Governance Strengthening accountability systems: e.g.

the introduction or reform of public sector

watchdogs, or new uses of information technology, to strengthen public sector transparency and accountability

Case study analysis: The implementation of a New IT System (ECUAPASS) in the National Customs Service of Ecuador (SENAE): Problems, Challenges and Possible Solutions

Theoretical review essay

Introduction

Nowadays, governments and public institutions worldwide are facing internal and external demands to improve public management (Kretz and Sigurdson, 2009). These demands come from a variety of sources, ranging from international organizations to citizens groups and civil society. There is an important view among these groups that public institutions can be managed and evaluated in the same way as private organizations through demands for control, transparency and responsiveness (Steets, 2010). Considering the aforementioned, it is imperative that governments implement

policies to expand accountability within these institutions, since public organizations are the ones which provide services and goods in response to citizen demands.

The term accountability is no longer a narrow concept, as it has been extended in a number of directions. Presently, accountability goes beyond the concept of the obligation to present an account for the execution of responsibilities to someone else. As Richard Mulgan (2000) mentions in his article Accountability: An ever-expanding concept, the term accountability refers also to The sense of individual responsibility and concern for the public interest expected from public servants. I argue that this is a more suitable approach for the development of this work.

In embracing this thought, in 2007, SENAE (National Customs Service of Ecuador) embarked upon a process of change to strengthen public sector transparency, accountability and performance. The main steps to achieve this change were to create a new Customs Legislation, a new IT platform and therefore a change in the structure organization. It is important to point out that SENAE is one of the major public institutions in Ecuador and it is the second largest source of taxes for the Ecuadorian Government, where taxes are the first entry for the national budget.

As a response to this process, a new IT system was created: ECUAPAS. This modern IT service has been one key part of this change. It was the result of an important agreement between Ecuador and South Korea Governments in order to control and facilitate trade among countries. For this reason, one hundred professionals from Ecuador and South Korea worked together in the creation of the new IT system (SENAE, 2013). Finally, ECUAPASS was launched in October of last year with the purpose of increasing accountability and revenue. However, despite its advanced technology, ECUAPASS suffers from several major drawbacks. Most of these problems are linked to accountability and, as it was implemented just five months ago, its beta period is the suitable opportunity to analyze these changes.

The first and most important drawback of the ECUAPASS program is lack of control. In order to accelerate the traffic of trade affairs, ECUAPASS tries to facilitate customs clearance. With this goal, ECUAPASS will focus on controlling the imports and exports already executeda process called Passive Control. As most of the responsibility is held by public officers in charge of Passive Control, there is increasing concern about who the people in charge of this task should be and who should control them. Another important point is that, since the number of documents for the process of imports and

exports is reducing with the use of the IT System and most of them will be online documents, it is difficult to ensure reliance on these documents because due to the lack of a method to validate online customs documents. For this reason, ECUAPASS must contain the most important information for document checking as well as the most relevant information on security features of authentic customs documents. On this topic, a vital question emerges: Is it possible to facilitate and simplify customs processes while simultaneously improving the control of these processes?

In addition to control, transparency is one of the biggest problems that SENAE must overcome. In fact, corruption and lack of transparency are common problems in Ecuadorian politics and certainly this institution has faced it in recent years. For this reason, one dilemma that SENAE faces is how to improve transparency with the implementation of ECUAPASS. Is it a good strategy to release important data into the public domain in order to ensure transparency of processes?

Finally, it is important to mention the challenges in terms of social responsibility and participation. In fact, civil society has an enormous stake in how national and local funds are spent. For this reason, one of the problems arising with the implementation of ECUAPASS is the lack of space to engage citizens in the auditing processes. This is a

legitimate challenge since citizen auditing could potentially weaken the power of bureaucrats. Additionally, civil society and citizens are called to collaborate with the governments goals. Therefore, one important challenge that SENAE faces with the implementation of this new IT system is also to change the citizens and public officers behavior in order to create a taxation culture among them.

