Supreme Audit Institution
PANAMA

Independence

The SAI Panama is established under the constitution by an act of the Parliament/Legislative body. The Head of SAI is appointed by the Parliament. Appointment of the Head of the SAI can be terminated only by supreme court of Justice, for reasons indicated in article 4 of Law 32 of 1984

For having committed a crime against the public administration, against public assets or in violation of public trust or, in general, any crime for which the basic punishment would be imprisonment
For having committed a crime amounting to misuse of authority or dereliction of the duties of a public servant, or
For obvious incompetence or negligence in exercising the responsibilities of the position

The Head of SAI must be

Citizen of Panama by birth
Have a university degree and be 35 years of age or more
Not to have been convicted by the judiciary with a punishment that deprived him of his freedom for crime committed against the public administration

The Controller is elected for a period of 5 years, up to an age limit of 75 years, according to Law No. 61 of August, 1966.

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

Special procedure for appointment
Special procedure for removal
Fixed tenure
Independence of frame workplans

The office of Controller general of the Republic informs the Legislative Assembly and the Executive Organ on the financial condition of the Public administration and provides an opinion on the viability and suitability of granting additional credits. In addition, it submits the annual Report of its activities to them. It also cooperates with the judiciary in any investigation pertaining to crimes against public administration through the Directorate for accountability for public Assets.

The budget for the Office of the Controller General of the Republic is allocated by the Central Government. The Political Constitution of the Republic assigns its function of auditing and control to the Controller's Office. Therefore it is incumbent upon the government to provide the funds required for carrying out this task.

The Legislative Assembly has the power to summon or require the Controller General of the Republic to provide verbal or written information with respect to the public finances. (Clause 9, Article 155 of the Political Constitution of the Republic).

Jurisdiction

The SAI’s jurisdiction extends to following and there are no limitations to its jurisdiction

Provincial and Local Governments
Bodies not owned but substantially funded by the governments.
Banks whose capital forms part of the Provincial and local government and autonomous bodies substantially funded by the government.
Entities owned or controlled by the Provincial and local governments and other entities owned or controlled by such government owned or controlled entities.
State joint ventures with foreign agencies and other enterprises.
Audit of Receipt of the Government.
Concession granted by the Government to agencies for exploitation of public resources
Aid or grants provided by Foreign Government.
Audit of Government investments made in other countries as minority share holder.

The SAI has jurisdiction over

Public utility/agencies providing public services even if they are privately funded and managed
Regulatory bodies (e.g. Privatisation, Environment, Pollution Control, Telecom etc.)

Powers

The SAI has powers of requisitioning all records of the auditee departments/organisations to discharge its mandate. The SAI has powers to enforce or initiate enforcement action to secure access to needed records, which are not produced. Law 32, Article 22: "In the course of inspections conducted by the Office of the Controller General of the Republic, such office may make use of all the means of testing and all procedures as permitted by the legal rules in force. Likewise, it may solicit the cooperation of national and local authorities, and may also adopt such legal measures as are warranted by the circumstances. Cabinet Decree No. 36 of February 10th, 1990, Article 6 says: "The Magistrate of the Directorate for Accountability of Public Assets, who is responsible for substantiating a transaction, can order that all steps and procedures be carried out that he deems necessary, in order to procure more supporting information and documentation for the background report.

The SAI has power to seal documents and other related items considered necessary for audit and inspection. The SAI also has powers to search and seize documents and other related items considered necessary for audit and inspection. The SAI also has power to seek testimonials of the persons concerned. It can seek co-operation of persons other than agencies subject to audit and inspection. Law 32, Article 82: "In the course of inspections conducted by the Office' of the Controller General of the Republic, such office may make use of all the means of testing and all procedures as permitted by the legal rules in force. Likewise, it may solicit the cooperation of national and local authorities, and may also adopt such legal measures as are warranted by the circumstances. Cabinet Decree No. 36 of February 10th, 1990, Article 6 says: "The Magistrate of the Directorate for Accountability of Public Assets who is responsible for substantiating a transaction, can order that all steps and procedures be carried out that he deems necessary, in order to procure more supporting information and documentation for the background report.

The SAI has powers to instruct government investigating agencies to perform activities considered necessary. Law 32, Article 82: "In the course of investigations conducted by the Office of the Controller General of the Republic, such office may make use of all the means of testing and all procedures as permitted by the legal rules in force. Likewise, it may solicit the cooperation of national and local authorities, and may also adopt such legal measures as are warranted by the circumstances."

