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INTOSAI International Journal Of Government Auditing: 

July 2007: 
Volume 34, No. 3: 

Board of Editors: 
Josef Moser, President, Rechnungshof, Austria: 
Sheila Fraser, Auditor General, Canada: 
Faiza Kefi, First President, Cour des Comptes, Tunisia: 
David M. Walker, Comptroller General, United States of America: 
Clodosbaldo Russian Uzcategui, Comptroller General, Venezuela: 

President: Helen H. Hsing (U.S.A.): 

Editor: Donald R. Drach (U.S.A.): 

Assistant Editors: 
Linda J. Sellevaag (U.S.A.): Christopher Lyons (U.S.A.): 

Associate Editors: 
Office of the Auditor General (Canada): 
Sudha Krishnan (ASOSAI-India): 
Luseane Sikalu (PASAI-Tonga): 
CAROSAI Secretariat (St. Lucia): 
EUROSAI General Secretariat (Spain): 
Khemais Hosni (Tunisia): 
Yadira Espinoza Moreno (Venezuela): 
INTOSAI General Secretariat (Austria): 
U.S. Government Accountability Office (U.S.A.): 

Administration: 
Sebrina Chase (U.S.A.): 
Paul Miller (U.S.A.): 

Members of the Governing Board of INTOSAI: 
Arpád Kovács, President, Allami Számvevöszék, Hungary, Chairman: 
Arturo González de Aragón, Auditor General, Auditoría Superior de la 
Federación, Mexico, First Vice-Chairman: 
Osama Jaffer Faquih, President, General Auditing Bureau, Saudi Arabia, 
Second Vice-Chairman: 
Josef Moser, President, Rechnungshof, Austria, Secretary General: 
Henri Bruno Bessin, Inspector General, Inspecteur Général d’Etat, 
Burkina Faso: 
Paul R.S. Allsworth, Director of Audit, Cook Islands Audit Office: 
Vijayendra Nath Kaul, Comptroller and Auditor General, India: 
Muneharu Otsuka, President, Board of Audit, Japan: 
Yun-Churl Jeon, Chairman, Board of Audit and Inspection, Korea: 
Guillermo Argüello Poessy, President, Consejo Superior de la 
Contraloría General, Nicaragua: 
Juergen Kosmo, Auditor General, Riksrevisjonen, Norway: 
Guilherme D’Oliveira Martins, President, Tribunal de Contas, Portugal: 
Albert Edwards, Director of Audit, National Audit Office, St. Kitts 
and Nevis: 
Faiza Kefi, First President, Cour des Comptes, Tunisia: 
Sir John Bourn, Comptroller and Auditor General, National Audit 
Office, United Kingdom: 
David M. Walker, Comptroller General, Government Accountability 
Office, United States of America: 
Guillermo Ramírez, President, Tribunal de Cuentas de la República, 
Uruguay: 
Clodosbaldo Russián Uzcátegui, Comptroller General, Venezuela: 

The International Journal of Government Auditing is published 
quarterly (January, April, July, October) in Arabic, English, French, 
German, and Spanish on behalf of INTOSAI (International Organization 
of Supreme Audit Institutions). The Journal, which is the official 
organ of INTOSAI, is dedicated to the advancement of government 
auditing procedures and techniques. Opinions and beliefs expressed are 
those of editors or individual contributors and do not necessarily 
reflect the views or policies of the organization. 

The editors invite submissions of articles, special reports, and news 
items, which should be sent to the editorial offices at: 

U.S. Government Accountability Office: Room 7814, 441 G Street, NW: 
Washington, D.C. 20548: 
U.S.A. 
(phone: 202-512-4707; 
fax: 202-512-4021; 
e-mail: intosaijournal@gao.gov) 

Given the Journal's use as a teaching tool, articles most likely to be 
accepted are those that deal with pragmatic aspects of public sector 
auditing. These include case studies, ideas on new audit 
methodologies, or details on audit training programs. Articles that 
deal primarily with theory would not be appropriate. 

The Journal is distributed to INTOSAI members and other interested 
parties at no cost. It is also available electronically at 
http://www.intosaijournal.org or http://wwwintosa.org and by 
contacting the Journal at spel@gao.gov. 

Articles in the Journal are indexed in the Accountants' Index 
published by the American Institute of Certified Public Accountants 
and included in Management Contents. Selected articles are included in 
abstracts published by Anbar Management Services, Wembley, England, 
and University Microfilms International, Ann Arbor, Michigan, U.S.A. 

Contents: 

Guide to the New Journal Web Site: 

News in Brief: 

The SAI’s Role in Combating Corruption: 

Developing International Standards and Guidelines: 

Planning and Selecting Performance Audits: 

Reports in Print: 

Inside INTOSAI: 

IDI Update: 

INTOSAI Calendar: 

[End of section] 

A Guide to the New INTOSAI Journal Web Site: 

In the April 2007 issue, we announced the launch of the Journal’s new 
Web site (www.intosaijournal.org). As David M. Walker, Chairman of the 
Board of Editors, noted in his letter, this site is designed to make 
the Journal more useful to INTOSAI members, more accessible to our 
global readership, and more user friendly. In this issue, we would 
like to take the opportunity to provide some useful guidance on how to 
navigate the new site. 

[Figure: home page example] 

Our home page is divided into three main areas—cover story, news and 
events, and a navigation menu for all key components of the Journal. 
The cover story (the current issue’s editorial) is featured most 
prominently in the center of the home page. Although the story begins 
on the home page, you can access the complete version by clicking on 
“Full Story” at the bottom of the page. 

[Figure: home page example] 

The news and events section features the most recent news briefs we 
have received from SAIs, upcoming events in the INTOSAI community, and 
something we call “highlights.” These are articles or news items that 
we think are particularly noteworthy. As we continue to develop the 
site, you will also begin to find more “breaking news” items in this 
section of the Web site. These items will be marked by a For example, 
as of the publication date of this issue, a breaking news item about a 
recent global forum on reinventing government has been posted. 

[Figure: home page example] 

The key to the site’s entire contents is the navigation menu on the 
left-hand side of the home page. Here, you can access a PDF copy of 
current and archived issues, links to technical articles from current 
and past issues, and links to past editorials. These items are 
organized chronologically. You can also find information on recent 
INTOSAI congresses and conferences held by all regional INTOSAI bodies—
AFROSAI, ARABOSAI, ASOSAI, CAROSAI, EUROSAI, OLACEFS, SPASAI, and the 
Commonwealth Auditors General. Under the menu item called “INTOSAI’s 
Strategic Plan,” you will find both a copy of the strategic plan and 
current and past contributions to our “Spotlight on the Strategic Plan”
 feature, which focuses on actions that INTOSAI is taking to implement 
the strategic plan. For example, it includes a piece from the January 
2007 issue about the 55th annual meeting of the INTOSAI Governing 
Board and its discussion of the strategic plan’s four major goals. By 
clicking on the “Inside INTOSAI” link, you will find current and past 
items from the Inside INTOSAI and IDI update sections of the Journal. 
These items detail the activities of INTOSAI committees and working 
groups as well as the INTOSAI Development Initiative. These items may 
include reports on meetings, seminars, standards and guidelines, 
training, methodology, and best practices. At the bottom of the 
navigation menu is a section providing links to other organizations. 
For example, the section currently provides links to INTOSAI, the 
INTOSAI Development Initiative, and the ASOSAI and EUROSAI journals. 

Perhaps the most exciting feature of the new Web site is the member 
information section. Here, you will find a list of all SAIs that 
belong to INTOSAI with contact information for each. Clicking on the e-
mail addresses shown for the SAIs automatically opens an e-mail 
application window on your computer screen, allowing you to connect 
directly with your colleagues in the INTOSAI community. By clicking on 
an individual country’s name, you will also find past news briefs on 
that particular SAI, as well as an audit profile of the institution if 
one has been published. Navigating this section is easy. Simply click 
on the first letter of the country’s name from the alphabetical menu 
at the top, and that SAI’s section will appear. Links back to the top 
of the alphabetical menu are included throughout this section at the 
top of the page, so you do not have to scroll throughout the section 
unnecessarily. 

At the top of each page of our Web site, you will find three features: 
our contact information, a subscription link, and the site’s search 
function. The contact information section informs you how to contact 
us by e-mail, telephone, fax, or mail. The subscription link tells you 
how to sign up to receive announcements when each new quarterly issue 
of the Journal has been posted to the site. Finally, the search 
function allows you to find current and past issues of the Journal 
specifically related to the topic you are interested in. 

We hope that this new site will be a useful tool for you to stay 
informed about INTOSAI events, connect with the INTOSAI community, and 
learn more about international government auditing issues and best 
practices. The site is designed to support all four goals of the 
INTOSAI strategic plan, and it is our hope that we have, at least in 
part, succeeded in doing so. While we are pleased with the progress we 
have made, we also recognize that we can do more to further develop 
and improve the site. For example, we plan to explore the possibility 
of sponsoring “virtual chat rooms” with the authors of technical 
articles, organizing materials by topic, streamlining our search 
function, and posting an INTOSAI calendar. 

