There are four standard levels of control in EMB financial management: purchase and expenditure approvals processes, internal monitoring, internal review, and external review or evaluation. These controls are necessary to ensure that errors are corrected, and that corrupt or illegal practices are prevented. The basic level of control is of the EMB’s procedures for approving purchasing and authorizing expenditures. Approvals of expenditure up to defined financial limits may often be effectively delegated to secretariat staff with appropriate seniority. The important factor is diffusion of control — for example, by requiring transaction approvals from:
- the operational area that requests the financial commitment;
- the finance control area that checks that the commitment is in line with EMB strategic directions and financial policies; and
- the finance disbursement area that authorizes payment for the transaction.
Internal monitoring is conducted by the EMB staff who are responsible for managing its financial resources at all levels. This includes the heads of division, who are responsible for monitoring and reviewing staff performance and managing their divisional budgets. Overall financial monitoring is the responsibility of the division, usually the finance division that is responsible for managing EMB expenses and financial transactions through accounting records such as general ledgers, journals and suspense accounts. This division also usually controls the entire budget and produces regular financial reports, including cash projections.
Some EMBs have a special members’ subcommittee on financial matters, which advises the secretariat on financial issues and may also have the mandate to approve the proposed EMB budget and appoint its external auditors. This can be a wise method of controlling expenditure, although the EMB’s work will be hampered if the limit is too low.
The EMB may also have an internal auditor, a member of the secretariat whose objective is to ensure financial regularity and the alignment of the EMB’s budget and staff performance with its strategic direction. To maintain the independence of its internal auditing procedure, it usually reports directly to a member of the EMB or the head of the secretariat, rather than through a division of the secretariat. While a primary function of internal audit is to assure the EMB of the accuracy and integrity of its financial management, it can also play a broad internal development and evaluation role within the EMB. It can advise on the audit requirements of various systems, especially those based on new technology, and provide an impetus for change through the reports of internal evaluations of the EMB’s operational processes.
The financial control process also includes external audits, which are usually required at least annually, and often after significant electoral events as well. Audits of electoral processes in governmental EMBs under the Governmental Model and component governmental EMBs under the Mixed Model may be part of the external audit of the host department. External audits may be conducted by a government audit agency (if one exists) or by a private contractor, which examines the EMB’s financial transactions for the relevant period and reports on whether they were free of irregularities, and also identifies areas of financial management that require improvement.
The final stage of financial control includes public submission, often to the legislature, as in Guyana and Nigeria, of the EMB’s election or annual reports and audited financial statements. Accountability mechanisms for EMBs are discussed in detail in Chapter 10.
