The special emphasis placed on reducing the shadow economy in the National Action Plan for the Promotion of Open Government is relevant in terms of the requirements of the modern era.

Baku, April 29, 2020, AZƏRTAC

In February of this year, the President of the Republic of Azerbaijan approved the “National Action Plan for 2020-2022 on the Promotion of Open Government”. The Action Plan defines important tasks covering ensuring transparency in our country, accelerating the development of civil society, freedom of information and other areas. In this regard, AZƏRTAC presents an interview with the Chairman of the Chamber of Auditors, Professor Vahid Novruzov.

- What factors necessitated the adoption of the National Action Plan on the Promotion of Open Government?

- One of the main characteristics of Azerbaijan’s economic development model is the particular importance attached to transparency in the governance system and in socio-economic life as a whole. The fact is that increasing transparency and establishing an effective control system are of great importance as essential conditions for ensuring socio-economic development in any country. It is no coincidence that President Ilham Aliyev continues to regard increasing transparency, combating corruption and preventing illicit income as among the highest priorities, as once again demonstrated in the recent statements of the President of Azerbaijan.

The head of state has ensured that our country has become one of the leading countries in combating the pandemic that began spreading at the beginning of this year and affected the entire world. Demonstrating firm determination in this area, President Ilham Aliyev has repeatedly emphasized, under the current challenging circumstances, the need to take more decisive measures to increase transparency, eliminate the shadow economy and ensure the efficient use of resources.

International experience shows that when efforts aimed at promoting open government are pursued consistently as a state policy, positive results are inevitably achieved. From this perspective, the consistent implementation of such a policy by the Azerbaijani state is also producing positive results. Most importantly, the country’s leadership has demonstrated strong political will in this struggle. The existence of such political will is reflected once again in the systematic set of measures established by the “National Action Plan for 2020-2022 on the Promotion of Open Government”, approved by Order of the President of the Republic of Azerbaijan dated February 27, 2020.

The main factors that necessitated the adoption of the National Action Plan (NAP), as stated in the relevant Order of the President of the Republic of Azerbaijan, are the further expansion of the application of the principles of openness, transparency and accountability, enhancement of financial transparency, expansion of mechanisms for ensuring the right to access information, support for civil society institutions and strengthening public oversight, as well as ensuring the continuity of measures undertaken to promote open government.

One of the features distinguishing the new NAP from previous plans is that the need to expand the application of accountability principles under new conditions has been brought to the forefront. The tasks set out in the area of enhancing financial transparency are also important in terms of ensuring the efficient use of available resources. The same applies to increasing mechanisms for ensuring the right to access information provided for in the NAP.

- How would you express the importance of the “National Action Plan on the Promotion of Open Government” in one sentence?

- There is no doubt that the full implementation of the tasks arising from the NAP will become an important factor contributing to the formation of healthier socio-economic relations in our country and ensuring full transparency in economic and financial activities. This is also of great socio-economic, moral and psychological significance amid the financial and economic crisis prevailing in the modern world.

- Which tasks envisaged by the NAP would you particularly like to highlight?

- The National Action Plan envisages the implementation of a number of important measures over the next two years to strengthen transparency in the activities of state bodies, which in turn are highly significant for preventing corruption and the shadow economy. Another noteworthy point is that the measures include specific tasks that meet modern requirements for promoting and applying ethical conduct rules.

As I noted above, the NAP also pays particular attention to measures aimed at ensuring financial transparency, which, in our view, is highly relevant in terms of the challenges of the modern period and addressing existing problems. I would also like to note that the bold economic reforms successfully implemented in our country envisage restructuring control, including financial and public oversight, which is an important function of governance, in accordance with international practice. It is particularly noteworthy that, in implementing the concept of economic development and progress under the leadership of President Ilham Aliyev, ensuring transparency, taking into account advanced international experience, and combating the shadow economy and corruption, which create obstacles to economic development and violate the rule of law and principles of social justice, have been identified as important priorities. In this regard, it is no coincidence that the NAP establishes the efficient use of financial resources, implementation of an improved control system and, in general, strengthening financial discipline as important directions for accelerating the country’s socio-economic development and as an attribute of open government.

The measures envisaged in the area of combating the legalization of money or other property obtained through criminal means and the financing of terrorism can be characterized not only by their importance but also by their close alignment with international practice. From this perspective, the particular emphasis placed on risk assessment is noteworthy as a more modern approach due to its preventive and proactive nature.

International experience shows that economic reforms cannot be implemented and sustainable development cannot continue to accelerate without a consistent and systematic fight against the legalization of proceeds of crime and without eliminating such practices. Both money laundering and the corruption and shadow economy that generate it cause significant damage to the economy of every country and create serious obstacles to the formation of a favorable investment climate, attracting investment from domestic and foreign sources, and developing entrepreneurship. At the same time, money laundering, whether domestically or abroad, and widespread corruption undermine the stability of a country’s financial market. From this perspective, there is no doubt that the comprehensive set of measures envisaged by the NAP will yield positive results.

In a document dedicated to promoting open government, the comprehensive and systematic approach to measures aimed at improving public services also provides a basis for the success of the NAP. In terms of ensuring the sustainability and productivity of the new civic solidarity and political dialogue that have become increasingly evident in our country recently, the NAP also sets out important tasks. In addition to all of the above, giving particular attention in the NAP on the promotion of open government to increasing transparency and accountability in the private sector and reducing the shadow economy represents not only a new approach but is also highly relevant and important in terms of the requirements of the modern era.

- As you noted, particular importance has also been attached in the NAP to improving accountability. What is this related to, and what will be the role of your institution in implementing the NAP?

- International experience has demonstrated that corruption, the shadow economy, unfair and unjustified stratification among population groups, and the possibility of legalizing illegally obtained money or property are directly related to the reliability of financial statements. In other words, in combating such phenomena, the proper preparation of financial statements and their objective assessment, ensuring control over illegal and suspicious transactions, and maintaining the necessary transparency in the activities of financial institutions are of great importance, and the potential and significance of auditing in this work are substantial. In international practice, the existence of financial statements objectively verified by an independent auditor is regarded as a preventive measure in combating the legalization of illegally obtained funds, the shadow economy and corruption.

Under modern conditions, one of the main prerequisites for the development of enterprises and organizations, including the exercise of control, is effective risk management. As stated in international standards, risk assessment is a systematic procedure for conducting a professional assessment of possible adverse conditions and events.

It is very important to use the capabilities of modern information systems to identify all activities subject to audit and existing risk factors and to assess their significance. In this regard, a number of important provisions have been reflected in the NAP, and a number of tasks have also been assigned to our institution. These tasks are reflected in the action plan approved by the Chamber of Auditors for 2020 in connection with the implementation of measures envisaged for the promotion of open government, with the relevant responsible persons and implementation deadlines determined.

In general, the auditors of our country, both in increasing transparency and combating corruption and the shadow economy, and in implementing the tasks envisaged by the NAP on the promotion of open government, in accordance with the instructions of the President of Azerbaijan, are determined to fulfill these tasks on time and with high quality. This stems from the need to live up to the high value placed by the head of state on the activities of the country’s auditors.

In this regard, I would like to recall the words of President Ilham Aliyev: “As the economy of the Republic of Azerbaijan develops and its integration into the global economic system strengthens, there arises a need to make greater use of the potential of auditing in ensuring transparency in economic and financial relations and in combating economic crime and corruption.”