bodies are entitled to suggest to the SAO the subject of an audit but this is not binding for the SAO.

3.    The President of the SAO is entitled to attend the meetings of the Chamber of Deputies, the Senate and their bodies and if he asks for the floor, he/she shall be given it, and vice versa.

4.     The two of a total number of three members of the Disciplinary Chamber of the SAO are the judges of Supreme Court appointed there in by the President of the Supreme Court.

5.    The SAO is obliged to announce all its findings, which might have criminal consequence to the Police or to the State Attorney. 

The SAO is financially independent. It prepares its draft annual budget of its own; this draft, approved by the Board of the SAO, is presented, usually by the President of the SAO, to the Parliamentary Budgetary Committee. The Ministry of Finance can only makes objections to the SAO draft but the final shape of the draft is decided by the Budgetary Committee. As the SAO budget is a part of the overall national budget it is finally approved by the Chamber of Deputies together with the other chapters. To secure accountability of the SAO following mechanism is adopted:

• Collective decision-making by the Board of the SAO;
• internal audit functions
• the presentation of the results of the SAO activity to the Parliament and its bodies.

Jurisdiction

The SAO's jurisdiction extends to the following

• Central Government
• Regional and local governments that manage  the state property ( i.e. not the self-governmental bodies)
• Bodies not owned but substantially funded by the governments
• Audit of Receipt of the Government.
• Aids or grants provided by Foreign Government to the State

SAI has jurisdictions over:

• Regulatory bodies of the State
• Agencies to whom performance and delivery of public services is contracted out by the Government or line ministries 

Powers

The SAI has powers to request from the auditee to submit all records to discharge its mandate under the SAO act, § 21.). The SAO may retain documents and other related items where it is considered necessary for its audit. The SAO has no powers of instructing government investigating agencies to perform activities considered necessary. The SAO has no executive powers; it just reports the findings with possible criminal consequences to the Police or the State Attorney; the SAO findings can be used as evidence and the auditors concerned can be heard as witnesses after being relieved of his/her duty of professional confidence by the President of the SAO. But the investigation is solely in the competence of the above-mentioned bodies.

The SAO does not have powers to decide on claims of interested persons as regards official actions, duties and behaviour ofauditees. These claims shall be decided by relevant authorities, e.g. by the courts.. The SAO audits on the basis of annual audit plan set up by the Members of the SAO  Suggestions for annual audit plan ensue from the auditing activities of  the SAO, from the Parliament and from the Government.

The SAO has no powers to take punitive actions except for levying fines (see § 28). The SAO has no powers to access the computer systems of the auditees and the power to download and use electronic data either in site or off site. It has power to review the correctness of the development of computer systems by auditees and suggest controls. The SAO does not have any role in the appointment and supervision of other external auditors engaged by the auditees for meeting any statutory requirements. If such external auditors are engaged, the SAO has no powers to supervise and regulate their work.

Audit Procedures and Functions

The SAO prescribes Financial, Compliance and Performance  audits in its scope of audit. The power to perform these audits are mandated by the law governing the SAO under the SAO Act, § 3 and 4Procedure followed for each main type audit conducted by the SAO are:

• Financial audit methods;
• Evaluation of economy, effectiveness and efficiency;
• Audit of  legality 

The SAO does not discharge judicial functions. The SAO is entitled to demand that the audited persons present within a set term a written report on the elimination of the ascertained defects. The SAO also carries out the repeated audits. The SAO follows its internal  standards, practices and guidelines in conducting audit and reporting. The INTOSAI Audit Standards are being implemented now. The SAO can consult and/or collaborate with other countries/SAIs  and international  organisations on matters relating to audit e.g-: The SAO co-operates with INTOSAI, EUROSAI and it takes a part in work of their bodies, working groups etc. The SAO  can engage  external consultants but if they are to be informed on the data relating to the auditees they shall come within the same procedures as the SAO own staff. The SAO can report on acts that infringe upon State economic interests like mass embezzlement of State assets, serious losses and wastes.

The reporting procedure has two stages: 

1. All findings, esp. irregularities detected, shall be described in "audit protocol" which is discussed with the respective auditee within a contradictory procedure; but the "audit protocols" are confidential documents;
2. On the basis of the "audit protocol" an "audit report", is drawn up which summaries and evaluates the most important findings; the "audit report", after being approved by the Board of the SAO, is sent to the both houses of the Parliament, the Government, upon request to the line ministries and is made public.

The SAO is obliged to present to the Chamber of Deputies its opinion on the report on the course of implementation of the state budget and on the state final account of the State.  It has powers to share its audit reports with the public and media. As regard the publishing of the "audit reports" in the official quarterly Bulletin of the SAO, it is a part of the reporting process. When the new Bulletin of the SAO is to be issued, the press conferences are also held.  The SAO has no advisory role as regards the preparation of Financial Statements by auditees

Organisation

The SAO is  a collegiate-type SAI.  The bodies of the SAO are the President of the Office, the Vice-President of the Office, the Board of the Office, the Senates of the Office and the Disciplinary Chamber of the Office The Board of the Office consist of the President of the Office, the Vice-President of the Office, and 15 Members of the Office. The President of the SAO presides over the Board of the SAO and submits to it drafts of the essential documents which the Board of the SAO has to approve. The Board of the Office shall adopt its decisions by vote; a decision shall be adopted by majority of the present members of the Board. In the case of split vote, the vote cast by the presiding member shall be decisive. The Board of the Office shall have a quorum when more than half of its members are present. 

The independence of the Members of the SAO is guaranteed by law: they are elected by the Chamber of Deputies. Normally, their tenure terminates when he/she attains the age of 65; before this limit their tenure can terminate only in cases expressly stated in the SAO Act . Their professional offences are judged by the Disciplinary Chamber of the SAO. The SAO  is empowered to engage external auditors/agencies/consultants when it is deemed necessary

Administrative Functions and Miscellaneous 

The SAO can expend resources budgeted independently. The SAO is allowed to spend the budgeted resources only. It has full independence in forming its workplan. The SAO is fully independent in the recruitment of its staff. The conditions of service of the SAO staff are determined by a general Labor Code. Of course, the status of the President of the SAO, the Vice-President of the SAO and the Members of the SAO is determined by a special law and it is close to the one of ministers. But a new special law on the Civil Service of the SAO staff in under preparation now.