We at the Journal will appreciate any feedback you provide on the new 
Web site and any ideas you have for continued improvement. To share 
your thoughts, opinions, and suggestions, please contact us at 
intosaijournal@gao.gov. 

[End of section] 

News in Brief: 

Azerbaijan: 

New Chairman of the Chamber of Accounts: 

On April 17, 2007, Heydar Khanish oglu Asadov became the new Chairman 
of the Chamber of Accounts of the Republic of Azerbaijan. He comes to 
the Chamber of Accounts from the Ministry of Finance, where he had 
served as the General Director of State Head Treasury since 1996. Mr. 
Asadov is a graduate of the accounting faculty of the State Economics 
Institute and completed his doctoral studies at Marmara University in 
Turkey in 1994. He taught at the Azerbaijan State Economics Institute 
until 1995, when he was appointed Azerbaijan’s Deputy Minister of 
Finance. Mr. Asadov is the author of three monographs and over 30 
other scientific works. 

For additional information, contact the Chamber of Accounts: 
Fax: ++994 12 9 20 25. 
E-mail: office@ach.gov.az. 
Web site: www.ach.gov.az. 

Chile: 

New Comptroller General: 

Ramiro Alfonso Mendoza became the Comptroller General of Chile on 
April 10, 2007, after being nominated to the post by the president of 
Chile and ratified by the Senate. 

[Photograph: Ramiro Alfonso Mendoza] 

In 1988, Mr. Mendoza received his law degree, with honors, from the 
University of Chile. He has extensive academic experience in many 
institutions of higher education in Chile. He has also taught 
postgraduate courses as a visiting professor in Chile and several 
neighboring Latin American countries. 

He has been a professor of administrative law in the University of 
Chile, the Catholic University of Chile, the Northern and Central 
Catholic universities, as well as the Gabriela Mistral, Finis 
Terrae,and Andes universities. Since 2002, he has been a professor in 
the magister (master’s)program in business law of the Development 
University of Concepción and a member of the Academic Committee. At 
several universities, he has given classes in the master’s programs in 
constitutional and public institutional law. Since 2005, he has been a 
professor in the diploma program of economic/administrative law and 
the masters of business law at Adolfo Ibáñez University. He has held 
an academic post in the master’s program in public law of the Catholic 
University since 1992. 

Before being named Comptroller General, Mr. Mendozawas a partner in a 
law firm specializing in regulatory affairs.
Mr. Mendoza is also the author of many articles on administrative law. 

For additional information, contact the Office of the Comptroller 
General: 
Fax: ++56 (2) 870 1 94. 
E-mail: relacionesinternacionales@contraloria.cl. 
Web site: www.contraloria.cl. 

Georgia: 

New Chairman of Chamber of Control: 

On May 11, 2007, Levan Choladze was appointed the new chairman of the 
Chamber of Control of Georgia. Prior to his appointment, Mr. Choladze 
held a number of governmental positions. From December 2005 through 
May 2007, he was the Deputy Minister of Foreign Affairs. He held 
several positions on the National Security Council from June 2004 
through December 2005, including that of National Security Advisor to 
the president of Georgia. He also served in the Ministry of Defense as 
Head of the Defense Minister’s office and Deputy Director of Defense 
Policy and International Relations. 

Mr. Choladze is the coauthor of the Georgian organic law on the 
National Security Council, which was adopted in November 2004. Since 
2004, he has chaired working groups elaborating a national security 
concept and national anticorruption strategy for Georgia. Mr. Choladze 
holds the diplomatic rank of Ambassador Extraordinary and 
Plenipotentiary and the civil service rank of first class state 
chancellor. 

For additional information, contact the Chamber of Control: 
Fax: ++995 (32) 78 81 84. 
E-mail: chamber@geomail.ge. 
Web site: www.control.ge. 

Hungary: 

State Audit Office Prepares Principles to Update Public Finance 
Regulation: 

The State Audit Office of Hungary (SAO) prepared a set of principles 
to provide the basis for drafting the new public finance regulation, 
which will replace Act XXXVIII of 1992 on public finances. 

Developing the principles was part of the SAO’s strategic goals for 
2006–2010 to support transparent and operational public finance, 
reinforce budgetary responsibility, and initiate other necessary 
changes. In the framework of its advisory capacity, the SAO initiated 
the renewal of procedures applicable to the operation, planning, 
accounting, and control of public finances and full and consistent 
regulation of the financial management of public property. 

Based on its audit experience, including expressing opinions on budget 
bills and preparing reports on final accounts, the SAO had proposed 
several times that the regulation on the management of public funds be 
comprehensively modernized. The SAO also offered to lay the foundation 
for the new regulation on public finances to give an impetus to the 
modernization effort. 

The principles were submitted to the Hungarian National Assembly in 
May 2007 as an annex to the Report on the Activities of the State 
Audit Office of Hungary for 2006. The National Assembly viewed the 
principles favorably, and the regulation is likely to be drafted in 
the near future. The regulation will be based on the principles and 
will use SAO contributions to refine and clarify methods of 
improvement. 

For additional information, please contact the SAO: 
Fax: ++ 6-1-484-9295. 
E-mail: international@asz.hu. 
Web site: www.asz.hu. 

Iraq: 

Board of Supreme Audit Celebrates 80th Anniversary: 

Members of Iraq’s Board of Supreme Audit (BSA) celebrated the agency’s 
80th anniversary on March 9, 2007. The celebration was attended by BSA 
president Abdul Basit T. Saeed, deputy president Mahmoud R. Ibrahim, 
and several BSA directors general. 

The BSA was established on March 9, 1927. Over the course of its 
history, the agency has undergone many changes and has been recognized 
for its contributions to the fields of training and research at 
international gatherings. The BSA’s training program was strengthened 
through staff participation in training programs both inside and 
outside of Iraq in cooperation with international organizations and 
training institutions. 

The BSA has increased its international contacts through cooperation 
with INTOSAI and its regional working groups and through bilateral 
relations with SAIs around the world. 

In addition, BSA’s translation department translated the July 2006 
issue of this Journal into Arabic. 

For additional information, contact the BSA: 
Fax: ++964 1 537 2622, 1 537 6975. 
E-mail: bsairaq2@yahoo.com. 
WWW: www.bsairaq.net. 

Japan: 

Annual Government Auditing Review Issued: 

In March 2007, Japan’s Board of Audit published the 14th issue of its 
Government Auditing Review. The Review is published yearly and 
consists of papers written by academics from universities and staffs 
from Japanese governmental institutions. These papers cover a wide 
range of issues related to governmental auditing, such as finance, 
public accounting, public administration, and public economics. This 
volume includes articles about public sector accounting, financial 
reporting, and departmental financial statements. Articles in the 
Review are available at www.jbaudit.go.jp/kanren/frt41.htm. 

For additional information, contact the Board of Audit of Japan: 
Fax: ++81 (3) 32 92 - 6915. 
E-mail: liaison@jbaudit.go.jp. 
Web site: www.jbaudit.go.jp/engl/. 

Paraguay: 

SAI to Participate in Millennium Challenge Corporation Threshold 
Program: 

In May 2007, the governments of the United States and Paraguay signed 
a bilateral agreement approving a threshold program for Paraguay. The 
program will focus on curbing corruption through funding initiatives 
that strengthen the rule of law and create conditions conducive to 
economic growth and poverty reduction. Upon completion of the 2-year 
threshold program, Paraguay, along with seven other countries, hopes 
to qualify for compact assistance under the Millennium Challenge 
Account, a U.S. government initiative that works with developing 
nations seeking to improve transparency and accountability in their 
governance and to enhance the prosperity and well-being of their 
people. 

The Office of the Comptroller General of Paraguay has been selected as 
one of the participants in the threshold program and thereby is in the 
vanguard of efforts to modernize public management. The program 
includes the following components: public ethics, quality management, 
internal audit, standards, citizen audits, and public communication. 
Work plans have been developed for each component and work is under 
way. The final goal is for the SAI to receive international ISO 
9001/2000 certification. 

For additional information, contact the Office of the Comptroller 
General: 
Fax: ++595 (21) 60 11 52. 
E-mail: cgr@contraloria.gov.py. 
Web site: www.contraloria.gov.py. 

United States: 

GAO’s Strategic Plan Updated: 

In March 2007, the U.S. Government Accountability Office (GAO) issued 
an update to its strategic plan. The updated strategic plan covers 
20072012 and is the third update since GAO first issued a strategic 
plan in 2000. The plan describes GAO’s proposed goals and strategies 
for supporting the Congress and the nation in facing the challenges of 
a rapidly changing world. 

Seven broad themes provide the context for GAO’s strategic plan—
changing security threats, sustainability concerns, economic growth 
and competitiveness, global interdependency, societal change, quality 
of life, and science and technology. 