Considering the above, this essay will examine some insights from selected literature regarding accountability. This essay will also discuss the relationship between these theories and the main problems of the implementation of ECUAPASS summarized in the introduction. Next, it will analyze what these theories suggest to manage possible solutions. Finally, this essay will present some conclusions summarizing strengths and weaknesses in the existing theoretical analysis.

It is important to list some of the possible solutions to overcome the problems that SENAE is facing at the moment:

Creation of a new department in charge of the Passive Control as well as new rules for the department.

Designation of an external control agent in charge of the evaluation of ECUAPASS

Develop a Tributary Culture. A campaign to explain the importance of taxes revenues for the Ecuadorian social wellbeing.

Responsibility and participation of citizens. ECUAPASS training program. It is important to highlight that training is not just for public officers but also for private sector agents and civil society.

Sharing of information among national and international organizations involved in the clearance process such as: customs, banks, traders, ministries, WTO, Andean Community.

IT application to detect false customs documents. ECUAPASS should hold an online platform where all the important information, taxes statistics and results are opened to the public

Literature Review

Significant research on private accountability has been done. In the private sector, accountability is focused basically on setting up controlling relationships with company directors, chief executives officers, shareholders, regulatory institutions, customers and stakeholders (Steets, 2010). However, accountability in public institutions has been briefly investigated. This part of the work will include a review of the theoretical

approaches of accountability in order to provide a broader understanding of it as well as taxation culture since these are the main concepts this essay is going to convey.

Several research approaches have considered some general and traditional concepts about accountability. Mulgan (2010) described accountability as the process of being called to account to some authority for ones actions. Another author, Stewart (2009) established accountability as the obligation or willingness to accept responsibility or to account for ones actions. These two concepts offer a clear, but at the same time narrow view of the purpose of accountability. Therefore, it is essential to analyze this concept in detail in order to manage it. As it was mentioned previously, accountability now covers several areas in terms of public management. For this reason, the literature relating to accountability will be analyzed separately from different approaches.

Control is an essential part of public institutions. In fact, a lack of control is the main reason accountability fails within organizations (Kusek and Rist, 2004). One of the reasons for creating public policies is the necessity to control communities, cities and countries. A large body of research has been published on the relation between accountability and control. In some cases, it could be said these two terms are inseparable. An interesting approach to this issue has been proposed by Mulgan (2010).

He has suggested that control is the core sense of accountability and that this concept is clearly grounded in the purpose of making agents act in accordance with the desires of their superior.

Several publications have appeared in recent years documenting also two kinds of control within public institutions: Internal and External Control (Stewart, 2009). According to some researches internal control is the process affected by the same public officers and managers of the institutions, designed to provide reasonable supervision and assurance regarding the objectives of the organization. On the other hand, the term external control is defined as the meaning of being responsible and responsive to external actors. For example: Public officers are accountable to the legislature or the community.

Another important approach to accountability is responsibility. In recent year the term responsibility has become very popular in the politics field. One of the definitions of responsibility is presented in the book Accountability in Public Policy Partnerships (Steets, 2010). She describes responsibility as an inward sense of moral obligation. She also claims that this approach of accountability tries to cover the internal function of a person morality and professional ethics. Steets also provides a concept for responsibility

in regard of public accountability. She defines responsibility as the act to entrusting money to others, who accept the responsibility to deal with it according to the terms agreed. In other words, citizens entrust their money to public institutions, which have to accomplish the government goals and thus to benefit civil society.

The last and equal important approach is social accountability. As Macneil and Malena (2010) describes in his book Demanding Good Governance, accountability always involve a second side, since it is a concept that refers to the relationship between at least two actors. This second actor is the civil society. They define the term social accountability as the wide range of citizen and civil society organization actions to hold the state to account. In other words, citizens have to be seriously involved in the pursuit of ensuring accountability within public institutions.

