Financial Audit Guidelines Subcommittee
First Set of Financial Audit Guidelines to Be Presented for Endorsement by INCOSAI
The Financial Audit Guidelines Subcommittee (FAS) will present its first set of financial audit guidelines for endorsement at the 19th INCOSAI in Mexico City in November 2007.
The following nine guidelines for financial audit—International Standards of Supreme Audit Institutions (ISSAI)—comprising practice notes and International Standards on Audit (ISA)—will be presented for approval by the INTOSAI Governing Board and the Congress:
- ISSAI 1230–Audit Documentation
- ISSAI 1260-Communication with Those Charged with Governance
- ISSAI 1800-Auditor’s Report on Special Purpose Audit Engagements
- ISSAI 1805–Special Considerations When Reporting on Summary Financial Statements
- ISSAI 1220–Quality Control for Audits of Historical Financial Information
- ISSAI 1300–Planning an Audit of Financial Statements
- ISSAI 1315–Understanding the Entity and Its Environment and Assessing the Risks of
Material Misstatement - ISSAI 1330–The Auditor’s Procedures in Response to Assessed Risks
- ISSAI 1450–Evaluation of Misstatements Identified during the Audit
In addition, the following documents will be presented as drafts:
- ISSAI 1320–Materiality in Planning and Performing an Audit
- ISSAI 1000–Implementation Guidelines on Financial Audit—Introduction
- ISSAI 1320 is currently being exposed for comment on the FAS Web site (http://psc.rigsrevisionen.dk/fas), and ISSAI 1000 will be exposed for comment at a later time, before INCOSAI 2010. The FAS would like to encourage all SAIs to consider the drafts and submit their comments to the subcommittee.
The practice notes have been translated into INTOSAI’s official languages in preparation for the congress and are available on the FAS Web site. However, since the ISAs are issued in English by the International Auditing and Assurance Standards Board (IAASB), they will not be translated.
Quality Standards
During the April meeting of the steering committee of the INTOSAI Professional Standards Committee in Bahrain, it was decided that the IAASB’s International Standard on Quality Control (ISQC1) will be integrated into level two of the planned ISSAI structure. The drafted practice note will thus not be presented for approval in Mexico City as planned.
Current Activities
The FAS has initiated the following work on practice notes:
- A task force will draft practice notes for ISA 500–Audit Evidence and ISA 501–Audit Evidence–Additional Considerations for Specific Items. The practice notes are expected to be exposed for comment in September 2008.
- A special expert team will draft practice notes for ISA 200–Objective and General Principles Governing an Audit of Financial Statements, ISA 210–Terms of Audit Engagements, and ISA 250–Laws and Regulations. The practice notes are expected to be exposed for comment at the earliest in April 2008.
Future Activities
In 2007-2010, FAS plans to do the following:
- Continue to incorporate public sector considerations into ISAs by
- participating as members in IAASB task forces to write audit standards on current and future projects and
- writing comment letters on ISA exposure drafts where INTOSAI has not ..
provided any input to the IAASB task force.
- Continue to provide guidance beyond what is provided in the ISA for public sector audits by
- drafting practice notes for all ISAs to provide special considerations for the public sector and
- drafting additional guidance dealing with the specific considerations of the public sector that, together with ISAs and practice notes, will constitute INTOSAI financial audit guidelines.
- Present a comprehensive set of the financial audit guidelines for endorsement at the 2010 INCOSAI.
- The subcommittee’s goal is to present to the INCOSAI a comprehensive set of financial audit guidelines comprising ISAs, practice notes, and additional guidance.
Calls for Nominations of Experts
As a result of the work plan of the IAASB and FAS, no calls for nominations of experts are expected before 2010. FAS currently has enough experts to produce the practice notes planned until the 2010 INCOSAI and, due to the Clarity Project, the IAASB does not anticipate starting a great number of new projects during this period. The FAS still has an ongoing need for additional input from Courts of Accounts and would also welcome any other experts nominated by their SAIs during the next 3-year period. The FAS asks all SAIs to notify the project secretariat when nominated experts are no longer available to work.
Subcommittee Meetings
The subcommittee met in Stockholm, Sweden, August 23–24, 2007. The primary issues on the agenda were FAS’s official approval of a number of translated practice notes as well as the revised work plan and budget for 2008–2010.
The next meeting will be held in London April 8–9, 2008, and will be hosted by the U.K. National Audit Office.