GAO separately published an excerpt from the strategic plan focusing 
on the implications of the plan’s themes. This document-—Forces That 
Will Shape America’s Future: The Themes from GAO’s Strategic Plan—-
provides detailed descriptions of the key themes and issues along with 
some implications for governance. 

The updated strategic plan and the themes document are both available 
on GAO’s Web site at www.gao.gov/sp.html. 

For additional information, contact GAO: 
Fax: ++1 (202) 512-4021. 
E-mail: spel@gao.gov. 
Web site: www.gao.gov. 

[End of section] 

The SAI’s Role in Combating Corruption: 

By Dr. Klaus-Henning Busse, INTOSAI Director of Strategic Planning: 

For many years, INTOSAI has championed the fight against corruption. 
In 1998, the role of supreme audit institutions (SAI) in preventing 
and detecting corruption was the theme at the INTOSAI congress in 
Montevideo. INTOSAI’s current strategic plan for 2005–2010 states that 
SAIs should assist governments in fighting corruption. 

As part of their audit work, SAIs are in fact committed to preventing—
or rather containing—corruption. In accordance with the 
recommendations of the Montevideo congress, SAIs should encourage 
governments to strengthen their internal control systems, enhance 
staff resistance to attempts at bribery, and closely monitor areas 
prone to corruption. In many countries, SAIs can rely on 
anticorruption laws and regulations and audit compliance therewith. 
Among other things, SAIs verify whether at least two persons are 
authorizing payments; whether there is a strict separation of needs 
specification, planning, contracting, and accounting and settlement in 
government procurement; and whether staff in areas prone to corruption 
(such as procurement, construction, and licensing) are being rotated. 
If anticorruption provisions have not yet been enacted or are being 
insufficiently implemented, SAIs can point out the losses that 
governments may incur because of legislative gaps and call for the 
adoption of anticorruption measures. 

Detecting corruption, however, is a more difficult endeavor. For this 
reason, a number of SAIs are reluctant to fight corruption at this 
level, an issue that was also raised by the Montevideo congress. Some 
SAIs even sounded a word of caution against becoming too active in 
this area. 

At a recent seminar on the role and responsibilities of SAIs, it was 
openly stated that the fight against corruption is not inherently a 
task of government audit institutions. Auditing for corruption, it was 
argued, would undermine the trust between the SAI and the auditee. 
Merely knowing that the audit might be geared to detecting corruption 
could prompt the auditee to adopt a defensive stance and jeopardize 
the cooperation based on mutual trust that is an essential 
prerequisite of successful audits. 

At the seminar, it was also pointed out that the SAI’s right to 
inspect files is limited to documents and records of government 
agencies subject to its audit mandate. In general, SAIs are not 
allowed to carry out audit investigations of private persons or 
companies. Some of the seminar participants felt that the involvement 
of SAIs in such activities might actually hinder rather than help the 
implementation of measures to effectively detect corruption. It was 
argued that public prosecutors that have the authority to investigate 
both the public and private sectors are better equipped to fight 
against corruption and are therefore in a better position to carry out 
this task. Reference was also made to agencies such as OLAF, the 
European Union’s Anti-Fraud Office, and the Malaysian Anti-Corruption 
Agency, which were set up specifically to counteract corruption in 
some countries and were better placed to detect it. 

This position, however, is inconsistent with the guiding principles 
INTOSAI previously set out and is untenable to the public. Taxpayers 
would certainly not understand why SAIs, which operate on taxpayers’ 
money, do not orient their audits toward detecting corruption, no 
matter what the reason. Corruption, after all, is much more harmful 
and dangerous to public finance than other infringements of the law or 
violations of the principle of economy that SAIs usually highlight in 
their audit reports. Taxpayers expect SAIs to become active wherever 
there is an imminent danger or risk to taxpayers’ money. 

This position is equally harmful to SAIs. If they choose to distance 
themselves from such a vital and high-profile field of audit, they run 
the risk of being relegated to the sidelines. Setting up specialized 
agencies to fight corruption should be only the first step in 
effectively fighting against corruption. 

This view is fueled by the fear that SAIs may fail to deliver when 
auditing for corruption. Audits to detect corruption that do not 
produce tangible results may tarnish an SAI’s good standing. 

It is true that auditing to detect corruption is not an easy task and 
often doomed to fail without in-depth preparation of the auditors. 
Perpetrators of corruption tend to be intelligent and know how to 
cover the evidence of their acts. This is why it is so difficult to 
identify and interpret signs and clues that may point to corruption. 

Audits can be successful only if auditors understand the nature of 
corruption, recognize circumstances suggestive of corruption, and know 
how to proceed if clues are identified. The possibility of corruption 
must always be kept in the back of the auditor’s mind even if 
deviations from standard procedures are only minor; it is then 
important to validate those clues step by step or to discard 
suspicions as soon as they are cleared. 

The following example illustrates this point. 

In a procurement audit at a government department, the auditor looked 
at a long-term contract with a paper manufacturer to supply paper to 
subordinate agencies and found that the quantities agreed upon were 
lower than the amounts actually invoiced and paid. Moreover, the 
number of agencies to be supplied had dropped significantly compared 
to the contractually specified number in the wake of an administrative 
reorganization that was implemented shortly after the contract had 
been concluded. Both circumstances added to the paper manufacturer’s 
profits because the contractually agreed-upon price had been 
calculated based on lower quantities and on a larger number of 
agencies to be supplied. 

Further enquiries by the auditor revealed that the higher demand for 
paper and the upcoming reorganization must have been known at the time 
the contract was concluded. 

Additional investigation and interviews with the staff members 
responsible for drafting the contract brought the following to light: 
One of the staff members preparing the bid had informed a paper 
manufacturer he knew that he would state the quantities and the number 
of agencies to be supplied in the specification favorably in return 
for 1 percent of sales. Anticipating higher returns, the manufacturer 
accepted this proposal. 

Aware that “nothing succeeds like success,” the auditor then looked 
into the conduct of that staff member on earlier occasions and 
detected similar instances of corruption. 

No public prosecutor or special investigation unit would have been 
able to uncover this case of corruption. Only a vigilant auditor who 
examined the accounts and was aware of what the contractual 
impropriety could actually mean could detect a hint of the 
irregularity. Because SAIs are intimately familiar with accounts and 
other records and because they audit the invoicing and settlement of 
transactions closely, they are ideally positioned to play a key role 
in the fight against corruption. 

Sometimes, the facts in a case are more complex. A particular degree 
of vigilance and expertise is required to frustrate attempts to cover 
up evidence of criminal action. The following example illustrates this 
point: 

An SAI audited the construction of a large, special-purpose sea 
vessel. A call for bids to supply the ship’s diesel engine was sent 
out. Leading worldwide suppliers of ship diesel engines submitted 
their bids. A national supplier won the contract, which was worth 
several million euros. 

The construction documentation contained a letter from an unsuccessful 
bidder complaining that the plans had been tailor-made for the 
successful bidder. Comparing the construction plans of similar ships, 
the auditor found that the design of the ship’s power room was, 
indeed, not standard. The planner could not offer a reasonable 
explanation for the deviations. 

The SAI then asked a naval engineer to give an expert opinion on the 
plans. He confirmed that the engine room design was unusual, 
unwarranted, and even uneconomical. 

The SAI notified the public prosecutor of these findings. The 
prosecutor had the accounts of the engine supplier seized; further 
investigations revealed that a payment related to the contract had 
been made to the designer of the vessel. 

Eventually, it was found that the engine supplier had promised to pay 
U.S. $100,000 to the planner if he won the bid and was chosen to 
supply the diesel engine. The planner had designed the power room in a 
way that favored the standard diesel engine supplied by that vendor. 

In most corruption cases, graft money comes from state coffers in the 
guise of extra profits. In these cases, supplies or services are 
overpriced or are not delivered at all. To recognize this, SAIs and 
auditors must be able to judge whether there is a disparity between 
performance and consideration. This requires particular expertise. 
SAIs without the required in-house skills may have to resort to 
contracting external experts. However, at least in those areas most 
susceptible to corruption, SAIs should be able to draw on their own 
qualified audit staff. 

While SAIs have fewer investigative powers than public prosecutors, 
this disadvantage is more than offset by the SAIs’ closer familiarity 
with auditee accounts and the expert knowledge of their staff. In 
their audits, SAIs scrutinize government accounts, analyze them from 
different angles, and acquire a more in-depth, insider’s view than 
that of the Ministry of Finance. By taking a close look at the 
financial management process, SAIs and their auditors are thus in a 
position to detect anomalies and deviations from standard procedures 
and identify irregularities such as corruption. The public prosecutor 
is just an outsider; for him, the government accounts may be nothing 
but a black box. 

Obviously, the best results in the fight against corruption can be 
achieved if SAIs and public prosecutors work together, as can be seen 
from the second case study. The SAI’s specialized know-how, linked 
with the public prosecutor’s sweeping powers of investigation, is the 
most powerful weapon against corruption. In the common interest, both 
should be used, especially in high-risk countries and areas. 

