135 anniversary

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THE 135TH ANNIVERSARY OF THE BULGARIAN NATIONAL AUDIT OFFICE

2015 year is big year for the Bulgarian National Audit Office because of the two important anniversaries - 135 years from its establishment and 20 years from the re-establishment of the budgetary control traditions in Bulgaria.

The Bulgarian National Audit Office was among the first institutions created after the Liberation. The first law makers in Bulgaria held the view that it was important to have control over the accounts of the state: Article 105 of the Turnovo Constitution says that the National Assembly shall “review the accounts of the Supreme Court of Accounts which is obliged to provide to it detailed reports on the implementation of the budget”.

The annals of the Bulgarian National Audit Office begin with the first Act on the Supreme Court of Accounts passed in 1880 by the Second Ordinary National Assembly. Two prominent Bulgarian politicians had a valuable contribution to that – the bill was introduced by the minister of finance Petko Karavelov, and Stefan Stambolov, who put all his energy into the drafting of the act. The legal text was rather short – all in all 9 articles and an organizational chart, because the introducer was afraid that “there would be no time to consider” such a law. During the parliamentary debates for its adoption, it was said that: “All states where the regular reporting on state accounts is considered important have courts of accounts, …, therefore the Principality is also badly in need of a court of accounts”.

It was during the debates that the resonant phrase about the staff of the Supreme Court of Accounts was pronounced by the prominent Bulgarian statesman Stefan Stambolov: “They have to be of such character so that we all trust their honesty”.

 While taking its first steps, the Supreme Court of Accounts met with some difficulties. Its first report to Parliament pointed out that its staff for the first year of operation was rather limited amounting only to the president, 5 members and 1 member-judge. Neverthless, the Court prepared a report which stated that up until 1 March 1879 the state had not had a budget.

Two years after the adoption of the first Act, a second act was passed in 1883, which was introduced by the then minister of finance Grigor Nachovich, political opponent of Petko Karavelov. The independence of the Court of Accounts has been violated with this law as it provided that its president and counsellors (members) be appointed and removed from office by the minister of finance instead of by parliament. At the same time, the act expanded the powers of the institution. The Court was obliged ‘to present a report to His Majesty” every year. It was for the first time that the Court had been assigned three tasks: to review not only the pecuniary accountability but the management of property by the state and the management of warehouses. The position of the prosecutor had been introduced with the chief mission of protecting the public interest.  The Court was assigned judicial functions – by exercising ex post control over the annual financial and property statements of the auditees, the Court issued decrees for granting or not granting a discharge.

Following the elections for the Fourth Ordinary National Assembly, Petko Karavelov returned to power as prime minister and finance minister. He continued his efforts to strengthen state control and in 1885 the third Act on the Supreme Court of Accounts was adopted and remained into effect for the next 40 years. The control was again made fully independent from the government. The president and the counsellors were appointed by decree of the Prince upon proposal of the Council of Ministers, and their removal from office was possible following a request from the Cabinet or the National Assembly but only with his decision. The Act introduced judicial powers for the institution. The Court became the second instance of appeal in regard to the decrees issued by the standing district commissions on the financial statements of the village municipalities. The functions of the Court have been extended – it took over the control over the income and expenditures of legal entities governed by public law, and the examination of the financial statements of all public charities and other organisations.  The Court was obliged to carry out ex-ante control and issue permissions for all payment orders under the state budget. Thus, the ex-ante form of control had been introduced in the activity of the Supreme Court of Accounts.

With such a wide range of activities, the huge volume of control tasks could not be performed effectively with a centralized structure. That is why, in 1925, a new Law on the  Supreme Court of Accounts and the district courts of account which were functioning in regions and  administrative districts was adopted.

With the amendmnent of the Act in 1934,  the district offices were closed and regional offices were set up. The Supreme Court of Accounts  and the regional offices were authorised to control the total execution of the state budget, the budgets of all town and village municipalities, the regional permanent commissions, the city and village school boards of governers, church and religeous institutions and all state  autonomous and public organisations and charities. In additon to the ex ante and ex post control, they conducted substantive tests and on-the-spot checks as well. The courts of acounts of the European states at that time did not have such broad competences.

The Supreme Court of Accounts became an instance of cassation in the place of the High Court of Cassation. A special court was established within the Supreme Court of Accounts  whose decisions were final. The Court was granted consultative functions – it provided an opinion on the application and interpretation of statutory texts and regulations in general and on specific cases.

On the eve of World War II in March 1939, the Bulgarian Parliament adopted the Law on the incurring, discharge and control of army expenditure in the time of war. In each Bulgarian army a mulitary court of audit was set up representing a section of the Supreme Court of Accounts. Their task was to do a final examination of the army expenditures in the time of war.

The Supreme Court of Accounts  functioned until the end of 1947 when it was dissolved. The regional offices were subsequently closed down in 1948.

An attempt to re-establish the Supreme Court of Accounts  was made in the first years of the transition period to democracy and market economy. The Seventh Great National Assembly at its last session on 2nd October 1991 adopted the National Audit Office Act. The President of the Republic used his power of veto and returned the act for further consideration but meanwhile the National Assembly was dissolved.

On 27th July 1995, the 37th National Assembly adopted the National Audit Office Act with which the traditions of the budgetary control in Bulgaria were reinstated. The first board of the institution was elected the same year.

Nowadays the National Audit Office consists of president, two vice-presidents and two members, representatives of the Institute of Chartered Accounts and the Institute of Internal Auditors. The audits are carried out in line with the international auditing principles and standards. The Institution is initiator and host of many and various national and international forums, conferences and discussions on important to the society themes, related to its activity. It is very active by presenting conclusions and findings on problems based on implemented audits. The Institution supports the professional development of students by providing internships in the audit office.

Publicity and transparency are among the main principles observed by the National Audit Office. In 2011 the Bulgarian National Audit Office was awarded the Golden Key prize  which is an acknowledgment for the BNAO striving to ensure complete information to the public and the society. The information is provided through the official webpage, the Register of the Declarations of Assets of Senior Public Officials and the Unified Public Register for Election Participants. According to a survey conducted by the international organization Transparency International in 2011 the BNAO is the institutions with the highest degree of integrity in Bulgaria.  

The management and auditors of the BNAO are working towards strengthening the relations with the Parliament, the institutions and the citizens to communicate the important audit results. The strategic audit goals aim at increasing the accountability and transparency in the public funds managements; higher effectiveness of public services; improving the effectiveness of the regulatory and supervisory authorities.

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