Finally, Baumol and other authors (1992) offer in his book Economics principles and Policy an explanation for the relevance of taxation within governments. For instance, taxes may be also levied to reduce economic problems and they provide the government with considerable revenue to invest in welfare benefits. The possible solutions aim to reach the two important criteria of taxation: Equity and efficiency.

In this part of the review, this essay will discuss what lessons from these theories and approaches can be applied to the SENAE case. The first aspect to point out is the concept of control in regard to accountability. It is important to highlight that several researches have define control as the core sense of accountability. Therefore, this approach deserves a special and careful consideration. According to the authors, some control problems arrive due to the lack of separation of powers. In fact, just a clear separation of powers allows public institutions to ensure accountability. According to this idea, the creation of an independent new department in charge of the Passive Control appears to be a suitable solution.

However, one thing learned from the literature is that a new department in charge of the Passive Control of clearance process is not sufficient to ensure control. According to the authors and the literature explained before, to ensure accountability is necessary internal and external control. On one hand, internal control should be cover with the creation of the new control department and the support of the customs legislation. On the other hand, therefore, ECUAPASS system should be control by other external agents. For example: The Ministry of Production is able to access updated information

of the clearance processes. The information should contain relevant details, such as: date, time, employee who is in charge of the process, documents, taxes amount, etc.

Finally, studies indicate that establish who is in charge of control is as important as how control is developed. In fact, sometimes public managers are inclined to focus control on their departments activities its outputs, rather than on the bigger picture (Streets, 2010). Control can be improved just when public managers focus on whether their control efforts lead to positive changes in the lives of citizens or they accomplish governments goals.

The theoretical review also explores the concepts of social accountability and participation. Definitely, social accountability entitles an interesting and challenging approach in terms of public management. This is evidence of the importance of engaging citizens and civil society to the process of control within public institutions. Indeed, the collaboration of the civil society is a key instrument in a policy implementation process. This approach may not be practical in all situations, since citizen participation is not normally admitted to the key decision-making bodies that establish priorities in public institutions, and certainly not to auditing processes.

Bearing in mind this, it is worth noting that the SENAE is facing a huge challenge in the development of a new IT System which engages citizen participation. For this reason, the idea that ECUAPASS should hold a platform where the results and taxes statistics are opened to the society seems to be a good improvement to the IT system in order to collaborate with the strengthening of public sector transparency and accountability.

Another important approach of accountability is responsibility. According to Steets (2010) policies frequently fail if the responsibility is shared among too many players. As more agencies become involved the complexity of coordination overwhelms the original policy intent. For this reason, it is important to clearly establish who will be the actors in charge of the implementation of ECUAPASS changes. Being careful not to involve departments of SENAE which are not necessary. In essence, a successful policy will be implemented by just one or, at most, a small number of actors.

In embracing these theories, one can claims there is not a single theoretical approach that can provide all the insights required for ECUAPASS challenges. It is necessary to synthesize all of them.

Conclusions

To conclude, this review of literature found that the concept of accountability goes beyond the obligation to present an account to someone else. Certainly, the literature reveals that accountability in public management comprises a series of sub-concepts such as: responsibility, transparency, social accountability, control end others, which even though they can be studied individually, when all those elements are putting together public organization can obtain superior outcomes.

The literature also indicates that each of these approaches of accountability can be applied on different areas of the institution. In this case, the concepts lead one to consider suitable some of the solutions suggested to the implementation of ECUAPASS.

Additionally, many researchers agree with the idea that accountability has positive implications in terms of the performance of public institutions. However, more studies would need to be done to measure to what extent accountability provides improvements in Public Organizations performance.

In essence, it is noticeable that accountability is a vital part of public management in the present day. Therefore, this literature will have positive effects to the development of practical recommendations in the governance reform in order to address the problems that SENAE is facing with the implementation of ECUAPASS.

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