For additional information, please contact the FAS:
E-mail: projectsecretariat@riksrevisionen.se
Web site: http://psc.rigsrevisionen.dk/fas
Capacity Building Committee
The steering committee of the INTOSAI Capacity Building Committee (CBC) met in Rabat, Morocco, on September 5, 2007. The main purpose of the meeting was to present progress reports on the work of the committee’s three subcommittees and discuss a draft pilot project that the CBC and the goal liaison (the SAI of the United States) are coordinating jointly.
At the meeting, CBC Subcommittee 1, chaired by the United Kingdom, presented a report on its main activities: development of a capacity-building guide and a directory of capacity-building projects. The steering committee endorsed the capacity-building guide and approved the decision to make it available in French and English at the 19th INCOSAI in Mexico City as a CBC working document. The steering committee also approved the design for the guide and considered using the design for other CBC products. The guide will be further developed during the next 3 years before it is adopted by the INTOSAI community. By 2010, it will be available in the other official languages of the INTOSAI. The steering committee also noted the progress made with the survey to collect information from SAIs that will be included in the directory of SAI capacity-building activities. The SAI of Sweden will develop the questionnaire for the survey. Subcommittee 1 also presented its work program for the present until the 20th INCOSAI in South Africa in 2010.
CBC Subcommittee 2, chaired by the SAI of Peru, presented its main activities as well as a summary report on the results of the technical questionnaire on encouraging (1) joint and coordinated or parallel auditing programs and (2) internship and visitor programs. This questionnaire was elaborated by the Fiji Islands and distributed before the meeting to all INTOSAI members. Subcommittee 2 also presented its preliminary work plan for 2008–2010.
CBC Subcommittee 3, chaired by the SAI of Germany, had the task of developing guidelines on how to undertake peer reviews and providing related best practice examples. The representative of this subcommittee apologized for the delay in reporting on its activities due to the unexpected leave of the person in charge but stated that the subcommittee would report on its progress and future work plan at the INCOSAI in Mexico City.
Participants in the September 2007 meeting of the steering committee of the Capacity Building Committee in Morocco.
Before the meeting, the CBC chairman and the goal liaison (the U.S. SAI) had jointly elaborated a proposal for comment. The proposal was entitled Partnering for Progress to Fight Corruption, Promote Transparency, Improve Performance and Ensure Accountability—INTOSAI, the World Bank, and the Donor Community Working Together to Strengthen the Capacity of Supreme Audit Institutions. At the meeting, the steering committee members discussed the draft, which is to be finalized during the next meeting of the CBC Steering Committee before being presented at the 19th INCOSAI.
During the Steering Committee, the World Bank representative pointed out that INTOSAI needed to deal with two fundamental issues: (1) defining the required funding at the INTOSAI, regional group, and country levels and (2) linking these needs with the expectations of the donor community (both the World Bank and other donors) by opening discussions between INTOSAI and the donor community. The World Bank representative also stated that the timing for this project is appropriate as donors wish to fund capacity-building efforts. He also announced that funding issues will be discussed at a meeting of the donor community to be held in Paris in December 2007.
The next meeting of the CBC will be November 4, 2007, in Mexico City. The objective of the meeting will be to approve the reports on the committee’s progress that will be presented at the 19th INCOSAI.
For further information, please contact the CBC:
Tel: +212 37 -57 -67 -16
Fax: +(212) 37 71 18 65
Email: ccomptes@courdescomptes.ma
Ninth ARABOSAI Assembly
The Arab Organization of Supreme Audit Institutions (ARABOSAI) held its Ninth Assembly in Sana’a, Yemen, May 28 to June 1, 2007. Hosted by the Central Organization for Control and Audit (COCA) for the Republic of Yemen, the assembly drew delegates from Algeria, Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, United Arab Emirates (UAE), and Yemen. Guests and observers included the INTOSAI Secretary General; ambassadors from participating countries; and representatives from the INTOSAI Development Initiative (IDI), this Journal, the League of Arab States, and the World Bank.
Heads of delegations to the Ninth ARABOSAI Assembly with the Prime Minister of Yemen.
Opening Ceremony
Abdullah Abdullah Al-Sanafi, President of COCA for the Republic of Yemen, and Ali Muhammed Mujawar, the Prime Minister of Yemen, led the opening ceremony and warmly welcomed the delegates. Ahmed El Midaoui, President of the Supreme Board of Accounting for the Kingdom of Morocco, relayed the remarks and good wishes of Mustafa Al-Barari, President of the Jordanian Audit Bureau and then President of the ARABOSAI Governing Board, who was unable to attend due to illness. Josef Moser, Auditor General of Austria and INTOSAI Secretary General, also addressed the assembly, thanking ARABOSAI for inviting him as an observer and welcoming the delegates. Faiza Kefi, first President for the Court of Accounts for the Republic of Tunisia and ARABOSAI Secretary General, noted ARABOSAI’s achievements and mentioned its pioneering role among regional organizations in innovative programs of audits and evaluations and control over public monies. Later in the proceedings, Dr. Al-Sanafi formally assumed the presidency of the ARABOSAI Governing Board.
