January 2015 January 2015 Vol

January 2015 January 2015 Vol. 42, No. 1

Board of Editors Josef Moser, President, Rechnungshof, Austria Michael Ferguson, Auditor General, Canada Abdellatif Kharrat, First President, Cour des ©2015 International Journal of Government Auditing, Inc. Comptes, Tunisia Gene Dodaro, Comptroller General, United States of America Adelina González, Acting Comptroller General, Venezuela

President The International Journal of Government James-Christian Blockwood(U.S.A.) Auditing is published quarterly (January, April, contents Editor July, October) in Arabic, English, French, Editorial ...... 1 Bill Keller (U.S.A.) German, and Spanish on behalf of INTOSAI Assistant Editor (International Organization of Supreme News in Brief...... 4 Amy Condra (U.S.A.) Audit Institutions). The Journal, which is the Regaining public trust ...... 8 Associate Editors official organ of INTOSAI, is dedicated to Office of the Auditor General (Canada) the advancement of government auditing Using audit procedures in revenue Shashi Kant Sharma (ASOSAI-India) audit ...... 11 Patrick Zacchini (PASAI, Yap, Micronesia) procedures and techniques. Opinions and CAROSAI Secretariat (St. Lucia) beliefs expressed are those of editors or The role of SAIs in auditing policy EUROSAI General Secretariat (Spain) Khemais Hosni (Tunisia) individual contributors and do not necessarily and law-making ...... 14 Basilio Jauregui (Venezuela) reflect the views or policies of the organization. INTOSAI General Secretariat (Austria) Inside INTOSAI ...... 18 U.S. Government Accountability Office The editors invite submissions of articles, (U.S.A.) IDI Update ...... 31 special reports, and news items, which should Administration be sent to the editorial offices at: INTOSAI-Donor Cooperation Sebrina Chase (U.S.A.) Update ...... 35 Paul Miller (U.S.A.) U.S. Government Accountability Office Members of the Governing Board of INTOSAI 441 G Street, NW, Room 7814 INTOSAI Calendar...... 37 Chairman Liu Jiayi China Washington, D.C. 20548 First Dr. Harib Saeed United U.S.A. Vice-Chairman Al Amimi Arab 202-512-4707 Emirates Email: [email protected] Second Dr. Osama Jafar Saudi Vice-Chairman Faqeeh Arabia Twitter: @INTOSAIJournal Secretary Dr. Josef Moser Austria General Given the Journal’s use as a teaching tool, Members: Terrance Bastian Bahamas articles most likely to be accepted are those Dr. Carlos Ecuador that deal with pragmatic aspects of public Ramón Pólit sector auditing. These include case studies, Faggioni ideas on new audit methodologies, or details Hesham Genena Egypt on audit training programs. Articles that deal Gilbert Gabon Ngoulakia primarily with theory would not be appropriate.

Teruhiko Kawato Japan The Journal is distributed to INTOSAI Juan Manuel Mexico members and other interested parties at Portal Martínez no cost. It is also available electronically Lyn Provost New at http://www.intosaijournal.org or Zealand http://www.intosai.org and by contacting the Jørgen Kosmo Norway Journal at [email protected]. Rana Muhammad Pakistan Akhtar Buland Articles in the Journal are indexed in the Krzysztof Poland Accountants’ Index published by the American Kwiatkowski Institute of Certified Public Accountants Tatyana A. Russian Golikova Federa- and included in Management Contents. tion Selected articles are included in abstracts Kimi Makwetu South published by Anbar Management Services, Africa Wembley, England, and University Microfilms Gene L. Dodaro United International, Ann Arbor, Michigan, U.S.A. States of America Dra. Adelina Venezuela González http://www.intosaijournal.org Editorial

The important role of SAIs in the UN post-2015 development agenda

Sustainable by Dr. Josef Moser President, Austrian Court of Audit and Secretary General, INTOSAI development worldwide is The importance of SAI independence peace, and undermines the efficiency only possible if for sustainable development of development aid; • the lack of legal, financial, and organiza- the use of public The last Congress of INTOSAI in Beijing in tional independence of SAIs from gov- October 2013 called especially for the imple- resources is made ernment, including obstacles to define mentation of the UN Resolution A/66/209 on the audit program independently; independence, in particular because SAIs can more transparent • the lack of a comprehensive audit man- accomplish their tasks objectively only if they date of SAIs; and accountable. are independent of the audited entity and • the lack of possibilities for SAIs to pro- protected against outside influence. It further vide a formal, comprehensive audit emphasizes that SAIs have an important role opinion on government accounts to in promoting efficiency, accountability, and Parliament; and effectiveness, and that they are conducive to • the lack of legal powers of SAIs to hold the achievement of development objectives, government to account. including the Millennium Development Goals. In relation to the sustainability of finance policies, the Beijing Declaration explicitly underlined the importance of strengthening Necessary measures to ensure the independence of SAIs, and acknowledged sustainable development that the mandates of SAIs may need to be enhanced for audits related to the sustain- Sustainable development worldwide is only ability of public finances. possible if the use of public resources is made Therefore both the international com- more transparent and accountable, in order munity of SAIs, as well as the international to enhance the responsibility of action to give community of states, call for action in order the future a chance, because the actions of to be prepared for the challenges related to today must not narrow and endanger the sustainable development. scope for future generations. SAIs all around the world currently face Increased transparency and accountabil- a series of challenges related to sustainable ity is also essential in order to strengthen development, such as: the trust of citizens in all state institutions. • the lack of transparency and account- It therefore has to be the common goal of ability, which causes a tremendous the SAI community to create transparency, damage to states, endangers social enhance accountability, fight corruption, and »

January 2015 International Journal of Government Auditing 1 Editorial

❝It is now that all responsible representatives of SAIs have to take action to raise awareness of relevant stakeholders—national and international—in order to successfully finalize our efforts to include the independence of Supreme Audit Institutions, related capacity building, and the improvement of accounting systems as essential elements of the Post-2015 Development Agenda.❞ — Josef Moser

thus to contribute to sustainable development. Administration (CEPA) and the Interparliamentary Against this background, INTOSAI developed a Union (IPU). position for the Post-2015 Development Agenda, calling for the inclusion of independence, capacity building, and the improvement of accounting Achievements systems as necessary elements in the Post-2015 Development Agenda. The results of these intensive efforts have been very gratifying: UN Secretary-General Ban Ki-moon explicitly INTOSAI’s efforts in the context of the welcomed this initiative of INTOSAI and under- post-2015 Development Agenda lined the importance of transparency and accountability on the occasion of a working meeting before At the global level, INTOSAI is currently heavily the last INCOSAI in Beijing. involved in the elaboration process of the Post- UN Under-Secretary-General Wu Hongbo spe- 2015 Development Agenda, which is defining the cifically mentioned accountability and monitoring future Sustainable Development Goals. mechanisms as a prerequisite for the Post-2015 The Austrian Court of Audit in its capacity as the Development Agenda and underlined that strong General Secretariat of INTOSAI has seized every and independent institutions as well as capacity opportunity in order to anchor the mentioned building of SAIs are key preconditions. objectives of INTOSAI—independence of SAIs, ECOSOC President Martin Sajdik also explicitly related capacity building, and the improvement referred to “a robust accountability framework“ of accounting systems—as central elements of as a key element for the success of the Post-2015 the Post-2015 Development Agenda in numerous Development Agenda and to the important role of UN forums, like the Economic and Social Council SAIs in this regard. (ECOSOC), the UN Intergovernmental Committee In its draft resolution to the ECOSOC, the UN of Experts on Sustainable Development Financ- Committee of Experts on Public Administration ing, or the UN Committee of Experts on Public (CEPA) expressly called upon UN Member States