Given the urgent need to address the problem of corruption, the time 
has come for INTOSAI to take practical actions to flesh out the 
guiding principles laid down in its strategic plan. SAIs should not 
only be supported in the prevention of corruption but also be 
empowered to play a successful role in detecting past corruption. An 
anticorruption working group, modeled on the working group to fight 
money laundering, could be a first step. This group could first 
collect information on past SAI activities and then work out best 
practices as well as a strategy for government audit to fight 
corruption. 

For additional information, please contact the author at 
busse@rechnungshof.gv.at. 

[End of section] 

Developing International Standards and Guidelines for SAIs: 

By Kristoffer Blegvad, INTOSAI Professional Standards Committee: 

Despite their many differences, supreme audit institutions (SAI) 
around the world agree that they need better general public sector 
auditing guidelines. A recent survey conducted by INTOSAI’s 
Professional Standards Committee (PSC) confirmed this long-held 
assumption. 

PSC carried out the survey in December 2006 to identify the standards 
and guidelines INTOSAI should develop in the future. The survey’s 
conclusions will be used to target the PSC’s future work to ensure 
that the greatest number of countries will benefit from international 
standards and guidelines that define the role and tasks of SAIs. 

The PSC Steering Committee developed the survey questionnaire during 
its meeting in Yaoundé, Cameroon, September 5–6, 2007. The 
questionnaire was distributed in English, French, Spanish, and Arabic. 
One hundred SAIs completed the questionnaire, and the results were 
discussed at the PSC Steering Committee meeting in Bahrain, April 23–
24, 2007. (See Inside INTOSAI for a full discussion of the Bahrain 
meeting.) 

Development of Guidelines for SAIs The completed surveys that the PSC 
received from around the world reflect the differences among SAIs and 
indicate that they apply audit guidelines differently. Despite these 
differences, SAIs generally agree that their role as public 
authorities that support parliamentary oversight imposes special 
requirements on them. Although SAIs frequently use the same financial 
auditing methodology as private sector auditors, the SAIs acknowledge 
numerous ways in which public sector auditing demands methodologies 
and standards that are different from those of the private sector (see 
figure 1). 

Figure 1: SAIs’ Evaluation of Differences between Public and Private 
Sector Auditing and the Need for Separate Public Sector Guidance: 

[Refer to PDF for image: horizontal bar graph] 

Same auditing tasks—-no need for separate guidance: 4. 

Similar auditing tasks-—separate guidance needed only for 
institutional issues: 14. 

Many different auditing tasks—-separate guidance needed for 
institutional issues and other aspects of auditing: 61. 

Totally different auditing tasks-—separate guidance needed on all 
aspects of auditing: 9. 

Source: INTOSAI’s Professional Standards Committee (PSC). 

Note: The total does not add to 100 because 12 SAIs expressed no 
opinion or gave a written comment to respond. 

[End of figure] 

The purpose of public sector auditing is significantly different from 
that of private sector auditing. Public auditing contributes to 
democratic insight and monitors the application and use of public 
funds. Its goal is to ensure that funds are used correctly and 
efficiently and in accordance with Parliament’s decision. Private 
sector auditors perform the vastly different task of issuing an audit 
opinion affirming the accuracy of accounts and certifying that they do 
not contain any material errors or omissions that would affect the 
stated value of the company. Also, in most countries, the relationship 
between the SAI and its “clients” differs greatly from relationships 
in the private sector, where clients appoint and pay the auditors 
themselves. 

Cooperation with Other Standard Setters: 

The 100 SAIs expressed a widespread desire for INTOSAI to develop 
strong guidelines for financial, compliance, and performance auditing. 
The SAIs generally accepted PSC’s strategy of including material from 
other standard-setting bodies and drafting supplementary guidance for 
the public sector. This strategy—known as the dual approach—will allow 
PSC to focus its development efforts on areas unique to public sector 
auditing. 

The survey showed that INTOSAI auditing standards are widely used by 
SAIs for auditing tasks and for developing methodology and strategy; 
76 of the 100 SAIs indicated that they apply the INTOSAI standards to 
financial, compliance, or performance audit tasks. However, many SAIs 
use these standards in combination with national public auditing 
standards and other guidance. In particular, many SAIs use standards 
issued by the International Federation of Accountants (IFAC) when 
performing financial audit tasks. Figure 2 summarizes SAIs’ usage of 
INTOSAI and IFAC standards in their audits. 

Figure 2: Number of SAIs Using INTOSAI or IFAC Standards: 

[Refer to PDF for image: pie-chart] 

INTOSAI and IFAC: 55; 
INTOSAI only: 21; 
IFAC only: 5; 
Neither INTOSAI nor IFAC: 19. 

Source: INTOSAI’s Professional Standards Committee (PSC). 

[End of figure] 

The survey’s results confirm the appropriateness of the PSC’s strategy 
of building upon other standard-setting bodies’ guidelines to the 
greatest extent possible. At its April meeting in Bahrain, the 
steering committee established the goal of adopting comprehensive 
guidelines for financial, compliance, and performance auditing by 
2010. INTOSAI’s guidelines for financial auditing will be based on 
IFAC’s standards and will provide supplementary guidance on special 
conditions that characterize public sector auditing. The PSC also 
decided to establish a new cooperative effort with the Institute of 
Internal Auditors (IIA) to further develop INTOSAI guidelines for 
internal controls in the public sector. The survey shows that a number 
of SAIs already make use of IIA’s standards and guidelines. 

The survey results provided an important platform for the PSC’s 
efforts to establish and clarify distinct public auditing standards 
and promote consistency between standards issued by various 
international organizations. 

For additional information on the survey, please contact the author at 
kb@rigsrevisionen.dk. The full report can be found at www.issai.org. 

[End of section] 

Planning and Selecting Performance Audits at the Netherlands Court of 
Audit: 

By Rudi Turksema and Peter van der Knaap, Netherlands Court of Audit: 

All performance auditors share the same goal: to audit the most 
relevant problems using the right people and the most appropriate 
methods and techniques at the right moment and to use the audit 
findings to make a meaningful contribution to the quality of 
government policy and operational management. 

The Netherlands Court of Audit devotes a great deal of time to the 
proper planning and selection of its audits. We work in a very broad 
field but with finite capacity. The Court of Audit’s mandate covers 
all of the central government and nongovernmental institutions that 
receive public funds to carry out statutory tasks. In all, we must 
audit the use of about 350 billion euros with a staff of just 80 
auditors who specialize in performance audits. For staffing reasons 
alone, we have to think very carefully about which performance audits 
we will carry out. More importantly, if our work is to be effective, 
we have to know where we can make the greatest contribution. 

In this article, we explain how the Court of Audit tries to realize 
its goals. The first section describes how we use the planning and 
selection tools in practice—which tools we use, when we use them, and 
how they are related to each other—and the next section includes the 
results and the lessons learned from our use of the planning and 
selection tools. 

Planning and Selection Tools At our SAI, audit planning and selection 
must help us achieve the Court of Audit’s mission: to “audit and 
improve the regularity, efficiency, effectiveness, and integrity with 
which the State and associated bodies operate.” Another task of the 
Court of Audit is to “contribute to sound public administration 
through cooperation and knowledge exchange at home and abroad.” For 
purposes of this article, it is also relevant that we seek to be a 
transparent organization. 

To plan and select our performance audits, we use a number of tools 
that are closely related to the Court of Audit’s overall strategy (see 
figure 1). 

Figure 1: Netherlands Court of Audit Strategy and Audit Planning and 
Selection Tools: 

[Refer to PDF for image: illustration] 

Strategy (2004-2009): 

Domains (2004-2009): 

Tools: 
Monitoring (permanent); 
Issue matrix (annual); 
Integrated risk analysis (annual). 

Activity program (annual). 

[End of figure] 

Planning and selection begins with the Court of Audit’s strategy. 
Three domains—-public services, safety and security, and sustainable 
development-—have been prioritized to implement the strategy, and they 
determine the most relevant objects for audit. We also use three tools—
monitoring, issue matrix, and integrated risk analysis—to look beyond 
the strategy at more topical developments in our field of operations. 

The first tool is monitoring, a standard activity carried out by all 
Court of Audit organizational units. In all events, we monitor the 
ministries’ policies and the performance of officials charged with 
statutory tasks. Given our strategic goal of helping to reduce social 
problems, we also increasingly monitor social developments. 

The issue matrix, the second tool, is an outcome of monitoring and is 
intentionally designed to facilitate discussion of the monitoring 
findings with the Court of Audit’s Board. Issues are summarized in 
memos that answer the following four questions: (1) What is at issue? 
(2) Is it undesirable? (3) Where does it occur? (4) Who are the main 
players? The issue matrix identifies relevant issues in our audit 
field that are not necessarily covered by our strategy. 

