site.btaNational Audit Office Sounds Alarm over Proposed Legislative Changes Threatening Its Independence

The Bulgarian National Audit Office (BNAO) announced on Thursday that it will alert the international professional community about a threat to its independence.

The management of the institution will request the Development Initiative (IDI) of the International Organisation of Supreme Audit Institutions (INTOSAI) to launch a procedure under the SAI Independence Rapid Advocacy Mechanism (SIRAM). This is a well-established procedure that the members of the international organisation can use in cases where the fundamental principles for the independence of Supreme Audit Institutions (SAIs) are violated, namely the standards INTOSAI-P1 "The Lima Declaration" and INTOSAI-P10 "Mexico Declaration on SAI Independence". 

"The Lima Declaration" states that "The Supreme Audit Institutions can accomplish their tasks objectively and effectively only if they are independent of the audited entity and are protected against outside influence."

The decision follows the submission of a bill to the 51st National Assembly on December 10, 2024, to amend the National Audit Office Act. The proposed amendments seek to strip the chair of the authority to propose deputy chairs for parliamentary approval, instead allowing the National Assembly to directly nominate and elect them. A similar bill was submitted to the 50th National Assembly on August 5, 2024.

This proposal comes after a constitutional amendment permitting deputy chairs of BNAO to serve as caretaker prime ministers. The statement noted the significance of allowing the National Assembly to appoint deputy chairs on political rather than professional grounds.

The bill's justification claims the nomination process is modelled after other bodies elected by the National Assembly but provides no specific examples. However, BNAO pointed out that leaders of entities such as the Bulgarian National Bank, the Financial Supervision Commission, and the Commission for Public Oversight of Statutory Auditors also propose their governing bodies to the National Assembly.

“The re-introduction of a Draft Act that radically changes the approach to the nomination of Vice-Presidents of the Bulgarian National Audit Office threatens the independence of the Supreme Audit Institution in an unacceptable way,” BNAO warned.

As early as August 6, 2024, after the first Draft Act for the amendment to the Bulgarian National Audit Office Act was deposited, Goritsa Grancharova-Kozhareva, Acting President of the Bulgarian National Audit Office, sent a letter to Tony Murphy, President of the European Court of Auditors, informing him about the attempts to compromise the independence of the Bulgarian institution.

In response, Murphy pointed out that independence is a key prerequisite for the objective and effective functioning of the Supreme Audit Institutions. In the letter, he made the point that the international professional audit community has a Rapid Advocacy Mechanism to protect the independence of the Supreme Audit Institutions (SAIs). The mechanism has not been initiated to date and a follow-up visit by international organizations has not been carried out in the hope that the Draft Act to amend the Bulgarian National Audit Office Act, which remained not adopted by the 50th National Assembly, is an isolated attempt to use the Bulgarian National Audit Office for political purposes, and that the statesmanlike approach of the promotion of independent external audit in the public sector will nevertheless prevail over the narrow partisan interests.