The State Audit is one of the pillars of a modern, democratic regime. The evolution of the Administrative State and the Modern Welfare State and the corresponding growth of bureaucracy in the years following the Second World War have turned public administration into an integral part of daily life for every resident of the modern State. The State began to provide numerous services, to finance other services, either directly or via third parties, and government agencies have become regulators and supervisors in many additional areas. In fact, every step taken by the individual is accompanied by administrative interference of one sort or another. This reality raises complex dilemmas. While on the one hand, the bureaucratic structures of the modern State were founded in order to serve the individual, providing him with welfare services and guaranteeing his rights, on the other hand use of the authority and enormous power vested in the State and its employees has the potential to damage the public interest, be exploited for personal gain, undermine the rights of the individual and lead to the inefficient use of public resources.
In order to overcome the dangers involved in giving extensive powers to public officials, the modern State has put in place a system for controlling and monitoring administrative authorities and their branches in order to ensure the legality and regularity of their activities, integrity, the safeguarding of the individual's rights, good governance, efficiency and economy. The State audit plays a pivotal role within the aforementioned system, and as such is part of the complex of checks and balances which exist in a democratic State. The role of the State Audit is to appraise the activities of the bodies coming within its ambit in accordance with the norms which regulate their work. The status attributed to the State Audit is a barometer of the democratic strength of the country. External scrutiny of the Executive and publication of the Audit's findings expresses the principle that public sector employees in a democratic country are the trustees and servants of the public, not its masters, and constitutes a major factor in strengthening the accountability of public administration and the transparency of its activities. Effective scrutiny of government authorities guarantees the existence of a free and democratic society.
In most democratic countries, an independent Supreme Audit Institution (SAI) has been established to be responsible for scrutinizing and assessing the activities of the Executive and other public bodies. The principles by which the Supreme Audit Institutions operate are contained in the 1977 Lima Declaration of Guidelines on Auditing Precepts and the 2007 Mexico Declaration on SAI Independence, which were adopted by the International Organization of Supreme Audit Institutions (INTOSAI). These Declarations delineate, inter alia, the centrality of the SAI's lawful or constitutional activity; the independence and immunity of its director; the need for the SAI to have a broad mandate and the authority to act according to its discretion only in all matters concerning the performance of its functions; the obligation to give the Audit's employees unrestricted access to information; the need to give the SAI the authority to publish and publicly report the findings of its Audit; the obligation to establish effective mechanisms for correcting deficiencies and the obligation to give the SAI adequate resources and managerial and budgetary independence.
The SAI of the State of Israel is the State Comptroller and Ombudsman, who currently acts pursuant to the authority vested in him by the Basic Law: The State Comptroller, a law which was enacted by the Knesset in 1988 and which constituted a fundamental turning point in determining the prominence of the Israeli State Audit. This Basic Law defines the constitutional status of the State Comptroller and Ombudsman. Section 2(a) of the Basic Law lists the types of bodies which are subject to the State Comptroller's audit: "The State Comptroller shall audit the economy, property, finances, obligations and administration of the State, of Local Authorities and of other bodies or institutions which are by law subject to audit by the State Comptroller", while section 2(B) delineates the scope and depth of the audit of those bodies: "The State Comptroller shall examine the legality, integrity, good governance, efficiency and economy of the audited bodies, as well as any other matter which he deems necessary". Section 4 gives the Comptroller the constitutional authority to to investigate public complaints as "the Ombudsman". Similarly, the Basic Law imposes an obligation on the audited bodies to provide the State Comptroller with information.
The State Comptroller is chosen by the Knesset in a secret ballot in which he received a special majority of votes and serves for one, seven year term. In performing his functions the State Comptroller is accountable only to the Knesset and not to the Government and it is he who determines the subjects which the Audit is to address each year. The budget of his Office is determined on the basis of the State Comptroller's proposal and is approved separately from the State Budget by the Knesset Finance Committee and the Comptroller submits a report to the State Audit Committee detailing how his Office's budget was used. The State Comptroller likewise enjoys independence in all matters concerning the recruitment and dismissal of his Office's employees. The State Comptroller submits reports and opinions to the Knesset relating to his areas of responsibility and releases copies of them to the public in the manner and subject to the restrictions imposed by law.
From its earliest days, the State of Israel already recognized the importance of the State Audit and so on 19th Iyar 5709 (18th May 1949) the Knesset passed the State Comptroller Law, establishing the State Audit as one of the fledgling State's first institutions. The Law was subsequently amended on two occasions and in the State Comptroller Law, 5718-1958 [Consolidated Version], the original version of the Law was revised in the light of the common law developments which had taken place up until that time. The broad powers which the Law has vested in the Comptroller since the establishment of the State, in terms of both the types of entities coming under his scrutiny and the scope and depth of the inquiry to which they are subject, has laid a solid foundation for an in-depth and thorough audit.
The original version of the State Comptroller Law created two frameworks: Firstly, a regularity and legality audit in the traditional sense, and secondly an economy and efficiency audit. A 1952 amendment to the Law added an integrity audit. Over the years, the audit was expanded to also include an assessment of the effectiveness and execution of the audited bodies' activities. Since the 1980's, the State Audit in Israel has also addressed, in appropriate cases, the results of government actions and policy. In conjunction with this development, the State Audit has been applied to additional bodies, such as government corporations, local authorities, subsidiaries of audited bodies, institutions of higher education, health funds and public transport cooperatives, etc.
In due course, the State Comptroller was appointed under the Political Parties Financing Law, 5733-1973, the Local Authorities (Financing of Elections) Law 5753-1993 the Political Parties Law, 5752-1992 to audit the accounts of the political factions in the Knesset, the accounts of candidates and factions in local authority elections and the current accounts of candidates running in internal preliminary party elections (Primaries).
Since 1971 the State Comptroller has also served as the Ombudsman and the address for the investigation of complaints by all persons detrimentally affected by the administrative decisions and actions of any national-public body described in the Law (an investigated body). The Comptroller's aforementioned role as Ombudsman is entrenched in the Basic Law: The State Comptroller. In this capacity the State Comptroller, in a similar way to a judicial tribunal, protects the rights of the citizen and investigates individual grievances against administrative actions. The Ombudsman carries out his functions through the Public Complaints Commission, which is a special unit within the State Comptroller's Office. Integrating the roles of SAI and Ombudsman is unique and has many advantages: The State Comptroller scrutinizes on his own initiative the audited bodies' entire range of activities, while the Ombudsman investigates complaints which are filed with him concerning the infringement of an individual's rights in relation to a given subject. Where investigation of an individual complaint by the Ombudsman exposes a defective administration technique or systematic illegality, his additional role as State Comptroller enables him to instruct those members of his staff who are engaged in the auditing work to examine the complaint not only from the complainant's point of view, but also from a comprehensive, systemic standpoint, which takes into account the interest of the general public. Moreover, the Public Complaints Commission is able to make use of information held by the Audit Units relating to the subjects of the complaints which it is investigating.