The SAI has the powers to re-examine its own adjudication. Cabinet Decree No. 36 of February 10th, 1990, Article 15: "An appeal for re-consideration of a decision taken by the Directorate for Accountability of Public Assets concerning liability for public property can be filed within five (5) working days following such notification...". The judgement will be re-examined following such appeal.

The SAI has the powers to decide on claims of interested persons in connection with official actions, duties and behaviors of persons subject to audit and inspection. It has the authority to dispense with, in whole or part, the audit of Federal, Provincial and local Governments accounts and other related matters. The SAI does not have powers to take punitive action and /or impose surcharges.

The SAI has powers to access the computer systems of the auditees and the power to download and use electronic and use electronic data either in site or off site. The SAI has powers to review the development of computer systems by the auditees and suggest/enforce any controls. It does not have any role in the appointment and supervision of other external auditors engaged by the auditees for meeting any statutory requirements. It can not supervise and regulate their work, if engaged.

Audit Procedures and Functions

The SAI prescribes Financial, Compliance, Performance & EDP audit in its scope of audit. Law 32, Article 11, Clause 2: "... The Office of the Controller General shall determine the cases in which it will conduct an audit both before as well as after the activities, as also those in which it will only do so in the latter case ..."

Regarding the functions of the Office of the Controller General, the Political Constitution of the Republic of Panama in Article 276, clause 3, sets out as one of its duties: "To examine, audit and close the accounts of civil servants, and entities or persons that administer, manage or are guardians of public funds or other public property..."

SAI conducts Pre audit, Concurrent audit and Special audit. Law 32, Article 11, Clause 2: "... The Office of the Controller General shall determine the cases in which it will conduct an audit both before as well as after the activities, as also those in which it will only do so in the latter case ..."

The Office of the Controller General conducts several types of audits

Certification of financial statements
Financial auditing of projects funded by international organizations
Auditing of financial bodies belonging to state institutions
Performance audits and management audits

All these audits are conducted in compliance with the Auditing Rules, the Rules for Internal Control in the Government, the Auditing Handbook and other regulations with respect to auditing.

SAI discharges judicial functions. The summary that is presented to the Parliament does not include findings. The SAI is required to follow specific standards, practices and guidelines in conducting audit and reporting. The SAI consult and /or collaborate with other countries/SAIs and International organizations on matters relating to audit. eg.

OCCEFS
OLACEFS

The SAI may engage consultants and/or obtain professional services in conducting audit. The SAI can report on acts that infringe upon State economic interests like mass embezzlement of State assets, serious losses and wastes. It is the duty of the Controller's Office, from the point of view of state assets, to ensure that State resources are used in a proper manner. As part of its functions the Office of the Controller General of the Republic must: "Audit, regulate and control all the activities pertaining to handling of public funds and other public assets, so as to ensure that such activities are conducted correctly and in keeping with the legal requirements." Paragraph 2 of Article 276 of the Political Constitution of the Republic.

The SAI require that, any fraud or embezzlement be reported mandatorly by the auditees. SAI has powers to oversee the ultimate disposal of such cases. The SAI has a role on the disposal or the action taken on the audit findings. The SAI presents an interim report before rendering an annual report on the examination of the closing of accounts of Federal, Provincial and Local governments. The SAI does not have powers to share its audit reports with the public and media. The SAI can not amend accounts in case of Financial Statement audits. The SAI has an advisory role eg.

When public deeds are to be transacted
When direct contracting is going to be done

Organisation

SAI is constituted as an audit office with monocratic status i.e. with an Auditor General or equivalent as head/ Court/Tribunal Audit/Accounts. There is a organic link between Central Audit office and Provincial Audit office. The SAI is not empowered to engage external auditors/agencies/consultants as required.

Administrative Functions and Miscellaneous

SAI can not expend resources budgeted independently. It has full independence in forming its workplan. SAI is not subjected to an independent financial and performance audit. The SAI required to submit a report on its activities. The Office of the Controller General of the Republic must submit the yearly report of its activities to the Executive Organ and to the Legislative Assembly (Paragraph 12, Article 276 of the Political Constitution of Panama). Further, it must report to both of them on the financial condition of the Public Administration (Paragraph 9, idem).