ARABOSAI Business
Dr. Al-Sanafi, President of COCA and incoming President of the Governing Board, presented board’s reports to the Ninth Assembly on ARABOSAI’s activities and financial condition during the 3 years since the Eighth Assembly:
- Training and Scientific Research. The Governing Board reviewed the results of training meetings held and the implementation of the Training and Scientific Research Committee’s action plan for 2007. Training meetings on contracting were held in Kuwait at the end of 2006. In cooperation with INTOSAI, training meetings were also held in Algeria on Auditing Financial Electronic Data and Systems. The board also reviewed the proposed plan prepared by the Training and Scientific Research Committee for 2008 to 2010 and approved the plan with some amendments. The General Assembly subsequently approved the plan.
The Governing Board approved the technical recommendations of the training meetings held in Egypt on health sector auditing. These recommendations included (1) providing member SAIs with the knowledge and skills necessary to conduct performance audits in general and in the health sector in particular and (2) identifying problems and difficulties in performance auditing in some Arab countries and ways to overcome them. The experience of Egypt and participating countries in the field of health sector auditing could be beneficial to other SAIs.
Accomplishing this would require the establishment of health sector evaluation standards and performance measures that are appropriate for each Arab country’s specific conditions. Such standards would promote greater integration among member countries and should consider the international standards established by the World Health Organization. Other recommendations included being attentive to internal control systems, including the need for a cost system that allows service performance effectiveness to be measured; considering environmental factors and their effect on human health when conducting health sector evaluations; and being attentive to the establishment of information systems to ensure that the information necessary for conducting performance audits will be available.
- ARABOSAI Strategic Plan. The Governing Board heard the proposal for the first ARABOSAI strategic plan made by the strategic planning team, which was headed by Morocco and consisted of staff from the SAIs of Kuwait, Libya, Saudi Arabia, Tunisia, UAE, and Yemen. After extensive discussion and some amendments, the board submitted the proposals to the General Assembly, which discussed and approved the plan unanimously. The Governing Board recommended that the strategic planning team, during its meeting at the end of 2007, reconvene ARABOSAI’s working groups and teams and have them adopt the content of the ARABOSAI strategic plan as their goals. The board also recommended that the strategic planning team prepare a proposal to implement the annual plan based on the ARABOSAI strategic plan and the training and information technology plans. In addition, the board recommended that the strategic planning team prepare a proposal for the implementation of the annual plan based on the ARABOSAI strategic plan and the training and information technology plans.
- ARABOSAI Research and Journal Awards The Governing Board approved the Training and Scientific Research Committee’s award recommendations for the Eighth Scientific Research Competition organized by ARABOSAI. Muhammad Brauu from Morocco received the first prize award for his paper, “The Role of the Supreme Audit Institution in Public Funds Accountability.” Other first prize winners included Mohamed Deer, also of Morocco, and Hesham Zaghlul Ibrahim Ali of the Egyptian SAI, for their papers on “Supreme Audit Institutions’ Financial Auditing and Application of Governmental Information Technology Systems” and “Environmental Auditing,” respectively. The board also approved an award to Habib Abdul-Salam from the Court of Accounts of Tunisia for an article published in the Journal on Financial Auditing, “Performance Auditing in the Public Health Sector.”
Technical Theme Presentations
The Ninth ARABOSAI General Assembly was organized around three themes:
- Theme I: the supreme audit institution’s role in government administration development
- Theme II: the impact of audit standards and procedures guidelines in enhancing audit quality and
- Theme III: developing standards in light of electronic information systems.
Plenary addresses introduced each theme and were followed by delegate debates on the professional and technical issues discussed in the principal papers and other presentations. Conclusions and recommendations were developed and approved for each theme.
Yemen moderated theme I, with Saudi Arabia serving as the rapporteur. The theme’s main recommendations emphasized, among other things, the importance of ensuring the independence of SAIs; enhancing and developing audit methodologies; developing SAIs’ human capital; promoting mutual cooperation in training and knowledge sharing between ARABOSAI’s members and INTOSAI; and encouraging research, studies and translations of topics related to administrative development. Implementation of these recommendations would enhance the capacity of SAIs to strengthen the state’s administrative development.