2 International Journal of Government Auditing January 2015 Editorial

for including the principles of the Lima and Mexico for including independence and capacity Declarations as well as the UN General Assembly building for SAIs, and improvement of public Resolution A/66/209, and for acknowledging the accounting systems in the Post 2015-Devel- importance of strengthening national account- opment Agenda. The current process is very ability through SAIs as well as the capacity promising and the INTOSAI General Secre- of national SAIs as essential elements of the tariat constantly keeps the whole INTOSAI Post-2015 Development Agenda. community informed about the progress of In detail, the text resolution on the Post-2015 the negotiations within the UN framework. Development Agenda agreed on by ECOSOC in July 2014 includes the following paragraph on SAIs: The ECOSOC “Acknowledges the indis- pensable role of supreme audit institutions The way forward and related capacity-building in holding Gov- ernments accountable for the use of resources All the efforts mentioned above illustrate the and their performance in achieving develop- successful commitment of the General Sec- ment goals, and calls on Member States to give retariat and the whole INTOSAI community due consideration to the importance of the on the way to achieve our common INTOSAI independence of supreme audit institutions in goal of strengthening the role of SAIs in the the elaboration of the post-2015 development framework of the UN Post-2015 Development agenda.” Agenda. As a direct result of our efforts, ECOSOC As the topic of sustainable development is placed special emphasis on the role of SAIs of utmost importance in this context, it is cer- and their capacity building in its resolution tainly appropriate to ensure that sustainability and called upon the member states to give due is also a core element of the new Strategic Plan consideration to the issue of independence of of INTOSAI, and that the future activities of SAIs in the Post-2015 Development Agenda. INTOSAI for the period 2017-22—the devel- Additionally, the ECOSOC Ministerial Decla- opment of guidelines, capacity building and ration also contains an explicit commitment the exchange of knowledge in general—are to the importance of good governance, rule strategically geared toward this issue. of law, transparency, and accountability at In this way, INTOSAI implements the UN all levels. Resolution A/66/209 and strengthens the Moreover, on the occasion of this years’ ECOSOC core element of the Post-2015 Development Ministerial Meeting, high-ranking UN represen- Agenda: accountability. In line with this, SAIs tatives expressly endorsed the call for indepen- are invited to actively contribute to the cur- dence and capacity building and the improve- rent revision of the new Strategic Plan for the ment of the accounting system. In their conclud- period 2017-22. ing and summarizing remarks, UN Under-Secre- The 23rd UN/INTOSAI Symposium in 2015 tary-General Wu Hongbo and ECOSOC Presi- will deal with the topic “The UN Post-2015 dent Martin Sajdik emphasized the necessity Development Agenda – Prerequisites and of improving the accountability mechanisms Possibilities for SAIs to safeguard sustainable and the related need for capacity building. The development” as well. The results of this Sym- discussions and concluding comments of UN posium will also feed into the further negotia- Under-Secretary-General Wu Hongbo and tions on the future Sustainable Development ECOSOC President Martin Sajdik prove that the Goals, which are to be adopted in late 2015. position of INTOSAI is being effectively included Therefore, it is now that all responsible rep- in the elaboration process of the Sustainable resentatives of SAIs have to take action to raise Development Goals and that it will also influence awareness of relevant stakeholders—national further discussions on accountability systems. and international—in order to successfully This constituted a further important step finalize our efforts to include the indepen- towards strengthening SAIs in the framework dence of Supreme Audit Institutions, related of the United Nations Sustainable Develop- capacity building, and the improvement of ment Goals. accounting systems as essential elements of Another very recent major activity of the the Post-2015 Development Agenda, which whole INTOSAI community is the negotiation will essentially contribute to the strengthen- of a UN General Assembly Resolution calling ing of sustainable development. n

January 2015 International Journal of Government Auditing 3 News in Brief News from SAIs around the world 300 years of auditing in Germany Kay Scheller, President of the Bundesrechnungshof, right, is congratulated by Dr. Josef Moser, President of the Austrian Court of Audit.

In 2014, the German SAI commemorated the Republic of Germany. 300th anniversary of the foundation of the Prus- Kay Scheller, President of the German SAI, sian Chamber of Accounts by King Frederick I welcomed about 500 invited guests, from both in 1714. There is a continuous—although wind- Germany and abroad, among which there were ing—historical path linking this external audit representatives from political life, public admin- institution of the Kingdom of Prussia with the istration, and from a large number of European German SAI that was founded in 1950. SAIs. In his speech, Mr. Scheller underlined the On the occasion of an official ceremony to cel- independence of the German SAI. Guaranteed by ebrate 300 years of government auditing in Ger- the constitution, the German SAI’s function is to many on November 18, 2014, Joachim Gauck, identify weaknesses and shortcomings in federal Germany’s Federal President, gave an address in financial management and to make recommenda- which he called the German SAI a key national tions for improvement. In doing so, the auditors pillar of the government structure of the Federal are independent, impartial, and unbiased. No

4 International Journal of Government Auditing January 2015 News in Brief other government institution may instruct the develop their full potential: free access to look German SAI to perform an audit. into the accounts and comment on them – from With regard to the development of government an objective and external perspective and with an auditing in Germany over the last 300 years, Mr. unprejudiced attitude.” Scheller stated: “Impact and efficiency of the On behalf of the external government audit external audit function always largely depended community, Dr. Josef Moser, Secretary General of on the political framework and government sys- INTOSAI and President of the Austrian Court of tems in place. But nevertheless, at all times, there Audit, and Vítor Caldeira, President of the Euro- have been two key aspects that guided our work: pean Court of Auditors, offered their congratula- on the one hand the audit criteria of regularity tions on the German SAI’s anniversary. In their and value for money, and on the other hand the speeches, both of them stressed the importance professional principles of independence, neutral- and benefits of cooperation between supreme ity and objectivity. However, it was only in the free audit institutions around the world. and democratic system of the Federal Republic of Germany that these principles could fully be For more information, contact the German SAI: implemented. Thus, finally, the basic idea and E-mail: [email protected] key purpose of the external audit function could Website: www.bundesrechnungshof.de Azis new chair for SAI Indonesia

The Audit Board of Republic of Indo- nesia (BPK) appoints Dr. H. Harry Azhar Azis as new Chairman Dr. H. Harry Azhar Azis, M.A, assumed office as the Chairman of the Audit Board of the Republic of Indonesia, succeeding the former chairman, Dr. Rizal Djalil, whose mandate expired October 28, 2014. Prior to his this appointment, Dr. Azis was a parliament member, econo- mist, and Indonesian political expert. He also served as Vice Chairman on the Commission XI of the Parliament, focus- ing in the fields of finance, national development planning, banking and non-bank financial institutions. Before engaging in the parliament, Dr. Azis was a lecturer at several uni- versities in Indonesia. He received his undergraduate education from the Col- lege of Industrial Management, Indone- sia. He then went to the United States to study economics, earning a Master’s degree at the University of Oregon and a doctorate at Oklahoma State University. Dr. Azis has received several academic awards, such as Scholarship Awards for ASEAN Youth in 1987 and 1993. He has written several papers which have been published in both the national and local media. Dr. H. Harry Azhar For moreinformation, contact the Audit Azis is the new Board of the Republic of Indonesia: Chairman of the E-mail: [email protected] Audit Board of the Republic Website: www.bpk.go.id of Indonesia January 2015 International Journal of Government Auditing 5 News in Brief

