Conference on “External Control over the Pubic Finance”

On Janury 17, 2014, Public Association for Assistance to Free Economy (PAAFE), together with its partners Entrepreneurship Development Foundation (EDP), Center for Economic and Social Development (CESD), Economic Research Center (ERC) held a conference on “External Control over the Pubic Finance”. The conference was organized with financial support of European Union (EU) in the framework of the project on “Effective system of control on public finance”.

More than 60 participants: representatives of government agencies, international organizations, embassies, economic experts, NGO leaders, also Member of Parliament Vahid Ahmadov, chairman of Department of Law and Public Service of Chamber of Accounts, Faig Najafov participated at the event.

In his opening speech the chairman of the EDP Sabit Baghirov, stated that the conference is dedicated to the presentation of researches regarding the improvement of authority of Chamber of Accounts that implements external control over the state budget.

After the opening section, a deputy Vahid Ahmadov as a moderator started the first panel of the conference. Rashad Hasanov the economic expert of CESD made a presentation on the activities of Chamber of Accounts (CA). He noted that the awareness about the activities of CA is low. “Only 23% of 700 people who take part in survey are aware about the existence of CA . And only 11.6 % is aware about the function of this institution. Moreover, 94% of people who are aware of CA have higher education and are active on economic sphere.”

At the end of his speech Rashad Hasanov noted his findings: Chamber of Accounts does not review the budget of State Oil Foundation; the Chamber do not explicate the methodology they used while preparing the review; External evaluation is not done; CA does not analyse in its review the situation where the state increases expenses for investment projects afterwards; annual reports of the CA are not posted in the official web-site of the institution and public access is limited.

Rashad Hasanov stated that, risky tendencies such as growth of transfers from the Oil Found, dependence on oil revenues are not mentioned at the part of budget income of reports.

The chairman Center for Economic and Social Development Vugar Bayramov talked about “recommendations and analysis of discussions of parliament on public finance”. He noted that, the constitution must identify the independence of Chamber of Accounts: “relation of CA with public, NGOs, media must be advanced”. Moreover, Vugar Bayramov, noted that, information about the result of inspections and gaps revealed by CA are not posted in the web-site and it makes difficulties to access them.

At the end of the first panel, therepresentative of EU Delegation in Azerbaijan, the chairman of the operations section, Federico Berna noted that, EU closely follows the process of external control on states funds in Azerbaijan. “We try to make closer the state and citizens and to form more open society, some indicators of the last year did not satisfied us, we expect better results”.

Afterward, the representative of Chamber of Accounts, Faig Najafov started the second panel as a moderator.

The expert of PAAFE, Kanan Aslanli mad a speech on “external control over public founds”. He talked about three types of external audit model in the world finance and international experience regarding the independence of audit in state finance system. He stated that, in the frameworks of the project “the effective system of control on public founds” they travelled to Ankara to learn about Turkey’s experience. They get familiar with institution -Sayishtay which is analogues to Chamber in Accounts in Turkey. He noted that although Sayishtay has several similarities with CA, it also conducts a performance audit. At the end, Kanan Aslanli presented the final recommendations: “CA should present its reviews on the budget project to the public as they present it to parliament; CA must prepare separate report on the delicate expenses directions (expenses of law enforcement institutions, state investment projects etc. )”; founds and financial operations out of the budget must be included to the reviews and audit report of the CA; CA must inform the public about the actions made by the government to fulfil the recommendations of CA”



The chairman of PAAFE, Zohrab Ismayil, made a speech on the topic “International experience and recommendations for Azerbaijan ” and presented his 11 recommendations prepared for CA. it included : independence of the chamber, expanding its activity sphere, increasing the functions of external control, measuring the effectiveness of expenses, conducting inspections on subsidises allocated from the budget for state companies etc. Zohrab Ismayil also emphasized that, any activity regarding the process of appointing and reappointing, retiring members, firing a chairman of the chamber, must not make them depended on the government. “Therefore, the changes must be made to the articles 8,9,10 of the Law “On the Chamber of Accounts” covering provisions regarding auditors, chairman and his deputy and their total independence from the government and parliament must be provided”. According to international norms, regardless of the situation whether it is included to state budget or not, all financial operations of the state can be and object of inspection for audit. Therefore, using its authorities, CA must be able to conduct audits of founds out of the stated, especially State Oil Found based on the survey over citizens, conduction of finance-budget expertize and revealing the result to the public must be added to the Article 16 of the Law “on Chamber of Accounts”.



The expert of ERC, Gubad Ibadoghlu made a speech on “Results of analysis of legislation on the activities of CA and recommendations”. In his speech he stated that, we can find all documents regarding the legislation in the web-site of CA. “In accordance with Lima Declaration the necessary degree of independence of CA and its members must be defined in the Constitution of Azerbaijan Republic. According to the Lima Declaration, definition of independence of the Supreme Audit Institution (SAI) by constitution, gives opportunity to SAI to act as a parliament member, and to work independently during inspections”

After the presentation, discussions started. Nazim Mammadov, an economic expert, stated that, deputies must have a right to apply to CA for conduct finance-budget expertize. “however, present, without order of the president, and Milli Majlis (Parliament), it is not allowed to conduct expertize, out of the working plan of CA ”.

At the end, the representative of CA Faig Najafov, stated his position. He stated the history of CA has only 12 years. It I not appropriate to compare CA with institutions of developed European Countries. “we also invite experts from Germany and other European country an learn their experiences. Currently CA prepare strategic development plan of 2012-2014. Within this project we had guest experts from Germany. In Turkey, France, Italy, and other European country CA is a part of the court system, but we have different system. However, I think that CA in Azerbaijan has enough authority. Chamber makes presentations on revealed defects, and our recommendations are fulfilled by the government. Moreover, the chairman of the chamber has the authority to stop financing it our recommendations are not implemented. We have not used this opportunity yet, because we never met with such situation. Speaking about posting results of expertize in the web-site, this is not implemented in other countries too. However I made notes. We will take under considerations all critics and recommendations and improve our activities within the framework of our authority ”