THE INDEPENDENCE OF EXTERNAL AUDIT IN THE PUBLIC SECTOR IN BULGARIA – REALITY AND CHALLENGES

Abstract

The independence of external audit is a fundamental principle for effective public financial control, ensuring transparency, accountability, and good governance. In Bulgaria, this principle is legally established in the Constitution, the Supreme Audit Institution (SAI) Act, and the Public Finance Act, as well as in applicable international auditing standards. However, the study identifies significant challenges in the practical implementation of this principle. This article examines the independence of external audit in Bulgaria’s public sector, with a particular focus on the institutional and legal framework of the Bulgarian SAI. The research explores the theoretical foundations of independence, its historical evolution within the institution, the regulatory safeguards, and their alignment with the International Standards of Supreme Audit Institutions (ISSAIs) and the INTOSAI Professional Standards Framework (primarily the Lima and Mexico Declarations). Despite a robust legal framework, the findings reveal serious challenges, including political influence, frequent legislative changes, and limited financial autonomy. A historical analysis demonstrates that the independence of the Bulgarian SAI has always been contingent on the political climate, while a comparative analysis confirms that, although Bulgaria’s framework formally complies with INTOSAI standards, it lacks effective protective mechanisms such as those implemented in other EU member states. An examination of recent cases—including the unprecedented invocation of the Supreme Audit Institution Rapid Advocacy Mechanism (SIRAM) to safeguard SAI independence—highlights the real risk of weakening institutional autonomy. Despite these challenges, the Bulgarian SAI continues to fulfill its oversight functions and report financial irregularities to the Prosecutor’s Office and the European Commission, demonstrating a retained operational capacity. To ensure full independence, urgent legislative and organizational measures are required: limiting political influence through transparent appointment procedures, strengthening financial autonomy, stabilizing the legal framework, enhancing transparency and fostering international cooperation through mechanisms like SIRAM. The conclusion emphasizes that, without these measures, there is a tangible risk of external audit becoming an instrument of political influence, thereby undermining accountability and good governance in Bulgaria.