Figure 2 is an example of an issue matrix in the transport, public 
works, and water management policy field. The horizontal axis shows 
the likelihood of an event’s occurrence, and the vertical axis shows 
the potential impact of an event. By ordering the issues in such a 
matrix, we are better able to determine their potential importance. To 
encourage further discussion, we deliberately do not define the 
concepts of “potential impact” and “likelihood of occurrence” any 
further. 

Figure 2. Example of an Issue Matrix for Transport, Public Works, and 
Water Management Policy: 

[Refer to PDF for image: illustration] 

Matrix plots Potential Impact from low to high against Likelihood of 
Occurrence from low to high. 

Privatization of Schiphol airport: 
Potential Impact: low; 
Likelihood of Occurrence: medium. 

Railway disruption: 
Potential Impact: medium; 
Likelihood of Occurrence: medium. 

Flooding: 
Potential Impact: high; 
Likelihood of Occurrence: medium. 

Creative contracting: 
Potential Impact: medium; 
Likelihood of Occurrence: high. 

Accessibility: 
Potential Impact: high; 
Likelihood of Occurrence: high. 

[End of figure] 

According to this issue matrix, it is our opinion that accessibility 
(motorway congestion) is almost certain to occur and will probably 
have a high impact. In the Netherlands, it is indeed a daily problem: 
overcrowded rush-hour motorways harm both the environment and the 
economy. Flooding, which may also have a high impact, is thought to be 
less of an issue because it is less likely to occur. The privatization 
of the national airport, Schiphol, would have a low impact since it is 
not expected to seriously affect the continuity of the airport’s 
operations. We have not identified issues with a low likelihood of 
occurrence in this policy field, though they may exist, Rather, the 
Court of Audit is more interested in issues that are more likely to go 
wrong. 

The third tool is integrated risk analysis. In contrast to monitoring 
and issue matrices, risk analysis builds on the strategy and is more 
focused so that it can be used directly for the activity program and 
planning of regularity audits. 

Integrated risk analysis (IRA) is a systematic and efficient means to 
generate, analyze, and record information about the entire audit field 
to identify and classify risks in the domains that are relevant to the 
Court of Audit. The risk analyses are integrated in that they: 

* combine all identified and prioritized risks so that choices can be 
made for both the regularity audits and the annual programming of 
performance audits and; 

* are conducive to detecting connections between public administration 
operations and risks to public administration performance. 

The system used to calculate risk is very similar to the one used for 
issue matrices. The risk is estimated as a combination of the 
likelihood of an undesirable event or situation occurring and its 
impact on one of the risk domains: risk = {likelihood of risk x impact 
of risk}. We use the model shown in figure 3. 

Figure 3: Integrated Risk Analysis Matrix: 

[Refer to PDF for image: illustration] 

Matrix plots Potential Impact from insignificant to significant 
against Likelihood of Occurrence from improbable to probable. 

Probable impact: Insignificant; 
Likelihood of risk occurring: Improbable; 
Risk: Low. 

Probable impact: Insignificant; 
Likelihood of risk occurring: Possible; 
Risk: Low. 

Probable impact: Insignificant; 
Likelihood of risk occurring: Probable; 
Risk: Average. 

Probable impact: Average; 
Likelihood of risk occurring: Improbable; 
Risk: Low. 

Probable impact: Average; 
Likelihood of risk occurring: Possible; 
Risk: Average. 

Probable impact: Average; 
Likelihood of risk occurring: Probable; 
Risk: High. 

Probable impact: Significant; 
Likelihood of risk occurring: Improbable; 
Risk: Average. 

Probable impact: Significant; 
Likelihood of risk occurring: Possible; 
Risk: High. 

Probable impact: Significant; 
Likelihood of risk occurring: Probable; 
Risk: High. 

[End of figure] 

The end product of integrated risk analysis is a systematic overview 
of the main risks to the operation and performance of public 
administration and associated third parties. The analysis results 
serve as input in our proposals for regularity audits (selecting the 
auditee and approach) and the annual programming of performance 
audits. Integrated risk analysis also contributes to accumulating 
field-specific know-how and exchanging that know-how among 
organizational units. 

Risks to public administration operations and performance may be 
related to each other. For example, IT problems (cause) at the 
Ministry of Finance may lead to late payments of housing benefits 
(effect). This might indirectly lead to another ministry’s failure to 
achieve a policy goal, such as reducing the number of forced 
evictions. A simplified cause and effect diagram for this example is 
given in figure 4. 

Figure 4. Example of Potential Cause and Effect of Risks to Public 
Administration Operations and Performance: 

[Refer to PDF for image: illustration] 

IT problems: 
effect on: 
Late payment of housing benefits: 
effect on: 
Forced evictions. 

[End of figure] 

The tools we use to plan and select performance audits ultimately 
generate input for programming. Ideally, by comparing the outcomes of 
monitoring and issue matrices (which have a broader and more topical 
orientation) with the proposals arising from the strategy (which have 
a more focused and longer term orientation), we will program the right 
performance audits at the right moment. The direct result of our 
planning and selection activities is therefore an optimal activity 
program, which in turn determines how effective we are as an audit 
institution. However, that is sometimes beyond our control. 

Conclusions: 

This article has explained how the Court of Audit is trying to perfect 
its planning and selection of performance audits. We are pleased with 
the three benefits we have identified in the planning and selection 
process. First, the process produces a systematic and lively internal 
and external debate. Second-—and this is a significant advantage of 
our multiyear strategy-—it enhances our external profile. An auditee 
sometimes sighs, “Yes, if I read your strategy and hear your 
arguments, it goes without saying that you’ll want to audit this.” And 
although we prefer not to hear people sigh, this often increases their 
cooperation and willingness to take a critical look at their own 
policy practices. Third, it encourages rigorous, activity-based 
management, both in the three domains recognized in our strategy and 
in auditing the relationship between policy and its implementation, 
the main focus of our performance audit strategy. 

People sometimes see an overlap in our preparations: in addition to 
carrying out monitoring activities and integrated risk analyses, we 
have identified special domains and must prepare related proposals. 
We, too, sometimes think that we have set our goals too high: we must 
invest a considerable amount of time in the planning and selection 
process, yet the capacity available to carry out further audits is 
limited. We also have to respond to current developments and requests 
from Parliament. Finally, programming our audits in response to social 
problems is a daunting challenge. Sometimes, operational audit “magnets”
 divert us from finding the causes of disappointing results and lead 
us to check procedural and organizational systems. Fortunately, we are 
getting better at resisting these modern-day “Sirens.” 

For additional information, contact the authors at 
r.turksema@rekenkamer.nl and peter.vanderknaap@rekenkamer.nl. 

References: 
Netherlands Court of Audit (2003), Performance and Operation of Public 
Administration: Strategy 2004-2009 of the Netherlands Court of Audit, 
The Hague, Netherlands Court of Audit. 

de Vries, G.J.D. (2000), Beleidsdynamica als sociale constructie. Een 
onderzoek naar doorwerking van beleidsevaluatie en beleidsadvisering, 
Delft, Eburon. 

[End of section] 

Reports in Print: 

In this issue, the Journal continues to highlight reports from SAIs 
that identify best practices. 

In 2006, the Office of the Controller and Auditor-General of New 
Zealand published a report on achieving public sector outcomes with 
private sector partners. The report informs leaders and decisionmakers 
about the key issues they need to consider across the public sector 
and for individual projects. Examples of partnering range from 
contracts where the private sector finances and owns public 
infrastructure to arrangements where public and private sector 
organizations work closely together as one team sharing risks and 
rewards. Public entities are ultimately accountable for delivering 
public services, which is a responsibility they cannot transfer to the 
private sector. According to the report, public entities must have 
robust internal arrangements in place to opt for a partnering approach 
and to manage its implementation. Strong leadership from the top of 
the organization is needed to drive the process and ensure proper 
accountability and control. There should also be a clear definition of 
roles and responsibilities, identification of relevant authorities and 
delegations, and adequate arrangements for public scrutiny of 
performance under the contract. 

For additional information, contact the Office of the Controller and 
Auditor- General: 
Fax: +64 4 917 1549. 
E-mail: enquiry@oag.govt.nz. 
Web site: www.oag.govt.nz. 

The Office of the Auditor General of Canada released a framework for 
identifying risk in grant and contribution programs to help managers 
think critically about their current practices. The framework 
identifies 10 key attributes of well managed grant or contribution 
programs. These attributes include choosing the appropriate funding 
instrument, funding projects at the appropriate level, and quickly 
resolving problems with project and program performance. 

For additional information, contact the Office of the Auditor General: 
Fax: ++1 (613) 957-4023. 
E-mail: communications@oag-bvg.gc.ca. 
Web site: www.oag-bvg.gc.ca. 

In 2007, the National Audit Office of Finland published a report 
examining the supervision and economy of official travel. The auditors 
had examined several government agencies and observed not only many 
errors and shortcomings but also best practices. One agency had cost 
calculations for official vehicles to guide decisions on whether to 
purchase a new vehicle or compensate employees per kilometer. Another 
agency required employees who obtained a loyalty card for official 
travel to authorize the agency to receive information concerning 
account transactions. The audit made recommendations and suggestions 
for improving the economy of official travel, the most important of 
which concerns developing a government travel strategy. 