Egypt moderated theme II, with Tunisia serving as rapporteur. One of the main recommendations suggested that ARABOSAI’s Audit Standards Committee develop (1) audit standards based on international standards to ensure audit quality and (2) an ARABOSAI audit standards manual to help guide member SAIs in developing their own manuals within the context of their respective environments. Another recommendation was exploring the development of a strategic planning team mechanism to promote bilateral cooperation between SAIs by exchanging audit teams and experts and enabling SAIs to conduct audit quality self-assessments.
Jordan moderated theme III, with Qatar serving as rapporteur. Some of the main recommendations were to develop a legal framework, including legislation, relating to information technology (IT) systems; develop SAIs’ IT human capacity; improve coordination between the SAI and the relevant state agency responsible for IT development; establish specialized units to support the SAI in conducting IT system audits; and periodically review all relevant policies and procedures related to IT system audits.
Election of New Members and Other Business
During the general business session, the General Assembly elected a new Governing Board. The assembly unanimously approved the transfer of the General Assembly presidency to COCA of Yemen. Jordan, which hosted the previous ARABOSAI assembly, is first Vice Chairman and Saudi Arabia, which will host the next ARABOSAI Assembly, is the second Vice Chairman. The delegates elected four SAIs—Bahrain, Iraq, Lebanon, and Morocco—to the Governing Board. They join the current members—the Secretary General of ARABOSAI (Tunisia) and the SAIs of Algeria, UAE, Egypt, and Kuwait. The SAIs of Syria and Mauritania were elected as main members to the Financial Audit Committee, and the SAIs of Sudan and Palestine were elected as reserve members.
The Governing Board reviewed the ARABOSAI financial plan for 2008–2010 that had been prepared by the General Secretariat. After extensive discussion, the Governing Board approved the plan and presented it to the General Assembly, where it was ratified.
The board also reviewed the report of the Financial Audit Committee regarding the results of financial audits of ARABOSAI for 2006 and approved the final accounts for 2006. The Governing Board requested that member SAIs pay their dues for ARABOSAI’s budget by the first 3 months of each fiscal year. It also asked the General Secretariat to expend its best effort to implement the recommendations of the Financial Audit Committee.
The Governing Board approved the topics for the 10th ARABOSAI Assembly and established specific deadlines for rapporteurs, the General Assembly, and individual country SAIs to complete and transmit research studies and country papers. The board thanked the SAIs of Kuwait and Oman for their reports on member SAIs’ participation in INTOSAI working groups and teams. The board also thanked Osama bin Jafaar Faquih, the President of the General Auditing Bureau of Saudi Arabia, for his report on activities relating to the INTOSAI Finance and Administration Committee and Ahmed El Midaoui, the President of the Supreme Board of Accounting of Morocco, for his report on the activities of the INTOSAI Capacity Building Committee (CBC). Finally, the board thanked Abdullah Al-Sanafi, the president of COCA for the Republic of Yemen, for his reports on participation in the steering committee meeting of the CBC as a representative of ARABOSAI and other committees.
Abdulrahmana Al-Ajlan, representing the General Auditing Bureau of Saudi Arabia, invited participants to the 10th ARABOSAI Assembly, which will be held in Riyadh in 2010.
Other Activities
Throughout the conference, the President of COCA treated participants with generous hospitality and warmth. Delegation heads met with the President of Yemen, Ali Abdullah Saleh. Dr. Al-Sanafi hosted a lunch for delegates and invited guests at the Al-Diwan Restaurant in Sana’a. Delegates and invited guests were treated to a tour of Rhlat Kokban, a mountain town outside of Sana’a, and a tour of old Sana’a city, including its Grand Mosque, the handicraft markets, and the ancient Ghamdan Palace. This tour was followed by an evening of outdoor entertainment that included Yemeni folklore, dance, and songs. On the last day of the assembly, Dr. Al-Sanafi presented delegates representing their SAIs with awards commemorating their participation. He also gave awards for the best research papers and published Journal article presented at
the assembly.
For additional information, contact the ARABOSAI General Secretariat, care of Faiza Kefi, First President of the Court of Accounts of Tunisia:
Fax: ++71 76 78 68
E-mail: arabosai@gnet.tn
10th SPASAI Congress
The South Pacific Association of Supreme Audit Institutions (SPASAI) met in Port Moresby, Papua New Guinea, September 10–14, 2007. The theme for the Congress was regional SAI cooperation and collaboration on regional audit initiatives, and the Congress was hosted by the SAI of Papua New Guinea. In addition to delegates from 12 SPASAI members, there were stakeholders from the Asian Development Bank, AusAID (Australia’s foreign assistance agency), China, INTOSAI, the Pacific Island Forum Secretariat, and Stantons International. Two new SPASI members also participated in the Congress: the Australian Audit Office and the Chambre Territoriale des Comptes de la Polynésie Française.