SAI Latvia works with law enforcement agencies to achieve good governance Accountability encourages others to think twice before handling public property and financial resources recklessly

Global economic events of recent years have enforcement institutions if, during an audit, substantially influenced public welfare, creat- information indicating possible criminal activ- ing new challenges for national governments. ity is obtained. Such notifications should facil- These events have also influenced the concerns itate a faster and more informed investigation of Supreme Audit Institutions (SAIs), where of the alleged activity. promoting good public governance has moved The SAO of Latvia has also organized training to the top of the priorities list. sessions for State Police officials on the SAO’s This year the State Audit Office of the Repub- audit processes and methodology. These train- lic of Latvia (SAO of Latvia) has intensified its ings are designed to help investigators better cooperation with law enforcement institutions. understand information provided in SAO audit The SAO of Latvia is an independent SAI that reports so that they can move forward with works in accordance with international audit further inquiries. standards. The SAO is not responsible for hold- As a result of these discussions with law ing those who are found guilty of improperly enforcement institutions, the SAO of Latvia has using public funds accountable; that task falls improved several of its work processes. Reports under the mandates of the General Prosecutor`s to law enforcement institutions now include office of the Republic of Latvia, the State Police more complete and detailed information on of Latvia, and the Corruption Prevention and infringements, as well as concrete documents, Combating Bureau. that explain legal and regulatory requirement Timely identification of issues that hinder violations that were revealed during audits. effective investigations leads to a desired out- The SAO of Latvia has also started to actively come: officials are held accountable for the mis- cooperate with forensic and police experts, use of public funds committed maliciously or answering questions such as how accounting through inexcusable incompetence. inspections are carried out and what to do if This accountability then serves to encourage an expert opinion differs from the opinion of others to think twice before handling public SAO auditors. property and financial resources recklessly, From 2006 until 2014, the SAO of Latvia has against the requirements of law and regulations. notified law enforcement institutions about The SAO of Latvia therefore considers it legal violations revealed during 168 audits (83 important for those organizations involved in compliance and 85 financial audits). the investigation and prosecution of the mis- The SAO of Latvia is gratified by the fact that use of public funds to actively discuss ways to both the Prosecutor General and the State Police improve their effectiveness and efficiency. have been encouraged to pay more attention to During 2014 several meetings were organized criminal proceedings that are initiated by the that included representatives from the General SAI’s audit materials. Prosecutor`s office and the State Police. Partic- ipants discussed the need for the State Police For moreinformation, contact the Audit Office of and the SAO of Latvia to meet and to clarify the the Republic of Latvia: process for reviewing audit materials. E-mail: [email protected] The SAO of Latvia will now inform law Website: www.lrvk.gov.lv

6 International Journal of Government Auditing January 2015 News in Brief

Associate Professor Dr. Recai Akyel, President of the Turkish Court of Accounts, left, and Mr. Cemil Çİçek, Speaker of the Turkish Grand National Assembly.

SAI Turkey submits audit reports

The audits of 2013, which are required by Articles Audit Reports for 2013. 160, 164, and 165 of the Turkish Constitution; the Among the TCA Audit Reports for 2013, the Public Financial Management and Control Law reports which were submitted to Parliament and no.5018; and the TCA Law no.6085, have been sent to the relevant entities have been published completed. TCA audit reports regarding the results on the website of the TCA and made public. Rep of the audits of 2013 have been prepared and sub- orts regarding the local administrations will be mitted to relevant authorities. sent to the relevant local administration councils, The General Conformity Statement, External Development Agency Reports will be sent to the Audit General Evaluation Report, Activity General relevant entities, and State Owned Enterprises’ Evaluation Report, and Financial Statistics Eval- reports will be sent to the Parliament and the uation Report, which were prepared as a result relevant entities. of the audits for 2013, and the TCA Audit Report They will then be published on the website of for 157 entities, were submitted to Parliament on the TCA. September 12, 2014. For more information, contact the Audit The President of the TCA, Associate Professor Office of the Republic of Latvia: Dr. Recai Akyel, visited Speaker of the Parliament Mr. Cemil Çiçek and gave information on the TCA E-mail: [email protected]

January 2015 International Journal of Government Auditing 7 Feature articles Regaining public trust: the future of the audit profession in the Netherlands

by Ellen van Schoten Secretary-General of the Netherlands Court of Audit

here have been a number of major sector in the debate. incidents in recent years involving poor The problems in the audit profession also quality of work and inappropriate behav- affect the public sector. Schools, housing associ- Tior in the audit profession in the Netherlands. ations, local authorities and government agen- Time and time again, it was proven that the cies all use audit reports drawn up by private quality of the work performed by auditors was audit firms. Government is by the people, for not in order. the people. This means that people need to rest The Dutch audit profession has come under assured that their government acts with integ- increasing pressure in recent months to take rity, spends its money carefully, is clear about action. This prompted the Dutch Institute of its intentions and capabilities, and delivers on Chartered Accountants (NBA) to set up a com- its promises. mittee to come up with proposals for the future This should be reflected by the quality of of the audit profession. The committee pub- the audits performed by private audit firms lished its report on September 25, 2014. working for the public sector. Only then can The Netherlands Authority for the Financial the public be confident that the government Markets (AFM) also published a report on the spends taxpayers’ money carefully. same day. Under the Audit Firms Supervision The recent report by the AFM, combined with Act, the AFM is required to supervise audit the many incidents in the recent past, make entities that issue audit reports that are rele- clear that, sadly, confidence in the audit pro- vant to the Dutch capital market. Since October fession is no longer a matter of course. The rep- 2006, audit firms wishing to perform ‘statutory utation of the audit profession in general, and audits’ in the Netherlands have been required chartered accountants in particular, has taken to hold a licence from the AFM. a battering. Public trust needs to be regained. The AFM report concluded that the quality It goes without saying that the interest taken of the statutory audits performed by the ‘Big by the Netherlands Court of Audit in the Dutch Four’ audit firms was not up to standard. audit profession is not new, and stems from our In the summer of 2014, we discussed these statutory duty to audit the ministries’ annual developments with a number of high-level reports. The local authorities and provincial stakeholders. Regaining public trust was the councils in the Netherlands receive specific-pur- central issue in these discussions. pose grants from the government for perform- Inevitably, the public is losing trust in the ing a variety of tasks, such as disaster relief audit profession, which it used to hold in high and mitigating educational disadvantage. In esteem. Regaining public trust is especially rel- 2013, the central government distributed €12.7 evant for the public sector, which depends on a billion worth of specific-purpose grants. These strong and quality-oriented accountancy sector. are audited in accordance with the “single-in- In a letter to Parliament in November 2014, formation, single-audit” (SISA) principle, which we stressed the key issues affecting the public means that local authorities provide assurance

8 International Journal of Government Auditing January 2015 Feature articles

❝The reputation of the audit profession in general, and chartered accountants in particular, has taken a battering. Public trust needs to be regained.❞

