Audit and innovation: an uneasy relationship

If you talk to public servants anywhere in the world about innovation, it usually doesn’t take long before the words “risk aversion” come up in conversation. A lot of people feel that trying new things in the public sector is difficult because there is little ability to take risks. There are many reasons why this might be so, but one issue that comes up fairly often, sometimes with a little shudder of the shoulders, is audit.

Audits vary between countries and public sector contexts, and audit can be externally done (e.g. by a supreme audit institution) or be something that is internal to an organisation. Audit functions are very important for governments. They help ensure confidence in the integrity of the public sector, they help identify where things could be done better, and they help create guidance about how to avoid repeating errors in the future. Audit is about getting to better outcomes, and is an important accountability function in government.

Yet, audit practices are not always sympathetic to innovation. Innovative projects change as they are developed and implemented, as new things are learnt and assumptions are challenged or even overturned. Predictions and project plans about how an innovative project will proceed are likely to be incorrect, in small ways or large. Projections of what skills and capabilities might be needed, or assessments of the risks to be encountered, may be quickly outdated as the project is undertaken. There may be many things that seem obvious after the fact despite being impossible to predict beforehand. Innovation is fundamentally a messy process. But audit processes can sometimes take a more rigid interpretation of what risks could have been foreseen, what could have been expected or anticipated, what should have been planned for, and the rigour that could or should be demanded from project management. Audit processes can sometimes be predicated on the idea that there was a right answer that could have been known beforehand.

This is not universally true however. In our work here at the OECD, we have come across a number of audit offices and functions that are very interested in innovation and who see public sector innovation as an important ingredient for getting better outcomes. Some of them have undertaken concrete steps to try and ensure that the tension between innovation and audit is lessened. For instance, some public efforts that I can point to include:

• In 2009 the National Audit Office (UK) published Innovation across central government
• Also in 2009, the Australian National Audit Office (Australia) published Innovation in the Public Sector Better Practice Guide
• In 2015 the Brazilian Federal Court of Accounts (Tribunal de Contas da União, TCU) established their Colab-i innovation lab.

Nonetheless, we know that audit can still be a big concern for those undertaking innovative projects. That’s why we’re working on better understanding the relationship between audit and innovation, and how it might be changed for the better. How can audit (which is ultimately about trying to get better outcomes from government) be used to drive innovation, rather than hindering it?

So we want to hear from hear from you about your experiences – positive and negative – about audit and innovative work, projects and initiatives. We’re also keen to hear about any work that has been done to help ensure that audit is an instrument that can help drive innovation. You can let us know about your experiences, or share any examples or resources with us, on Twitter, via email or in the comments below.

We’ll be using the information we receive as an input for the meeting of the Auditors Alliance at the OECD in March, and hope to share back what we learn about how to help audit drive, rather than deter, innovative activity in the public sector. Ultimately we hope this emerging knowledge and examples will feed into a piece on innovation and audit that we will be writing in 2020 as part of our continuous exploration of the barriers and enablers of innovation in government.