Participants in 10th SPASAI Conference held in Papua New Guinea in September 2007.
Consistent with the theme of the congress, many of the presentations focused on the Pacific Regional Audit Initiative (PRAI), whose objective is to raise Pacific public auditing to uniformly high standards. This effort is being developed within the context of the broader Pacific Plan,1 which has four pillars: economic growth, sustainable development, good governance, and security through regionalism. PRAI falls under the good governance pillar, specifically improved transparency, accountability, and equity and efficiency in managing and using resources. To support this effort, SPASAI members formed a Regional Institutional Strengthening Committee comprising representatives from Fiji, Cook Islands, New Zealand, Palau, Papua New Guinea, Tuvalu, and Vanuatu.
Several Stantons International consultants gave presentations related to PRAI. Neville Smith noted that achieving the PRAI design will require an in-depth understanding of the challenges SAIs in the region face, factors SAIs can control and influence, and identification of those challenges that are regional in nature and those that are SAI-specific. Linda Weeks discussed the key challenge facing the global accountability community of relatively high staff turnover and critical staff shortages. She also reviewed the overall human resource management model and its transformation through revised performance competencies. Kerry McGovern talked about her initial visits to three SPASAI members: Fiji, Palau, and Papua New Guinea.
Sanjesh Naidu of the Pacific Islands Forum Secretariat provided context for the PRAI effort, discussing how it fits within the context of the broader Pacific Plan to Strengthen Regional Cooperation and Integration. He discussed concrete examples of regional approaches to furthering goals in the Pacific Plan; for example, customs agents in member states have pooled resources to do postclearance audits.
Pritom Phookun of the INTOSAI Development Initiative discussed the status of a range of work done by regional SAI groups on capacity-building needs assessment,strategic planning, capacity strengthening, and developing IT audit capabilities. He also provided an example of recent work carried out in one nation on a capacity-building framework, discussing the methodology used to conduct the study and the importance of cooperating with local audit staff in carrying out this work.
Jim Kirwan of the Department of Finance, Papua New Guinea, made a presentation titled “Auditing for Impact: A Perspective from the Department of Finance.” He emphasized that auditing for impact requires SAIs to build business relationships within the government in order to be effective, while ensuring independence of the audit office. He stressed that audit findings alone are insufficient to ensure change.
Steve Chapman, Deputy Auditor General of Australia’s National Audit Office, made a presentation titled “The Journey to Performance Auditing in Australia.” In 2006-07, the National Audit Office tabled 51 performance audit reports in the Parliament. He highlighted key legislation, early performance audit experience, and lessons learned to date. He summarized by noting that performance audits are a useful complement to financial audits and are “worth the effort.” He cautioned that transitioning to performance auditing requires commitment and the development of new skills for staff accustomed to doing financial audits.
Peter Achterstraat, Auditor General of the state of New South Wales, Australia, discussed recent developments, including audit coverage, budget, staffing, and the office’s audit responsibilities. He also provided a comparative discussion of work done by other investigative agencies in his region and how they relate to his office’s mandate, e.g., the Independent Commission against Corruption, the Ombudsman Office, and the Police Integrity Commission. Kevin Brady, Controller and Auditor General for New Zealand, was unanimously appointed to another term as SPASAI’s Secretary General.
The location for the 11th SPASAI congress was not determined at the close of the meeting although it was agreed that it needed to be held in early 2008 with the timing dependent on the progress of the Pacific Regional Audit Initiative.
Related Activities
The Papua New Guinea Audit Office organized a comprehensive program to ensure
that participants experienced a range of cultural and recreational activities in the
Port Moresby region. Delegates and stakeholders were invited to attend opening and
closing receptions at the National Parliament building. There was also a group visit to a
memorial established to honor those who died in the World War II Papua New Guinea
campaign, a national park overlooking the Port Moresby region, and a botanical garden.
Throughout the week, congress participants were treated to traditional shows that
featured dances and songs characteristic of Papua New Guinea and the regional culture.
For additional information, contact Secretary Kevin Brady, Auditor-General of New
Zealand:
Fax: ++64 4 917 1509
E-mail: kevin.brady@oag.govt.nz
1http://www.pacificplan.org/tiki-page.php?pageName=The+Pacific+Plan