— Ellen van Schoten

about the spending of specific-purpose grants organizations such as schools, hospitals, and in an annex to their annual report, which is housing corporations are of vital public impor- audited by private audit firms. In 2011, we tance, this does not make sense. uncovered a serious shortcoming in the SISA The NBA and the AFM are now proposing to system. Our review showed that the quality change this. We endorse the recommendations of the audit work did not provide an adequate made by the AFM and the NBA to extend the basis for deciding whether the specific-purpose definition of PIEs to the public sector. grants had been spent in a lawful, or regular, However, great care needs to be taken both manner. in terms of the speed with which the definition Fortunately, that situation has now improved: of PIEs is extended to the public sector and the the Minister of the Interior took steps in 2013 manner in which this is done. Not only are many to improve the SISA system and informed Par- different organizations involved, the number liament accordingly. However, this does not of PIE permit-holders is limited. detract from the importance of our original In addition, the PIE framework is tailored to observation. The government is now planning private organizations governed in a manner further transfers of tasks, responsibilities, and that is different from organizations funded fully budgets in relation to youth care and social or partly with public money. Local authority services to the local authorities (represent- governance is totally different from the way in ing an annual budget over €8 billion). Private which private companies are governed. audit firms will audit this spending. The public For this reason, we advised Parliament to must be confident that this public money is well explore how the role of auditors at local author- spent, which means that the quality of their ities could be improved before extending the audit work must be beyond reproach. PIE framework to local authorities. This is The AFM stated in its report of 25 September especially important as local authorities feel that 60% percent of the audit work performed that the current system of statutory audits is for public and semi-public corporations was of based too much on the system used for auditing inadequate quality. Although the proportion private businesses, and is therefore ineffective of audit work at public-interest entities (PIE) and not efficient. classified as inadequate was also high, the per- In 2013, we informed Parliament that the centage was considerably lower, at 31 percent. share of public spending authorized by Parlia- Under the Audit Firms Supervision Act, a ment in the form of budgetary laws is falling “public-interest entity” is defined as a publicly – gradually but steadily. Countervailing this listed company, among various other types of trend, an increasing share of public expendi- organizations. However, the organizations in ture (i.e., spending by the local authorities, and which the public interest is most apparent, i.e., spending on care and social security) takes place public-sector organizations, do not fall under beyond Parliament’s field of vision and influ- the definition of a PIE. Since public-sector ence. Parliament and local authorities rely on »

January 2015 International Journal of Government Auditing 9 Feature articles

Government is by the people, for the people. private audit firms to ensure that this problems. money is spent in accordance with laws Second, the committee proposes and regulations. setting up an independent institute to This means that people We also informed Parliament that investigate the causes of poor quality an increasing amount of public money control and the effects of national and need to rest assured falls outside the direct responsibility of international action in relation to the the relevant minister. This applies, for audit profession. example, to the Municipalities Fund We welcome the audit profession’s that their government (the budget for which will rise by more desire to boost its learning capacity and than €10 billion as of 1 January 2015, in investigate shortcomings and incidents. acts with integrity, the wake of the decentralization opera- We would recommend taking account tion), the National Police, and schools. of the specific characteristics of the Parliament depends on private audit public sector, which require a tailored spends its money firms to provide assurance about the approach using specific expertise. regularity of this spending. We have offered to get together with carefully, is clear All the more reason, therefore, for other stakeholders, such as the Minis- us to be involved in the debate about ter of Finance, the AFM, and the NBA, extending the definition of PIEs to pub- in order to discuss how this might be about its intentions lic-sector organizations and, in more achieved. general terms, in the action taken by the As I have sought to make clear in and capabilities, audit profession to improve the quality this article, the recent developments of their work. affecting the audit profession in the There are two other issues which we Netherlands have not come to an end. and delivers on its feel are particularly important. First, In fact, the process of change has only the governance of the audit profession just begun. promises. itself is not mentioned either in the Audit firms now have to start adopt- report issued by the NBA or in the AFM ing the 40 different measures proposed report. by the NBA committee. These include A crisis such as that now facing the changes in their governance, business audit profession requires decisive action models, and remuneration structures, and firm leadership, especially in those as well as the introduction of claw-back areas in which public trust must be regulations and so forth. restored as a matter of priority, such The Netherlands Court of Audit is as in relation to the public sector. planning to closely monitor the mea- We believe that it would be worth sures taken to improve the quality of examining whether extending the defi- audit work in the public sector. As I have nition of PIEs to public-sector organi- already said, extending the definition zations would affect the governance of of PIEs to public-sector organizations the NBA. plays an important role in this. This could also help solve certain I would be very interested in hear- problems related to specific laws and ing from colleagues from other SAIs regulations. At the moment, problems whether they have encountered the arising from the complexity of specific same issues in the audit profession laws and regulations are solved in nego- in their own countries, and whether tiations between the relevant ministry they have any suggestions or lessons and the NBA. It might be wiser to dis- that could be useful for us in the cuss problems in a broader context, so Netherlands. that lessons can be drawn for the public Please feel free to contact me at sector as a whole that will enable sim- [email protected] n ilar solutions to be found for similar

10 International Journal of Government Auditing January 2015 Feature articles Using audit procedures in revenue audit Although revenue audit is a significant domain of public sector auditing, limited guidance materials are available. SAI Nepal offers its experiences as examples for other SAIs interested in revenue audit.

by Ramu Prasad Dotel Assistant Auditor General, Office of the Auditor General, Nepal

lthough revenue audit is a significant audit. However, INTOSAI has not developed domain of public sector auditing, limited any guidance notes for revenue audit. Research guidance materials are available on this literature in this area is also lacking. This arti- Atopic. When performing revenue audits the cle is therefore based on the practical cases of Office of the Auditor General in Nepal has used a SAI Nepal in using audit procedures for revenue combination of procedures, rather than a single audit. approach, to produce well-informed conclusions. We offer our experiences as examples for other Supreme Audit Institutions (SAIs) interested in Use of Audit Procedures revenue audit. Revenue consists of all kinds of government During the revenue audit’s planning stage, in receipts, such as tax, duty, fees, levies, interest, order to gain insights into the tax administration dividends, and income from the sale of assets, system, auditors reviewed operational processes, investments, and the leasing of government the information technology (IT) environment, property. It is the responsibility of revenue policies, directives, legal provisions, roles and authorities to see that all revenue is correctly responsibilities, control procedures, and the assessed, collected, and deposited to the gov- monitoring mechanisms of the Inland Revenue ernment treasury– and it is the main objective Department (IRD) of Nepal. Auditors then iden- of revenue auditors to ensure compliance with tified inherent and control risks associated with legal provisions in this assessment, collection, compliance with laws and directives. At the end and deposit of revenue. of this exercise, areas having the greatest likeli- The Lima Declaration of Guidelines on Auditing hood of risk, and the greatest impact on revenue Precepts (1977) states that SAIs shall be empow- collection, were selected for audit. ered to both audit the collection of taxes to the Three audit procedures—test of control, maximum possible extent and to examine indi- substantive analytical procedures, and test of vidual tax files. The International Organization details—were designed for use in the revenue of Supreme Audit Institutions (INTOSAI) has audit. Examples of combining audit procedures developed International Standards for Supreme to collect sufficient and appropriate audit evi- Audit Institutions (ISSAIs); these standards deal dence are discussed below. with financial, compliance, and performance audit. Case one: Mismatched transactions These ISSAIS can also be used for revenue The IRD of Nepal has introduced a system in»

