Accounting Chamber Upgrade: Three Possible Scenarios

It hasn’t been long since the results of the competition to select candidates for the posts of four members of the Accounting Chamber were announced. It ended with an appointment of new members, despite warnings from the public and international partners. Now, the attention is again focused on this institution.

On March 15, the term of office of seven members of the Accounting Chamber, who were appointed in 2018, expired. Neither they nor the body ceased to be legitimate: the members of the Accounting Chamber continue to exercise their powers until they are dismissed by the Verkhovna Rada.

It would seem that the end of the tenure of most of the Accounting Chamber’s staff is a chance to upgrade the body, not only in terms of quantity but also quality. This means appointing specialists with relevant experience and new approaches to bring the operation of the Accounting Chamber in line with international auditing standards.

Last September, parliament already announced the conditions and deadlines to conduct a competition for the posts of members of the Accounting Chamber, whose term of office expired this March.

In December, the Budget Committee of the Verkhovna Rada met the public halfway and provided streams of interviews with candidates. This is the first and significant step to ensure transparency, which at the same time clearly demonstrated all the deficiencies of the pseudo-competitive procedure, which is quite general and unclear, taking up only one paragraph of the law and negating the principles of competitiveness, objectivity, and impartiality on which the selection should be based. The current approach allows only formally assessing the level of professionalism and compliance of candidates with the requirements provided for members of the Accounting Chamber.

Three months have passed since that selection, but no progress has been made in updating the competitive procedure. The draft of the new Law on the Accounting Chamber, which does not change the current procedure significantly, did not even reach the first reading in parliament.

Both international partners from the G7 and the EU, as well as the public, insisted on reform. Therefore, at the end of last year, a working group was created under the Budget Committee of the Verkhovna Rada of Ukraine to develop a new draft law that would suit all stakeholders. A discussion of proposals that will form the basis of the draft is underway.

Given the current situation, several scenarios of personnel changes in the Accounting Chamber are likely.

1. The Verkhovna Rada does not dismiss the previous members of the Accounting Chamber, cancels the announced competition, and appointments take place after the selection according to the updated procedure

The law does not determine the period within which a draft resolution on the dismissal of a member of the Accounting Chamber, whose term of office has expired, should be submitted to parliament for consideration. As of April 4, such drafts had not been registered.

Moreover, there have already been cases where the Rada ignored the issue of dismissing a member of the Accounting Chamber despite the legal grounds for this. This may also indicate the likely influence of political agreements inside the Verkhovna Rada regarding the work of the Chamber and its members.

Statements by parliamentarians from the ruling party, who assured that the competition for the appointment of seven members of the Accounting Chamber would take place after the adoption of a new law on the reform of the body, also speak in favor of this scenario. However, MPs explained the appointments to the Accounting Chamber in December by the fact that it was impossible to complete the competition. However, this is not true: the termination of the competitive selection of judges to the Constitutional Court of Ukraine is a great example.

The key drawback of this scenario is that the majority of the Chamber’s members will in fact keep on working in the status of “acting members.” This causes instability and uncertainty, which can affect the efficiency and quality of work of these persons and the body as a whole. In addition, the reform of the Accounting Chamber and the update of the competitive procedure are delayed, and no one will undertake to predict its completion.

International partners proposed to implement a similar scenario back in December. Back then, the ambassadors of the G7 countries warned not to rush with new appointments before changing the competitive procedure. They also warned that the appointment of officials before the adoption of the reform law would undermine the credibility of the Accounting Chamber as the institution responsible for overseeing the provision of international assistance.

The European Commission also emphasized the need to enhance the Chambers’ independence in its report. It also pointed out that new legislation must be adopted as soon as possible.

Transparent, independent, and competitive selection to the Accounting Chamber, with checks on the competence and integrity of candidates, was on the U.S. list of priority reforms.

But these calls were blatantly ignored twice: first, four members of the Accounting Chamber were appointed, and then its head. Such actions clearly demonstrate that the Ukrainian authorities are prone to the following scenarios.

2. Parliament completes the competition and appoints new members, and the Accounting Chamber is rebooted after the adoption of the new law  

This is a scenario that will be implemented according to the “reforms in exchange for funds” principle. It seems that this is what the speaker of the Verkhovna Rada hinted at when he emphasized that the Ukrainian side was ready not for the absolute reforming of the Accounting Chamber, but for “…a constructive dialogue with partners on issues they are concerned with in the context of appointing members of a parliamentary body.”

MPs are used to the fact that reforms in Ukraine are mostly associated with further allocation of macrofinancial assistance. However, despite all the statements and calls on the part of international partners, the reform of the Accounting Chamber has not been among the conditions to receive financial assistance in the current programs. For example, references to the reform of the body were completely excluded from the Ukraine Facility Plan, although they had been present in the draft plan.

This leads to a situation where the issue of the Chamber fades into the background in the internal agenda. Instead, the authorities continue to enhance their influence on the budget control bodies through the appointment of candidates of their choosing using current competitive procedures.

If the reform of the country’s supreme audit institution becomes a priority sooner or later, a reboot may be a compromise option. Then it will be necessary to terminate the powers of all members prematurely and appoint new ones based on an open and transparent competition, which would evaluate candidates for compliance with the criteria of professional competence and integrity.

Such cases already happened in the past. An example is the reboot of the National Agency on Corruption Prevention in October 2019, when parliament prematurely terminated the powers of members of this body and a number of its officials.

3. Parliament completes the competition, appoints new members, and fails to reform the Accounting Chamber

This scenario might be brought to life if neither parliament, nor the Office of the President, nor the Accounting Chamber are interested in the effective operation of the body, which will have an opportunity to work under the old rules in the updated composition. The lack of internal support for the idea of quickly reforming the Accounting Chamber, as a result, will also be reflected in the absence of such a condition in the programs of financial assistance from partners.

Under such conditions, the key risk (which is also typical for the previous scenario) is the appointment of candidates to the posts of the Chamber’s members for 6 years under the current ineffective procedures.

Here we should pay attention to the candidates who applied for the competition, and the list of them has already been finalized. Of the 46 participants, only 9 have never participated in the competition for a position as a member of the Accounting Chamber. Among other participants:

–       4 have already been appointed as members of the Accounting Chamber;

–       6 are members of the Accounting Chamber whose term of office has expired, and they wish to hold office for a second consecutive term (as permitted by law);

–       23 participated in the December selection.

In the absence of changes to the weak and formal competition procedure, with a high probability, either its former members or candidates who have not previously been able to confirm compliance with the level and requirements of the position will take a place in the updated Accounting Chamber.

But it seems that candidates should not worry about their possible non-compliance with the requirements of the Law. According to the decision of the Budget Committee of the Verkhovna Rada of Ukraine, a candidate who did not confirm their knowledge of one of the official languages of the Council of Europe was eventually appointed to the post of a member of the Accounting Chamber.

This is proof that the current competitive procedure is a front, not a real mechanism for candidates with professionalism and integrity. This is a consequence of a more important problem: the collective irresponsibility of parliament in adopting decisions that contradict the conclusions of its own representatives and, most importantly, the law.

This situation will persist until the reform of the Accounting Chamber becomes a priority for the Ukrainian authorities. Not because it will be a condition for the allocation of financial assistance, and not because it can be turned into another supervisory authority, but because the supreme audit institution of the country is an integral part of the democratic system, which should ensure the efficiency, accountability, effectiveness, and transparency of public administration. Without trust in such a body, there will be no trust in the state.

The material was prepared within the framework of the USAID/UK aid TAPAS Project/Transparency and Accountability in Public Administration and Services.