For additional information, contact the National Audit Office: 
Fax: +358 (0)9 432 5820.
E-mail: kirjaamo@vtv.fi.
Web site: www.vtv.fi. 

[End of section] 

Inside INTOSAI: 

Delegates from European and Latin American SAIs Meet in Lisbon, 
Portugal, to Discuss Fiscal Sustainability: 

On May 9 through 12, 2007, representatives of SAIs from 52 countries 
gathered in Lisbon, Portugal, for the fifth EUROSAI/OLACEFS 
Conference. The theme for the conference, hosted by the Tribunal de 
Contas of Portugal, was fiscal sustainability, presentation of 
accounts, and accountability. Guilherme d’Oliveira Martins, President 
of the Tribunal de Contas, opened the conference, noting that his 
country is “at the center of dialogue between Europe and Latin America”
 and that this conference was “an important opportunity to share 
different points of view” about the chosen theme. 

[Photograph: Delegates to the EUROSAI/OLACEFS conference gathered in 
front of the meeting place, the former Session Hall of the Tribunal de 
Contas, an 18th century building in the heart of Lisbon] 

The first working session—the presentation of accounts and 
accountability in the context of fiscal sustainability—featured four 
speakers who focused on reforms within their SAIs. Tullio Lazzaro, 
President of the SAI of Italy, said that the Corte dei Conti has 
become increasingly involved in the budget cycle and now advises 
Parliament on issues such as the feasibility of budget and public 
finance objectives and compliance with European Union fiscal 
sustainability indicators. Noemí Rojas Llanos, Deputy Comptroller 
General of Chile, noted the importance of transparency in 
communicating audit findings to the public and discussed her 
organization’s new use of electronic government mechanisms. Kurt 
Grüter, President of the SAI of Switzerland, discussed his country’s 
shift to an accrual budgeting system. Finally, Andrés Terrero, 
President of the SAI of the Dominican Republic, delivered a 
presentation about the evolution of his organization as it has become 
increasingly independent from the country’s executive branch. 

[Photograph of Conference delegates during one of the working sessions] 

During the second working session, conference participants focused on 
the SAIs’ contribution to the fiscal sustainability of social sectors. 
Both Tuomas Pöysti, Auditor General of Finland, and Alexander 
Semikolennykh, Vice Chairman of the SAI of the Russian Federation, 
discussed how their organizations have addressed fiscal sustainability 
concerns when auditing their national health care programs. 

Vítor Constâncio, Governor of the Bank of Portugal, delivered an 
informative lecture on how to define and assess fiscal sustainability. 
His lecture was followed by a presentation by Sir John Bourn, 
Comptroller and Auditor General of the United Kingdom (UK), who 
discussed new initiatives that his organization has undertaken to 
address fiscal sustainability. For example, the UK National Audit 
Office has been asked to review the budget assumptions used in 
formulating the country’s budget and to determine when the economic 
cycle begins and ends. 

At the close of the conference, the participating SAIs agreed that 
they have a natural role to play in working towards fiscal 
sustainability. Methods for addressing this issue include disclosing 
the actual size of public debt; assessing the economic situation of 
the state; and monitoring the economy, efficiency, and effectiveness 
of public management. The conference resulted in several 
recommendations, including that SAIs closely monitor the development 
of budget, management, accounting, and social reforms in their 
countries and inform the public of the results of their assessments. 

For more information and to obtain copies of the papers, visit the 
conference Web site: www.tcontas.pt/eurosai/eurosaiolacefs/index.htm. 

Professional Standards Committee: 

The INTOSAI Professional Standards Committee (PSC) Steering Committee 
met in Manama, Bahrain, April 23–24, 2007. The main purpose of the 
meeting was to discuss the results of the PSC survey, described in 
detail elsewhere in this issue,[Footnote 1] and the PSC’s mandate for 
2007–2010. 

Before the meeting, the draft framework for INTOSAI standards and 
guidelines was forwarded to all INTOSAI members for comment. At the 
meeting, the steering committee members discussed the final version 
that is to be presented at the INTOSAI congress in Mexico. They 
unanimously agreed to ask the congress to approve (1) the framework; 
(2) a new name for INTOSAI standards and guidelines—International 
Standards for Supreme Audit Institutions (ISSAI)—and (3) a new name 
for INTOSAI guidance related to administrative authorities, Guidance 
on Good Governance. 

The PSC’s mandate is to develop a comprehensive set of standards and 
guidelines ready for presentation at the 2010 INTOSAI congress. Based 
on the survey results and already planned activities, the PSC proposes 
to undertake the following in 2007–2010: 

* Work to harmonize public sector audit internationally by 
recognizing, using, and building on standards issued by other standard-
setting bodies and developing supplementary guidance in areas where 
SAIs have special needs. 

* Ensure that clear and user-friendly guidance on the special role of 
SAIs and specific features of public sector auditing is prepared in 
accordance with the following principle: Where the tasks are the same, 
the standards should be the same, and where the tasks differ, the 
standards should differ. 

* Prepare a decision on permanent maintenance of the set of ISSAIs, 
recognizing that individual SAIs decide on implementing the ISSAIs, 
the INTOSAI Communication Policy addresses communication issues, and 
the INTOSAI Capacity Building Committee addresses capacity building. 

The PSC’s accomplishments and proposed mandate for 2007-2010, along 
with its strategic alignment plan, will be reported to the 2007 
INTOSAI congress in Mexico City. 

The PSC meeting was generously hosted by the SAI of Bahrain and led by 
Mr. Hassan Khalifa Al Jalahma, President of the National Audit Court. 
The PSC’s next meeting will take place on November 4, 2007, in Mexico 
City. 

For further information, please contact the PSC: 

Fax: ++45 33 14 38 28. 
E-mail: yvan.pedersen@rigsrevisionen.dk. 
Web site: http://psc.rigsrevisionen.dk 

Footnote: 

[1] See “Developing International Standards and Guidelines for SAIs,” 
p. 12. 

Subcommittee on Accounting and Reporting: 

The Professional Standards Committee’s Subcommittee on Accounting and 
Reporting observes and participates in the meetings of the 
International Public Sector Accounting Standards Board (IPSASB)-— 
formerly the Public Sector Committee-—an International Federation of 
Accountants (IFAC) board that issues international accounting 
standards for public sector entities. As part of the subcommittee’s 
activities, it will provide periodic updates of IPSASB activities to 
INTOSAI members through articles posted to this Journal’s Web site 
(www.intosaijournal.org) and updates in this section of the Journal. 

A summary of the March 2007 IPSASB meeting is available on the IFAC 
Web site at www.ifac.org (click on the following links: IFAC Boards 
and Committees/International Public Sector Accounting Standards 
Board/IPSASB meetings). Participants discussed the following topics at 
the meeting and agreed on the following actions: 

* IPSASB’s strategic plan for 2007–2009: A strategy, operational plan, 
and work plan will be developed based on a detailed planning session 
at the meeting. 

* Social Benefits: Plans to develop an exposure draft dealing only 
with disclosure were reaffirmed. 

* Improvements Project: A project proposal was approved to realign 
selected International Public Sector Accounting Standards (IPSAS) with 
equivalent International Accounting Standards (IAS)/International 
Financial Reporting Standards (IFRS) that have been revised since 
those IPSAS were issued. 

* Heritage Assets: Some issues will be analyzed further to help decide 
on next steps. 

* Financial Instruments: A project proposal was approved to amend 
IPSAS 15, Financial Instruments: Disclosure and Presentation, in 
accordance with IAS 32, Financial Instruments: Presentation. 

* Entity Combinations: An issues paper will be developed addressing 
public sector issues related to entity combinations. 

The next meeting of the IPSASB is July 3–6, 2007, in Montreal, Canada. 
The draft meeting agenda includes projects related to the strategic 
plan conceptual framework, social benefits, impairment of cash-
generating assets (discuss comments on the exposure draft (ED)), 
employee benefits (discuss comments on the ED), financial instruments, 
service concessions, and external assistance (discuss comments on the 
ED). 

For additional information, please contact the subcommittee chair at 
the U.S. Government Accountability Office: 
Fax: ++1 (202) 512-4021. 
E-mail: daceyr@gao.gov. 

16th Meeting of the INTOSAI Standing Committee on IT Audit: 

The 16th meeting of the INTOSAI Standing Committee on IT Audit 
(ISCITA) was hosted by the State Audit Institution of Oman in Muscat, 
March 5–7, 2007. At the meeting, 51 delegates from 20 countries 
discussed present and future committee projects. 

The SAI of India presented the final product on e-governance along 
with the updated courseware on IT audit. IDI made a presentation on 
the alpha version of the e-course on auditing IT controls and informed 
the committee that User-IDs would be used in the final version to 
track participants’ progress. IDI thanked the SAIs of the United 
States and India for their contributions to the development of the 
courseware. 