January 2015 International Journal of Government Auditing 11 Feature articles

Three audit procedures—test of which taxpayers are required to upload pur- to the IRD, which has since initiated a tax chase and sales transactions of more than liability assessment process. 5,200 USD These taxpayers must specify control, substantive their permanent account number (PAN) Case two: Increasing Value-Added in IRD’s IT system. This arrangement ulti- Tax credit mately contributes to the control of tax analytical procedures, As per the VAT Act, VAT paid in purchases evasion. can be credited to the amount of VAT col- While performing the test of control, lected from sales. A taxpayer submits a and test of details— auditors reviewed the effectiveness of the debit return to IRD if the amount of VAT system. They noticed that IRD has also collected is more than the amount of VAT developed mismatch software which can be were designed for use paid during the purchase. Likewise, a tax- run in its IT system to identify discrepan- payer submits a credit return if the amount cies reported by taxpayers regarding pur- of VAT paid is higher than the VAT amount in revenue audit. chase and sales transactions. Thousands collected. of mismatched transactions were thus While performing the test of control of reported by the system. this process, auditors found that less than However, IRD did not assess the tax two percent of VAT returns filed in IRD implications of these events. were reviewed by the tax officer. Auditors also discovered that some tax- As significant weaknesses were found payers were not uploading their transac- in internal control, the auditors extended tions into the system. The return details audit procedures and performed substan- were verified for taxpayers even when tive analytical procedures by collecting they did not upload their purchase and the information relating to 2012/13 on the sale transactions. This indicated that the ratio of debit and credit VAT returns. IRD’s internal control system was not They found that 22 percent of taxpay- consistently applied. In fact, the sys- ers registered in the VAT system had not tem was found to be ineffective in con- submitted VAT returns to the IRD. Of the trolling tax evasion due to a lack of proper taxpayers who did submit returns, 32 per- administration. cent had submitted zero rate returns, and Auditors also performed a test of detail 52 percent submitted credit returns. This procedures by selecting 157 tax payers for indicates a serious problem in the imple- which a transactional mismatch had been mentation of VAT. reported. Auditors compared the return Auditors also noted that during 2012- details submitted to IRD with the purchase 13, the amount of VAT debit returns and sales ledgers of individual taxpayers, submitted by taxpayers totaled only 252 and found several cases of insufficient million USD, compared to a credit return reporting. total of 1.8 billion USD. The VAT credit For example, a report by taxpayer A return amount was 7.2 times that of the regarding a purchase from taxpayer B debit return amount; taxpayers are clearly was not reported as a sale by taxpayer B. claiming many more VAT dollars from the Likewise, a sale reported by taxpayer X to government treasury than were paid into taxpayer Y was not reported as a purchase the system. by taxpayer Y. Auditors also used test of detail proce- While compiling such cases, auditors dures, by selecting random taxpayers for found that a sales transaction worth 16 review, to identify the cause of increas- million USD was underreported, resulting VAT credits. This test revealed that ing in a loss of about 8 million USD in increasing government exemptions on value-added tax (VAT) and income tax the VAT, and the submission of fake bills, revenue. were main causes of the discrepancies. This These cases of tax evasion were reported

12 International Journal of Government Auditing January 2015 Feature articles

❝Our experiences show that any one audit procedure, on its own, cannot provide the quality of audit evidence that a combination of approaches can produce.❞

— Ramu Prasad Dotel

issue was reported to the IRD to investigate on and bank balances of the loan recipients had a case-by-case basis. been found sufficient by tax reviewers for the business requirement. In reviewing the cash outflow, it was noted Case Three: Interest claimed for non- that taxpayers had given the available funds to business loans the directors, or had advanced funds to other firms or people with whom they had no direct The Prevailing Income Tax Act of Nepal states business relationship. Auditors pointed out that only the interest paid for loans used for these loans were not used for business purposes business purposes, rather than personal or and so, as per legal provisions, the interest on other loans, can be deducted. such loans was not tax deductible. While reviewing the control environment The audit revealed that the claimed inter- at internal revenue offices, auditors noted est on loans not used for business purposes that tax returns submitted by taxpayers resulted in a revenue loss to the government claiming interest expenses are substantiated of 500,000 USD. only when IRD conducts a tax audit. Normally, the IRD only selects two percent of all filed returns for follow-up audits. Conclusion Auditors therefore determined that interest Audit procedures conceptualize the activities expense claims were a risk area for the 2012- performed to collect sufficient and appropri- 13 audit. ate audit evidence. In the process of the three Auditors performed a test of details in order revenue audits previously cited, auditors to identify the actual use of loans taken out by performed three audit procedures—test of taxpayers. Loans and interest paid were veri- control, substantive analytical procedures, fied, and the annual cash inflow and outflow and test of detail—to mitigate the risk of of the randomly selected taxpayers was also material misstatement. Our experiences reviewed. show that any one audit procedure, on its Auditors found that loans were taken out by own, cannot provide the quality of audit evi- taxpayers on different dates and from different dence that a combination of approaches can banks than those reported. However, the cash produce. n

January 2015 International Journal of Government Auditing 13 Feature articles The role of SAIs in auditing policy and law-making We argue that SAIs can play an important role in advancing evidence- based policy-making and regulatory quality. We will demonstrate that in recent years several SAIs have conducted audits on policy-making processes and that this can be considered as a transnational field of performance auditing. We urge SAIs to share share experiences on the topic so that auditors can be encouraged to recognize relevant audit questions and methods. By Auri Pakarinen, Principal Performance Auditor, PhD, and Annu Kotiranta, Senior Auditor, Fiscal Policy Audit, National Audit Office of Finland

Editor’s Note: servants. However, in some other languages and jurisdictions, this distinction cannot be In addition to research and the authors’ auditing easily made. experience, this article is inspired by discussions at two workshops: the paper builds on the discussions at the workshop “Auditing Policy-Mak- ing Process: How to Create Better Regulation” Why should policy-making processes be delivered by the writers at the Young EuroSAI audited? congress in Rotterdam in November 2013, and Careful formulation of legal rules may contribute to the workshop “The Role of Audit Offices in Regu- efficient use of public resources, competitiveness, and latory Policy,” which was run by the OECD at the social welfare. Regulatory failure may have disastrous International Regulatory Reform Conference in effects; the financial crisis of 2008 partly resulted from Berlin, February 2013. incomplete regulation and implementation. Auditing creates an incentive for government offi- Policy-making or law-making? cials to make better impact assessments, to consult relevant stakeholders, and to develop regulatory In this article two terms, “policy-making” management. and “law-making” are used to describe Policy-making itself may be a function involving the preparation of legal norms. In the significant public spending. Depending on the scope English language, the term “policy-making” of the jurisdiction, there can be hundreds or thou- emphasizes the role of political decision- sands of government officials directly involved in the makers, while the term “law-making” refers preparatory work. Hence, evaluation of policy-making more to the technical work carried out by civil can also be justified by direct economic significance.

