This is a first in a series of articles and webinars about how to follow the money, which highlights the work of organizations and activists around the world.

“Follow the money” became popular after its use in the 1976 Hollywood blockbuster All the President’s Men. In development circles, the phrase is widely used by international agencies and civil society organizations (CSOs) to demand transparency and accountability in government spending. Never before has this been more necessary.

In the past few months, governments have announced billions of dollars in emergency spending to mitigate the health and economic impacts of the COVID-19 crisis. The International Monetary Fund (IMF) has called on governments to “do whatever it takes but keep your receipts” and encouraged CSOs to be involved in monitoring government spending. Many international and national CSOs are looking to do just that.

How can CSOs follow the money?

While there is undoubtedly a need for enhanced oversight to ensure that emergency spending measures are serving their objectives and reaching their intended beneficiaries, it is not an easy task for CSOs to conduct such oversight. As our Open Budget Survey 2019 shows, three out of every four of the 117 countries surveyed failed to reach the minimum threshold for adequate budget transparency. CSOs will find it challenging to follow the money expended to respond to the effects of COVID-19 because budget and spending data are either not published or are not even produced. The challenge is exacerbated during emergencies such as the current one as several governments are channeling their relief efforts through special funds that are managed outside of the routine budget process, and these off-budget funds are typically even more opaque than the routine budget.

The good news is that organizations do not have to start from scratch. Over the past two decades, CSOs have developed a suite of innovative ways to follow the money.

1. Understand the budget implementation process and its place within national budget cycles.

The budget implementation process begins with monies being released by the national treasury (or finance ministry) to spending ministries (like health or education) in line with the budgets authorized by national legislatures. These ministries incur expenditures directly through their payrolls (on teachers, doctors, etc.) or by procuring goods and services (such as school supplies and medicines).

Procurement systems followed by governments typically begin with the solicitation of bids and then the award of contracts to vendors who ideally offer the best value for money. Later, payments are made to the vendors to pay for the goods and services they have provided. The actual expenditures incurred are recorded in national accounting books and budget reports. These records are audited for accuracy by supreme audit institutions (SAIs), who submit their audit reports to national legislatures. Legislatures then use audit reports to demand remedial measures and accountability from officials responsible for spending decisions.

Off-budget funds processes differ from country to country. IBP has created a useful resource on issues surrounding the governance and transparency of public spending that occurs outside of the regular budget. The IMF is also in the process of issuing a special note on special funds established by countries to channel COVID-19-related funds and the risks that can be associated with such funds.

2. Tools for following the money:

IBP publication “Our Money, Our Responsibility: A Citizens’ Guide to Monitoring Government Expenditures,” describes 10 methodologies CSOs have used effectively to evaluate and monitor government spending. Below, we highlight four of these tools that CSOs can use now to track COVID-19 relief expenditures.

A. Social Audits: These are participatory processes through which local communities directly scrutinize public programs and projects and hold governments to account in public hearings attended by officials responsible for overseeing the programs and projects that are the subjects of the audits. Social audits are widely used by both governments and CSOs. In India, state governments use the tool to monitor the implementation of a wide range of social sector programs, including the multi-billion-dollar rural employment guarantee program. Social audits have also been widely used by CSOs in South Africa, Kenya, and Indonesia. The tool is most appropriate for grassroots organizations or networks that have deep roots in local communities. Read this story on how Beatrice, a resident of a poor township in South Africa, used social audits to improve sanitation services in her community.

B. Open Contracting: CSOs have developed multiple tools to monitor government procurements. One such tool developed in the Philippines is the Differential Expenditure Efficiency Measurement (DEEM) tool. Using this tool, Procurement Watch Inc. uncovered inconsistencies in records produced at different stages of the procurement process (such as between the purchase request form, purchase order, and the payment disbursement order), which in turn highlighted mismanagement and corrupt practices being followed by government agencies. However, the use of tools like DEEM require CSOs to possess a degree of expertise on complex government procurement processes. More recently, the Open Contracting Data Standard developed by the Open Contracting Partnership offers governments and CSOs opportunities to more easily analyze government contracts.

C. Citizen Report Cards: This tool is used to obtain public feedback regarding the quality and adequacy of essential services. The report cards evaluate user satisfaction in such areas as staff behavior, the number of visits required to complete a task, and the ease with which problems are resolved. Citizen report cards have been widely used around the world, including in India, Philippines, Ukraine, and Vietnam. Read this story on how CSO use of citizen report cards led to improving public services in Bangalore, India. CSOs that conduct a citizen report card exercise may need specialization on survey techniques and survey fieldwork. Universities and private companies can be good places to find people with skills in these technical areas.

D. Audit Scorecards: CSOs use this tool to evaluate and publicize key findings contained in audit reports issued by SAIs. Scorecards typically focus on revenues and expenditures flagged by auditors as being in some way improper or irregular, or for which there is insufficient documentation. View these short videos produced by IBP’s civil society partner in Sierra Leone—the Budget Advocacy Network—that highlight the amounts of funds in different national ministries that have been questioned by the national SAI due to improper management. CSOs do not need to be financial or accounting specialists in order to use this tool although they would benefit from some experience in government audits. Fortunately, SAIs are increasingly receptive to collaborating with CSOs on holding governments to account on public spending and could be strong resources for CSOs in implementing this tool.

3. Analyze and research your results carefully

Governments’ actual expenditures often deviate from planned or budgeted expenditure. For this reason, in a recent blog article, we cautioned CSOs about prematurely celebrating government spending announcements as these plans may not be fully implemented. But planned and actual expenditures can diverge for many reasons, some of which are legitimate while others are improper or even downright illegal. Through our pilot project on addressing budget credibility, we identified many reasons for deviations in government budgets across dozens of countries that were studied, including the following:

• Flawed financial management systems;
• Corruption;
• Diversion of funds to other programs;
• Poor revenue collections;
• Unpredictable donor aid flows; and
• Inefficient procurement systems.

Identifying expenditure deviations in a project to follow the money is insufficient. The reasons underlying these problems can be complex, and the solutions even more so. The most difficult part of the project is often to understand this complexity and propose appropriate solutions.

Governments deserve much credit for channeling unprecedented levels of funding to combat the COVID-19 crisis. But taking a longer view, public spending on social support programs needs to continue well into the future—even after the immediate threats posed by the COVID-19 pandemic fade. For this to happen, policy makers and the broader public need to be assured that scarce resources will not be mismanaged or line the pockets of corrupt officials. By serving as watchdogs of public expenditures during the COVID-19 pandemic, CSOs can provide a valuable service that can help improve government accountability surrounding the delivery of critical services. They can also help bolster the case for a fiscal future in which governments commit additional resources their populations will need to recover from the profound social and economic consequences of the COVID-19 pandemic.