Part III Assessing resources Chapter 12: Auditing public spending KEY QUESTIONS • What steps are involved in spending resources? • What are some of the common reasons why governments’ actual expenditures deviate from planned budgets? • What different approaches can be used to monitor resource expenditure? INTRODUCTION One common reason that policies, plans and programmes that aim to fulfil ESCR end up being underfunded is that the money that is allocated is not spent well. For this reason, it is important to differentiate between budgeted spending (what government officials say they intend to spend when they enact the budget) and actual spending (the amounts that actually go out the door during the course of the year). A budget may have been adequate but not spent entirely. Alternatively, if the amount spent is more than allocated, funds may have been used for purposes for which they were not approved. For this reason, it is also important to look at how “downstream” decisions affect the way allocated funds are actually spent in practice. This chapter outlines the key steps involved in resource expenditure and explains why the expenditure process is important to evaluate from a human rights perspective. It then introduces a number of different approaches to do this, including strengthening oversight and audit bodies, monitoring procurement and monitoring the impact of spending. 12.1. WHAT IS RESOURCE EXPENDITURE? Resource expenditure, or budget execution, generally follows five steps: Funds are disbursed to various line ministries (or departments and agencies) as per the approved budget; Agencies initiate expenditures directly, or by procuring goods and services; Payments are made for these expenditures; Expenditure transactions are recorded in accounting books; and Financial reports produced throughout the year culminate with the closure of the accounting books and the production of year-end reports. As constitutional or statutory agencies, this is a process that NHRIs also have to follow. As noted in the final step, the executive branch of government is required to report on its fiscal activities to the legislature and to the public. Expenditures should also be subjected to regular review by an independent and professional body, such as an audit institution or the country’s auditor general. The findings of the audit body should be submitted to the legislature, which is responsible for holding the executive accountable for its budget execution practices. Chapter 12: Auditing public spending | 119