14 International Journal of Government Auditing January 2015 Feature articles

Policy cycle and audit questions

Citizens and members of parliament expect SAIs to found that the following four topics had been audited evaluate policy-making processes. This call, or wish, by more than one SAI: expressed by SAIs’ “clients” is the final argument for the need to audit policy-making. In some countries, • Impact analysis: the European Court of Audit, SAIs may also be the only public authority in a position the British, the Finnish, the Norwegian, and the to independently evaluate policy-making processes. Swiss SAIs • Preparation or implementation of EU regulations and directives: the British, the Finnish, What types of audit have been conducted? and the Dutch SAIs • Government’s regulatory policy: the British and In the past few years, several SAIs have audited regu- the Finnish SAIs latory policy. A recent survey by the OECD found that • Evaluation of the administrative burden reduc- in 14 of the 34 member countries, SAIs had audited tion programs: the British and the Swedish SAIs regulatory management tools or programs (OECD. Our brief comparison indicates that the policy-mak- 2014,OECD Framework for Regulatory Policy Evaluation: ing process is a transnational topic for performance 68−72, http://www.keepeek.com/Digital-Asset-Man- auditing. Still, national SAIs may not be aware that the agement/oecd/governance/oecd-framework-for-regu- same audit questions have also been posed elsewhere latory-policy-evaluation_9789264214453-en#page1). by several other SAIs as, to our knowledge, this field OECD considers this as a moderate result and indirectly of auditing has not been widely discussed in the inter- calls for a strengthened role of SAIs in the field.We national government auditing community. Our argu- examined what types of audit have been conducted ment is that the SAIs auditing policy-making processes by European SAIs. Examples of recent audit reports may benefit from recognizing that the same topic has of seven SAIs are listed in the information box below. also been evaluated in other countries. Understanding When reviewing audit reports on policy-making, we the context of a policy-making process may help an »

January 2015 International Journal of Government Auditing 15 Feature articles

auditor to construct audit questions audited, official preparatory docu- and quality criteria, as will be shown ments are in most cases an essential Regulatory in the next section. source for the analysis. The empiri- cal methods typically include inter- governance in How to audit policy-making views of government officials, parties processes? affected by the regulation, and other experts. Quantitative data on the There are a number of generally the Ministry realized impacts of a regulation can recognized criteria for evaluating be gathered and this data can be com- the quality of a policy-making pared with the initial goals of the reg- for Foreign process. Policy-making should be ulation and estimates of its impacts. analytical, evidence-based, open, Affairs and participative. During the process, alternative regu- Conclusions latory options should be taken into consideration. At the final stage, There are at least three main reasons members of parliament should why SAIs should audit policy-mak- The National Audit Office be provided with all the necessary ing processes. First, careful design of information to decide on the pro- regulations may contribute to saving of Finland audited law- posed law. The following chart illus- public resources. Second, SAIs are trates the policy cycle and presents in a position to independently audit audit questions that should be asked preparatory work. Third, both the making in the Ministry at different stages. general public and the parliament These normative criteria have been often expect SAIs to audit it− in fact, for Foreign Affairs in 2013. articulated in several government in recent years several SAIs have guidelines. The most influential is the already audited policy-making pro- OECD’s Recommendation of the Council cesses. However, national SAIs may The evaluation was part on Regulatory Policy and Governance not have been totally aware that (http://www.oecd.org/governance/ the same audit questions have also of a broader audit report regulatory-policy/49990817.pdf). been analyzed by other SAIs. We The OECD recommendation strongly suggest that the awareness of the emphasizes the role of an implicit common field could help auditors on the management whole-of-government policy for reg- to recognize relevant audit ques- ulatory quality with institutions and tions and methods. In the future, systems in the Ministry. mechanisms to implement and over- a discussion platform or network see the policy. for changing experiences between The quality of law-making When a policy-making process is SAIs might be fruitful. n was audited against three main criteria:1) law-making Preparation of tax legislation is properly managed, The economic impact assessments concerning indirect taxation were 2) satisfying impact audited by the SAI of Finland in 2014. The audit covered a comprehensive selection of past reforms concerning indirect taxation, such as changes in value-added, alcohol, and fuel taxes. In the audit the background cal- assessments are made, and culations of the impact assessments were reconstructed and validated. Auditors also examined whether the government proposals included all 3) the preparatory process the relevant information on the economic impacts of the changes and whether the information was presented correctly. Attention was also paid to the preparation process: did the ministry have sufficient time and is transparent and involves human resources to conduct proper impact assessments? The issue of whether the conducted changes in taxation were in line with the eco- relevant stakeholders. nomic theory’s suggestions on an efficient tax system was also discussed.

16 International Journal of Government Auditing January 2015 Feature articles

Examples of audit reports on policy-making processes:

European Court of Audit proposals particularly with regard to assessment of economic impacts] • Impact Assessments in the EU Institutions: Do They Support Decision-Making? 2010 Netherlands Court of Audit • Europese regelgeving: Implementatie van Europese richtlijnen en National Audit Office (UK) handhaving van Europese • Delivering Regulatory Reform, 2011 verordeningen in Nederland, • Assessing the Impact of Proposed 2008 [European rule-making: New Policies, 2010 Implementation of the EU directives • Delivering High Quality Impact and enforcement of EU regulations in Assessments, 2009 the Netherlands] • The Administrative Burdens Reduction Programme, 2008 Office of the Auditor General of • Regulatory Quality: How Regulators Norway are implementing the Hampton • Riksrevisjonens undersøkelse av vision, 2008 om offentlige tiltak utredes på en • Lost in Translation? Responding to tilfredsstillende måte, 2013 [The the Challenges of European Law, 2005 investigation of whether government actions are examined in a satisfactory National Audit Office of Finland manner] • Veromuutosten taloudelliset vaikutukset: välillinen verotus, 2014 Swedish National Audit Office [Economic impacts of tax reforms: • Regelförenkling för företag: indirect taxation] Regeringen är fortfarande långt från • Sosiaali- ja terveysministeriön mälet, 2012 [Simplifying regulations säädösvalmistelu, 2012 [Legislative for businesses: The government is still Drafting in the Ministry of Social far from the goal] Affairs and Health] • Hallituksen lainsäädäntösuunnitelma, Swiss Federal Audit Office 2012 [The Government’s legislative • Umsetzung der Evaluationsklauseln plan] in der Bundesverwaltung, 2011 • Säädöshankkeiden [Review of the implementation of valtiontaloudellisten vaikutusten evaluation clauses in the Federal arviointi, 2011 [Evaluation of the Administration] economic impacts of legislative • Comment les offices mesurent-ils les projects] effets de leurs actions? Evaluation du • EU-säädösehdotusten kansallinen système d’information de dix offices käsittely erityisesti taloudellisten fédéraux, 2005 [How do agencies vaikutusten arvioinnin kannalta, measure the effects of their actions? 2006 [National preparatory Evaluation of the information system procedure of the EU legislative in ten federal agencies]

January 2015 International Journal of Government Auditing 17 Inside INTOSAI Inside INTOSAI

Progress update from the INTOSAI Capacity Building Committee

By Thembekile Kimi Makwetu all CBC work streams, members, and stakehold- Auditor General of South Africa and ers succeeded in encouraging dialogue, coor- Chair of the INTOSAI Capacity Building dination, and cooperation during the annual Committee meeting in Lima. The Task Group on INTOSAI auditor certification provided an opportunity for the CBC At the XXI INCOSAI in Beijing in 2013, the to challenge its own structures and priorities INTOSAI Capacity Building Committee (CBC) by quickly responding to a request from the was given a mandate for reform, taking into Finance and Administration Committee, part- consideration the developments in INTOSAI nering with the IDI, and working closely with in general and in the development arena spe- the Professional Standards Committee (PSC), cifically. The new CBC leadership presented the Knowledge Sharing Committee (KSC) and a its value proposition in an INTOSAI Journal number of INTOSAI regions and supreme audit editorial by Kimi Makwetu in July 2014, and institutions (SAIs) to address a need clearly in the first annual joint CBC meeting in Lima, expressed by members. Peru, in September 2014. Value proposition: to partner with those As the first year under a new CBC leadership already in the capacity-building game, encour- comes to an end, it is time to report on progress aging capacity-building providers and practi- in relation to the ambitions set in the value tioners, especially the IDI, to focus on their proposition. So far, the ambitions articulated in areas of strength, enabling a greater impact of the value proposition have served to ensure that their efforts where possible. the CBC adds value to the capacity-development The CBC has engaged with the Chair and sphere of INTOSAI in the following ways. Director General of the IDI throughout the Value proposition: to strategically and con- year to coordinate initiatives, not least of structively challenge current structures, prior- which is the Task Group on INTOSAI auditor ities, programs and activities, including identi- certification. fying and addressing capacity-building overlaps, The CBC Chair is an active member of the gaps, and inconsistencies within INTOSAI. INTOSAI-Donor Cooperation Steering Com- The decision to transform the CBC Steering mittee, the INTOSAI Task Force on Strategic Committee annual meeting into a joint event for Planning, the INTOSAI Governing Board, and