Future ISCITA projects include IT governance, e-governance risk, SAP 
applications in public administration, and auditing 
application/software development. 

[Photograph: Delegates to the 16th meeting of the INTOSAI Standing 
Committee on IT Audit] 

The meeting was preceded by the 5th Seminar on Performance Audit on IT 
Governance, March 3-4, 2007. The seminar was coordinated by the SAI of 
the United States along with the SAIs of Brazil, Canada, the 
Netherlands, and India. 

The seminar was attended by 75 delegates from 28 countries. The key 
issues discussed were the causes of failure of IT projects, the use of 
external consultants, and the lack of IT security that leads to the 
loss of citizens’ personal and financial data. 

For additional information, contact ISCITA: 
Fax: ++91 (11) 2323 - 5446. 
E-mail: pdir@cag.gov.in. 
Web site: www.intosaiitaudit.org. 

ASOSAI Seminar on Managing Audit Results: 

On February 12-15, 2007, 24 participants from ASOSAI member countries 
and senior executives from the U.S. Government Accountability Office 
and the Office of the Comptroller and Auditor General of India 
attended a seminar focused on managing audit results. The seminar, 
held at the International Training Center of the SAI of India in New 
Delhi, was the first ASOSAI event targeted to middle-and senior-level 
SAI managers. The seminar’s purpose was to provide SAI staff with a 
forum to exchange audit management practices that could both improve 
the efficiency of the audit process and enhance accountability in the 
public sector. 

During the seminar, participants identified three main challenges 
facing their SAIs and reached consensus on strategies that could be 
used to address these challenges. First, participants noted the 
difficulties in ensuring the quality of the audit plan, process, and 
results. In response, they agreed that it was important to establish 
annual and strategic plans, improve existing audit processes to comply 
with international and INTOSAI standards, provide continuous training 
for staff, conduct peer reviews, establish quality assurance units to 
review internal audit processes, and exchange information with other 
SAIs. Second, the participants highlighted the challenges in ensuring 
that audit results are effectively communicated to stakeholders. As a 
result, they recommended establishing protocols with audited entities 
to ensure their cooperation in implementing audit recommendations, 
preparing user-friendly summaries of audit reports, and developing a 
communications strategy for sharing audit results with intended 
audiences, including political stakeholders and the media. Third, 
participants identified approaches for following up on SAI findings, 
including establishing a database to facilitate audit recommendation 
follow-up, creating a unit dedicated to tracking and documenting 
recommendation follow-up, and developing measures to track audit 
effectiveness in monetary terms. 

For additional information, contact the ASOSAI General Secretariat: 

Fax: ++91 (11) 2323 - 5446. 
E-mail: cag@cag.gov.in, pdir@cag.gov.in. 
Website: www.asosai.org. 

ASOSAI Financial Audit and Fraud Awareness Workshop: 

The ASOSAI Training Administrator chose the National Audit Department 
of Malaysia (NAD) to host the Financial Audit and Fraud Awareness 
Workshop. This was a cooperative program of ASOSAI, the INTOSAI 
Development Initiative (IDI), and the Asian Development Bank (ABD). 
The workshop was held May 3–24, 2007, at the Legend Hotel, Kuala 
Lumpur; 28 participants attended from the SAIs of Afghanistan, 
Cambodia, Laos, Maldives, Myanmar, and Vietnam. Six instructors from 
Indonesia, Nepal, Pakistan, the Philippines, and Malaysia conducted 
the workshop. 

The Auditor General of Malaysia, Tan Sri Dato’ Setia Ambrin bin Buang, 
officiated at the opening ceremony; ambassadors/high commissioners 
from the respective countries and senior officers from the NAD of 
Malaysia also attended. 

For additional information, contact the NAD: 
Fax: ++60 (3) 88 88 97 01.
E-mail: jbaudit@audit.gov.my. 
Web site: www.audit.gov.my. 

Meeting of OLACEFS International Liaisons: 

Twenty international liaison specialists from OLACEFS SAIs met in 
Bogota, Colombia, March 21-23, 2007. The SAIs represented were 
Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba, Dominican 
Republic, El Salvador, Guatemala, Honduras, Nicaragua, Panama, 
Paraguay, Peru, Puerto Rico, Uruguay, and Venezuela. This second 
meeting of international liaisons was a joint effort of the SAI of 
Colombia, the President of OLACEFS, and the OLACEFS Executive 
Secretariat. Experienced specialists within the group of liaisons made 
invaluable contributions to the discussion, which focused on the roles 
and competencies of the liaisons and the relationship between OLACEFS 
and their SAIs. Participants also discussed obstacles they face in 
carrying out their jobs and presented concrete proposals for 
overcoming these difficulties. 

At the request of the OLACEFS Steering Committee, the delegates 
drafted terms of reference for the group, which were submitted to the 
Steering Committee at the end of March 2007. 

[Photograph: OLACEFS international liaisons at their meeting in Bogota] 

For additional information, contact OLACEFS: 

General Secretariat: 
Office of the Comptroller General of Panama: 
Fax: ++507 263-9322: 
E-mail: omarl@contraloria.gob.pa: 
Web site: www.olacefs.org.pa: 

President: 
Court of Accounts, El Salvador: 
Fax: ++503 2281-2563: 
E-mail: presidencia@olacefs.gob.sv. 

Meeting of Finance and Administration Committee: 

[Photograph: The fourth meeting of the INTOSAI Finance and 
Administration Committee was held in Oslo, Norway, on March 26 and 27, 
2007. The principals (left to right, front row: Jørgen Kosmo, Norway; 
Osama Jafar Faquih, Saudi Arabia, Chairman; David M. Walker, United 
States; second row: Josef Moser, Austria (second from left); 
Clodosbaldo Russián Uzcátegui, Venezuela, Vice-chair; and Vijayendra 
Nath Kaul, India) discussed a number of issues, including updating the 
INTOSAI strategic plan, INTOSAI’s financial condition and legal 
status, and associate membership in INTOSAI] 

SAIs of Baltic Countries Discuss Best Practices in Relations with 
Parliamentary Audit Committees and Ministries of Finance: 

The SAIs in the Baltic countries (Estonia, Latvia, and Lithuania) have 
seen great progress and change in recent years. Auditors from all 
three countries’ SAIs have developed key relationships with colleagues 
at their respective Ministries of Finance and more recently have 
undertaken initiatives to strengthen their relationships with 
Parliamentary Audit Committees (PAC). 

In October 2006, the Lithuanian National Audit Office, together with 
SIGMA,[Footnote 1] organized a regional meeting for the SAIs of the 
three Baltic countries, senior experts from other the SAIs of other 
European Union (EU) Member States, and representatives of Ministries 
of Finance and Parliaments, the European Parliament, and the European 
Court of Auditors. 

[Photograph: Participants in the regional best practices meeting in 
Lithuania] 

The meeting’s specific purpose was to share experiences and best 
practices to make the relationships and functions of the PACs, 
Ministries of Finance, and SAIs better, stronger and more effective. 
The discussions focused on improving national accountability processes 
and systems by comparing and understanding what is already working 
well in the Baltic region and learning from the experiences of other 
selected EU Member States and from the EU as a whole. 

The meeting was organized under four discussion areas. The following 
sections highlight the main conclusions and best practices that 
emerged from each of the four areas discussed at the meeting. 

The Effective Functioning of Parliamentary Audit Committees To carry 
out effective and useful work, PACs need quality, fact-based, fair, 
and informative reports from fully functional and operationally 
independent SAIs. SAIs, in turn, need to provide practical support to 
PACs (and their chairmen) in their work. In the Baltic region, the 
degree of this support varies by country. 

Witnesses who attend PAC meetings need to be sufficiently senior staff 
who are directly responsible for the audit topic under consideration 
and well prepared. PACs need to produce their own reports with clear 
conclusions and recommendations, and there needs to be effective 
follow-up of the implementation of audit and PAC recommendations. 

The process needs to be unbiased and nonpolitical and focused on 
policy implementation. Key indicators of success are the authority and 
influence of the actors in the process and the benefits derived from 
implementing the recommendations. 

Participants identified the following best practices: 

* The PAC should determine its own agenda for considering audit 
reports and should work with the SAI to ensure sufficient audit work 
has been done to meet its needs. 

* The SAI can support the PAC with prior briefings, suggested lines of 
questioning, and drafting PAC reports. 

* The chair of the PAC should be selected from the opposition, and the 
committee should operate and report in an unbiased and professional 
manner. 

Relations between Baltic SAIs and Parliamentary Audit Committees: 

The PACs in the three Baltic countries are relatively new but are 
already functioning well. Relationships between SAIs and PACs are 
businesslike and professional, and many reports are considered. 

The Lithuanian PAC has the power to direct the government to take 
actions arising from its consideration of audit reports. The chairman 
of the Estonian PAC often meets with the prime minister to discuss 
audit findings. Latvia has good processes for briefing the PAC and 
helping to draft its reports. 

