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July 2007
Vol. 34, No. 3
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.
www.intosaijournal.org
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.
A Guide to the New INTOSAI Journal Web Site
International Journal of Government Auditing–July 2007
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.
www.intosaiournal.org
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 theJanuary 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.
News in Brief
NAzerbaijan
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.
Ramiro Alfonso MendozaIn 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, theNorthern 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 programsin 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 ofthe 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 ( 2) 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 hasbeen 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 5 7 2622, 1 5 7 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 Reviewis 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 ( ) 2 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
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 subordi-
nate 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 agen-
cies 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 con-
tract 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.
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
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 1
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.
Developing International Standards and Guidelines for SAIs
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
Neither INTOSAI nor IFAC 19
INTOSAI and IFAC 55
INTOSAI only 21
IFAC only 5
Source: INTOSAI’s Professional Standards Committee (PSC).
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@rigsrevi-
sionen.dk. The full report can be found at www.issai.org.
Developing International Standards and Guidelines for SAIs
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).
Planning and Selecting Performance Audits at the Netherlands Court of Audit
Figure 1: Netherlands Court of Audit Strategy and Audit Planning and
Selection Tools
Strategy (2004-2009)
Domains (2004-2009)
Tools
Monitoring
(permanent)
Issue matrix
(annual)
Integrated
risk analysis
(annual)
Activity program
(annual)
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
Potential impact
High
Low
Likelihood of occurrence
Low High
Creative
contracting
AccessibilityFlooding
Railway disruption
Privatization of
Schiphol airport
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
Probable impact
Insignificant
Average
Likelihood of risk occurring
Improbable ProbablePossible
Low
Average
Low Average
High
HighHigh
Average
Low
Significant
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
effect effect
IT problems Late payment of
housing benefits Forced evictions
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.
Reports in Print
IIn 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
INSIDE
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.
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.
Picture 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,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
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.
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.
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
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,2 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.
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
Footnote 2 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.
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
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 UPDATE
INTOSAI IDI DEVELOPMENT INITIATIVE
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
IDI/ISCITA E-learning Course on Auditing IT Controls
After a series of new interactive learning strategies were incorporated, the alpha (test) of the INTOSAI
version of the IDI/INTOSAI Standing Committee on IT Audit (ISCITA) course on Development
the Audit of IT Controls was presented at the committee’s 16th meeting in Oman in Initiative. To find
March 2007. In April 2007, both the Web-based and computer-based versions of the out more about IDI
21-module course were made available to 480 participants from 36 SAIs in AFROSAI-and keep up to date
E, ASOSAI, and CAROSAI, the three English-speaking target regions. Some partici-between editions
pants from ASOSAI and CAROSAI have started using the Web-based training (WBT) of the Journal, look
version of the course. Every WBT participant is required to complete the course within at the IDI Web site:
45 days; participants must complete the computer-based training (CBT) version www.idi.no
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 Webbased
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
INTOSAI 2007 Events
July
10 Financial Audit Guide-
lines Subcommittee
telephone conference
August
24–24 Financial Audit Guide-
lines Subcommittee
meeting, Stockholm,
Sweden
September
3–5 8th ASOSAI Governing
Board meeting, Kuwait
10–14 2nd EUROSAI
Governing Board
meeting, Switzerland
10–14 10th SPASAI Con-
gress, Papua New
Guinea
October
1–6 17th OLACEFS Govern-
ing Board meeting,
Dominican Republic
November
4 Professional Standards
Committee meeting,
Mexico City
5–10 19th INCOSAI and
56th and 57th INTOSAI
Governing Board
meetings, Mexico City,
Mexico
December
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.