18 International Journal of Government Auditing January 2015 Inside INTOSAI

is an observer on the IDI board. The CBC lead- OLACEFS, and PASAI. ership has also been invited to join the Finance All CBC work streams are sharing work pro- and Administration Committee. These arenas grams and information on the CBC website, offer an opportunity to learn from others, share including CBC guides. The subcommittee on the plans of the CBC, and coordinate efforts. cooperative audits will also start sharing reports Value proposition: to champion closer coop- and agreements from cooperative audits on the eration between the CBC, PSC, and KSC in the CBC website. interest of capacity building and the efficient Value proposition: to support the verification use of INTOSAI resources or assessment of capacity-building efforts in the The CBC, PSC, and KSC attended each other’s form of peer and/or self-assessments, such as meetings in 2014 and initiated discussions on ISSAI 5600 on peer reviews and the INTOSAI closer cooperation and alignment of work plans. Performance Measurement Framework, or dif- The CBC worked very closely with the PSC ferent forms of external evaluations. on the Task Group on INTOSAI auditor certi- The CBC, through the subcommittee on fication, and will continue to do so during the peer reviews, is updating ISSAI 5600 in time next phase of research and consultations, and for endorsement at the XXII INCOSAI in 2016. ultimately the development and piloting of a Peer review reports and agreements are con- competency framework, as approved by the tinuously shared on the CBC website (www. INTOSAI Governing Board. intosaicbc.org). The subcommittee regularly Value proposition: to facilitate a greater monitors the number of peer reviews carried out capacity-building role for the INTOSAI regions, and takes the opportunity to share the benefits from both a participation and an accountability of peer reviews through articles and discussions angle, while recognizing their diversity. whenever possible. All regions were given a platform at the Value proposition: to explore opportunities annual CBC meeting to share information on and encouraging initiatives for the certification the region and some of their key success stories and accreditation of auditors, in coordination and challenges; most of the themes included in with the INTOSAI’s Finance and Administra- the annual meeting program were proposed by tion Committee (FAC) and all relevant INTOSAI the regions. stakeholders. The regions have been encouraged to share The CBC responded to the FAC’s call to set up capacity development news on the CBC website a task group to explore—together with the IDI, ( www.intosaicbc.org ) PSC, other INTOSAI structures and identified Value proposition: to support capacity build- SAIs—the concept, feasibility, and options for ing through knowledge sharing; for example, by INTOSAI undertaking a process for the certi- championing communities of practice, support- fication of auditors. The white paper was pre- ing inter- and cross regional knowledge sharing, sented to the INTOSAI Governing Board in or encouraging coordinated audits. November 2014. The Governing Board gave the The CBC annual meeting included theme dis- task group a continued mandate to research cussions on interregional as well as coordinated the topic and consult widely while drafting a audits. As a result of the discussions during the competency framework for piloting. annual meeting the CBC has included a goal in The INTOSAI Capacity Building Committee the work plan to establish a capacity develop- proudly reports on these developments, and ment forum for regular strategic dialogues with looks forward to working closely with other the INTOSAI regions and other capacity devel- INTOSAI bodies and stakeholders in support opment stakeholders. Discussions will focus of capacity development of regions and SAIs on key capacity development trends, oppor- within INTOSAI. tunities, and challenges, and will promote the priorities of INTOSAI capacity development in order to strengthen current and future capacity We welcome contributions to the CBC web- development efforts. site on capacity development initiatives, The CBC leadership and secretariat attended, success stories, and lessons learned. Please and shared the CBC’s plans and ambitions contact the CBC Secretariat by e-mail at at, regional events in AFROSAI, EUROSAI, [email protected]

January 2015 International Journal of Government Auditing 19 Inside INTOSAI

EUROSAI Databases: less paperwork, more information

by Miloslav Kala contact person or institution. President of the Supreme Audit Office of the Czech Republic and Chair of EUROSAI Goal Team 3 – Knowledge Database of products: Sharing The objective of this database is to list, at one central location, as many materials, doc- Three years after launching the sixth year uments, and projects as possible. EUROSAI Strategic Plan, Goal Team 3 for Knowl- The database of products contains infor- edge Sharing (GT3) achieved several essential mation such as: title of product, source, type results. These are mentioned in the midterm of document, subject area (the same as in the review report on the EUROSAI´s Strategic Plan audit database), year of publication, country Implementation, approved by the IX EUROSAI of origin, and a hyperlink to the document. Congress held in The Hague in June 2014. The database covers products from publicly However, one of these results deserves accessible sources. detailed elaboration, as its intention is to improve EUROSAI members’ access to the results of work done by individual SAIs, and Database of training events: by EUROSAI and INTOSAI committees, task forces, and working groups. The objective of this database is to gather all The availability of this information might training events organised within EUROSAI in help to significantly reduce the number of ques- one place. tionnaires and requests circulating within the In this database you can find information EUROSAI community. about training events, such as the date, place, The activity is defined in the EUROSAI Stra- program, and training materials. There are tegic Plan as follows: several filters that can be used to search the • 3.1.1 Establish and maintain a database of training events effectively. audits conducted by the EUROSAI mem- By drafting and creating the databases, we bers in different fields. took an important first step towards the accom- • 3.1.2 Establish and maintain a database plishment of the implementation strategy aris- of products of INTOSAI and EUROSAI ing from the Strategic Plan: to enhance the use WGs and Committees including training of the results of work produced by individual materials and networks. SAIs, EUROSAI, and INTOSAI Committees and working groups as a tool of cooperation. The next step is to fill in and maintain the Database of audits: databases. As for the databases of products and training events, GT3 is able to complete these databases with the assistance of the EUROSAI The objective of the database is to gather in Secretariat, goal teams, working groups, task one place as many audits conducted within forces and committees. EUROSAI as possible. Nevertheless, the filling up of the database The audit database contains basic informa- of audits can be done only with contribution tion on the audit report, such as the audit title, and cooperation of all EUROSAI members. By subject area, year the audit was conducted, type cooperation in this matter, we will contribute to of audit, a short description of the audit, the more effective dissemination and accessibility country performing the audit, materials which of information—which is the main mission of are available from the audit, type of perfor- EUROSAI. mance (individual or coordinated audit), and