Participants identified the following best practices for relationships 
between SAIs and PACs: 

* Given their mutual independence and different functions in the 
accountability process, the business and professional relationship 
between the SAI and PAC should be as close as possible. 

* The relationship between the auditor general and the PAC chairman is 
crucial to the success of the process and obtaining synergy. 

Developing the Role of the Ministry of Finance in the Accountability 
Process: 

In all three Baltic countries, the Ministry of Finance’s role in the 
accountability process is relatively underdeveloped but should evolve 
through practice rather than by regulation. 

The Ministry of Finance role can be one of leadership, coordination, 
and direct participation in the process. 

Ministries of Finance should oversee follow-up of the implementation 
of audit and PAC recommendations in ministries and agencies. They can 
benefit from taking a more active role and being better informed of 
business in the accountability process. 

Participants identified the following best practices for the Ministry 
of Finance role: 

Ministries of Finance should: 

* receive, analyze, and act on all audit reports; 

* provide guidance on corrective actions needed for systemic control 
failures and instances of poor value for money identified by the PAC 
and SAI; 

* actively participate in PAC meetings by standing alongside direct 
auditees; and; 

* work with the PACs, SAIs, and spending ministries to efficiently 
implement recommendations. 

The EU Accountability Process: 

Since 80 percent of EU funds are spent in member states, the 
accountability process for EU funds has a strong national dimension 
that may have been neglected up to the present. The same 
accountability process can be developed and strengthened at the EU 
level by involving the European Parliament Budget Control Committee 
(EPBCC), the European Court of Auditors (ECA), the Council, and the 
European Commission (EC). 

Many of the best practices identified at the national level can also 
be applied at the European level. 

Participants identified the following best practices for the EU 
accountability process: 

Accountability for EU Funds: 

* Relevant audit reports from the ECA should be discussed at national 
PAC meetings. SAIs should report on EU trends and performance audits. 

* There is scope for further interaction between national parliaments 
and the European Parliament in the sound management of EU resources 
area. Accountability at the EU level: 

* The technical standards underpinning the EU budget implementation 
should be more harmonized, and the exchange of best practices should 
be improved. 

* Functional relationships between the ECA, EPBCC, Council, and the EC 
should be strengthened. 

For additional information, contact the Lithuanian SAI: 
Fax: ++370 (5) 266 67 61.
E-mail: nao@vkontrole.lt.
Web site: www.vkontrole.lt. 

Footnote: 

[1] SIGMA, a joint initiative of the European Union and the 
Organisation for Economic Cooperation and Development, provides 
support to partner countries in their efforts to modernize public 
governance systems. 

[End of section] 

IDI Update: 

IDI Update keeps you informed of developments in the work and programs
of the INTOSAI Development Initiative. To find out more about IDI and 
keep up to date between editions of the Journal, look at the IDI Web 
site: www.idi.no. 

Annual Meeting of the IDI Board: 

The International IDI Board celebrated its 8th annual meeting in 
Norway in March 2007. The board discussed and approved the IDI annual 
report for 2006 and the budget and the operational plan for 2007. The 
new IDI Strategic Plan 2007–2012 will be implemented starting this 
year. Over the past few years, IDI has moved from organizing training 
events and establishing regional and national SAI training 
infrastructures to emphasizing professional and institutional capacity 
building in a broader context. The board discussed IDI’s position and 
future role in light of the INTOSAI Strategic Plan 2005–2010, which 
identifies IDI as an important partner in achieving INTOSAI’s 
strategic goal 2, institutional capacity development. A paper on this 
issue is to be presented at the XIX INCOSAI in November 2007. 

IDI/ISCITA E-learning Course on Auditing IT Controls: 

After a series of new interactive learning strategies were 
incorporated, the alpha (test) version of the IDI/INTOSAI Standing 
Committee on IT Audit (ISCITA) course on the Audit of IT Controls was 
presented at the committee’s 16th meeting in Oman in March 2007. In 
April 2007, both the Web-based and computer-based versions of the 21-
module course were made available to 480 participants from 36 SAIs in 
AFROSAIE, ASOSAI, and CAROSAI, the three English-speaking target 
regions. Some participants from ASOSAI and CAROSAI have started using 
the Web-based training (WBT) version of the course. Every WBT 
participant is required to complete the course within 45 days; 
participants must complete the computer-based training (CBT) version
within 60 days of receiving the CDs. Participants are considered to 
have successfully completed the course when they score at least 75 
percent in each of the post-module assessments. IDI is using the 
learning management system (LMS) on which the Web-based course is 
hosted to regularly monitor the progress of individual WBT users. The
course will be available on the LMS until March 2008. 

IDI/AFROSAI-E Review Meeting and Operational Planning Workshop: 

As part of the IDI/AFROSAI-E Strategic Planning Program, strategic 
planning teams from the SAIs of Eritrea, the Gambia, Kenya, Mauritius, 
and Swaziland developed draft strategic plans by March 2007. At a 
review meeting held in Swaziland in April 2007, the teams received 
feedback from peers and subject matter experts and worked on 
modifications to the draft strategic plans. A workshop on operational 
planning was also conducted to give the teams practical guidance on 
going to the next level of planning and to discuss related issues, 
such as marketing the plan, managing change, and reporting on 
achievements. The next steps for the five participating SAIs will be 
adopting the strategic plans and developing and implementing 
operational plans. 

IDI/AFROSAI-E Adaptation and Design Meeting for Institutional Needs 
Assessment: 

The IDI/AFROSAI-E needs assessment program is designed to create 
regional and local capacity to carry out needs assessments at the SAI 
level. Its first activity was an adaptation and design meeting for 
institutional needs assessments held in South Africa in May 2007. At 
this meeting, about 10 regional needs assessment champions adapted IDI’
s needs assessment framework and tools to suit regional requirements. 
They also designed and developed a 1-week workshop on conducting needs 
assessments at SAIs. This workshop will be delivered later this year 
to needs assessment teams from selected SAIs of AFROSAI-E. 

IDI/ARABOSAI IT Auditing Program: 

Within the framework of the IDI/ARABOSAI IT auditing program, a second 
2-week IT Audit Workshop was delivered in Yemen in June 2007 by six 
IDI-certified IT champions. The workshop, which was designed to fit 
ARABOSAI’s basic IT auditing needs, allowed 30 more participants to 
acquire IT auditing skills. Other IT champions participated in the 
delivery of the course, which helped to enlarge the regional pool of 
IT champions with international experience. 

IDI-AFROSAI-E Quality Assurance Handbook Project Meeting: 

AFROSAI-E has prioritized quality assurance (QA) as one of the five 
strategic imperatives in its strategic plan for 2007–2009. The region 
expressed a need for practical guidance in the area of QA. As a first 
step, a project team of six regional experts will develop a QA 
handbook. The handbook will incorporate existing AFROSAI-E models for 
conducting quality assurance reviews on financial and performance 
audits and provide practical guidance to regional SAIs for setting up 
quality assurance units and carrying out quality assurance reviews at 
the institutional level. The project group met for a week in Botswana 
to determine the contents of the handbook. 

IDI and Liaison with the INTOSAI Community: 

IDI representatives have attended and reported at the following events 
in recent months: the Regional Institutional Strengthening Committee 
of SPASAI (Fiji), the INTOSAI Professional Standards Steering 
Committee Meeting (Bahrain), the International Consortium on 
Governmental Financial Management Conference (USA), the ARABOSAI 
General Assembly (Yemen), the INTOSAI Committee on Public Debt 
(Portugal), and the Working Group on Environmental Auditing Assembly 
(Tanzania). 

Contacting IDI: 

To discuss any of the issues raised in this edition of the IDI Update, 
please contact IDI: 
Telephone: ++47 21 54 08 10. 
E-mail: idi@idi.no. 
Web site: www.idi.no. 

[End of section] 

INTOSAI 2007 Events: 

July 10: 
Financial Audit Guidelines Subcommittee telephone conference. 

August 24–24: 
Financial Audit Guidelines Subcommittee meeting, Stockholm, Sweden. 

September 3–5: 
8th ASOSAI Governing Board meeting, Kuwait. 

September 10–14: 
2nd EUROSAI Governing Board meeting, Switzerland. 

September 10–14: 10th SPASAI Congress, Papua New Guinea. 

October 1–6: 
17th OLACEFS Governing Board meeting, Dominican Republic. 

November 4: 
Professional Standards Committee meeting, Mexico City. 

November 5–10: 
19th INCOSAI and 56th and 57th INTOSAI Governing Board meetings, 
Mexico City, Mexico. 

Editor’s Note: This calendar is published in support of INTOSAI’s 
communications strategy and as a way of helping INTOSAI members plan 
and coordinate schedules. Included in this regular Journal feature 
will be INTOSAI-wide events and regionwide events such as congresses, 
general assemblies, and board meetings. Because of limited space, the 
many training courses and other professional meetings offered by the 
regions cannot be included. For additional information, contact the 
Secretary General of each regional working group. 

[End of July 2007 edition of The Journal]