20 International Journal of Government Auditing January 2015 Inside INTOSAI

EUROSAI Goal Team 1: Capacity Building

The Strategic Plan of EUROSAI was adopted at the VIIIth EUROSAI Con- gress in Lisbon, Portugal in 2011. It indicates the goals and focus areas for the work of EUROSAI for 2011 -2017. The Strategic Plan contains four goals: 1) capacity building, 2) professional standards, 3) knowledge EUROSAI Strategic Plan’s capacity building sharing, and 4) governance and communication. site at www.eurosai.org/en/strategic-plan/ In 2011, four goal teams were formed to imple- capacity-building/ ment these goals. According to the Strategic Plan, capacity building of SAIs involves developing skills, Success stories of Capacity Building knowledge, structures, and ways of working that make an organization more effective, building The SAI of Sweden assembled a booklet on on existing strengths and addressing gaps and capacity building suc- weaknesses. EUROSAI is committed to facili- cess stories based on the tating the development of strong, independent, experience of the SAIs of and highly professional SAIs. France, Georgia, Portugal, Membership and activity in EUROSAI’s goal and Sweden. This booklet teams is based on the principle of volunteer- is available at www.euro- ing. Therefore, those members participating sai.org. in the activity of Goal Team 1 are doing so in addition to their regular constitutionally and legally mandated tasks and obligations. Survey and seminar Goal Team 1 was led by the SAI of France until of independence the IXth Congress (June 16-19, 2014), and is now chaired by the SAI of Hungary. The SAIs of France and Hungary conducted Main outcomes of Goal Team 1 a survey on the independence of SAIs within the EUROSAI Community. The booklet on the Innovation booklets survey is available at www.eurosai.org. In addition, the SAIs of France and Hungary SAI of the United Kingdom assembled two organized a seminar on independence, which innovations booklets. was held in Budapest March 28, 2014. Fifty participants from 25 countries arrived to discuss When compiling these publications, Goal Team their views on this issue. 1 is not judging the innovations but providing Their presentations are available on the a space for each of the members of EUROSAI EUROSAI website at www.eurosai.org/en/ to share their own experiences. It is then up training/training-events-and-outputs/ to each of us as readers to decide which inno- Seminar-on-Independence/ vations might be of interest, and/or might be useful for our own organizations. For further information, contact These volumes can be accessed from the [email protected]

January 2015 International Journal of Government Auditing 21 Inside INTOSAI

INTOSAI Task Force on Strategic Planning: update on initial results

The INTOSAI Task Force on Strategic Planning that respond to emerging opportunities held its second meeting and first in-person meet- and managing related challenges, and ing on November 5, 2014 at the Vienna Interna- 3. Ensuring that INTOSAI’s governance struc- tional Center in Vienna, Austria. More than 40 ture and internal management processes individuals representing 22 SAIs and the INTOSAI support its goals and strategies. Secretariat participated. The Task Force also agreed on 17 related sub- The Task Force reviewed its progress in identify- themes to guide the development of the next ing key strategic themes of the next plan covering plan. Within those themes, the Task Force will 2017-2022. Those themes were developed based give special attention to several priority areas: on the results of the Task Force’s internal and SAI independence remains an overriding value external scans and related planning efforts cur- and concern of INTOSAI. We need to identify spe- rently underway within INTOSAI. The Task Force cific examples of what SAI independence looks like endorsed a planning perspective that recognizes in practice, and concrete steps SAIs and INTOSAI the need—and opportunity—for INTOSAI to can take when SAI independence is threatened or be more “external facing;” that is, fully prepared undermined. to assume a central role in enhancing good gov- We need to ensure that the strategic plan is ernance both globally and within our respective clear on specific substantive areas where we expect nations. SAIs—subject to their respective mandates—and The Task Force also heard the following INTOSAI to play key roles. The global community’s presentations: expectations for the essential role that SAIs and “Current and Emerging Global Governance INTOSAI will play in monitoring and assessing the Risks” by Davide Taliente, Managing Partner, implementation of the forthcoming Sustainable Europe, the Middle East, and Africa (EMEA); and Development Goals is one obvious substantive Suresh Kumar, Partner, Public Sector and Health area. Other areas discussed by the Task Force & Life Sciences Practice, from the global manage- include open data and civic engagement, finan- ment consulting firm Oliver Wyman cial regulatory systems, and sustainable public “UNDESA and INTOSAI Strategic Outlook: financing. Post-2015 Agenda and Sustainable Development The strategic plan must be based on realistic Goals” by Elia Armstrong, Chief, Development financial expectations and be consistent with the Management Branch, Division for Public Adminis- resources—many of which are provided through tration and Development Management (DPADM), in-kind support from individual SAIs—available United Nations Department of Economic and to INTOSAI. Social Affairs (UNDESA). We need to be prepared to revisit the INTOSAI The Task Force generally agreed on a framework vision, statutes, and our other foundational state- of three overarching strategic themes: ments and documents for possible updates that 1. Assuring that INTOSAI is alert to emerging reflect the evolving role of INTOSAI as articulated opportunities and challenges, in the new plan. 2. Creating INTOSAI programs and initiatives The plan must reflect our strong commitment

22 International Journal of Government Auditing January 2015 Inside INTOSAI

Responses to INTOSAI Strategic Plan Survey

Source: INTOSAI Strategic Plan Survey, 2014

to ensuring a standards-setting process that pro- full range of audit and SAI operational issues—an vides for wide involvement within an organized increased and better use of information and com- framework to ensure uniform quality, due process, munications technology (ICT) was prominently sustainability, periodic updates, coherence, and mentioned as one such mechanism. integration. We must ensure the plan fully integrates stan- Related to standards-setting, the Task Force dard-setting, knowledge sharing, technical assis- on Strategic Planning must remain fully engaged tance and training, and capacity building across with the INTOSAI-wide discussions on auditor INTOSAI so that we are collectively building on certification. INTOSAI’s achievements and each others’ efforts, The strategic plan must recognize and leverage and minimizing fragmentation and duplication, as the regional working groups as the lynchpin that we move forward. links individual SAIs to wider INTOSAI efforts. The Task Force will hold a staff-level working We need to look for more effective mechanisms meeting on January 28-29, 2015 in Washington, for sharing information and experiences across D.C., to prepare for the next in-person meeting of regional working groups and on a worldwide INTO- the Task Force on March 5, 2015, in Vienna. » SAI level, including “what works” practices on a

January 2015 International Journal of Government Auditing 23 Inside INTOSAI

Update on the INTOSAI TFSP strategic to identify issues they may want to raise outside planning process of their national perspectives as Auditors General. The information gathered from these interviews The Task Force and the INTOSAI Governing supplements the perspectives of individual SAIs Board also received updates on the significant provided through the internal scan survey. progress the Task Force has made in developing The Task Force is conducting an external scan the 2017-2022 INTOSAI Strategic Plan. The Task to understand INTOSAI’s relationships with other Force has closely followed the guidance of the international organizations and to ensure that the Finance and Administration Committee (FAC) Task Force fully understands the broader global Task Force on Financial Foresight and the FAC governance landscape within which SAIs and itself on the planning process to be followed INTOSAI must operate. and the range of issues to be considered in the The Task Force has remained fully informed of context of the strategic planning effort. other INTOSAI evaluations and proposals that In May 2014 the Task Force sent out an online provide vital context for the planning effort. internal scan questionnaire to all 192 SAI members These include, for example, IDI’s Global Survey and five associate members to obtain their views 2013, “Supporting Supreme Audit Institutions in on INTOSAI’s strengths, internal and external Strengthening Performance and Capacities;” the challenges, and emerging issues. A total of 123 PSC’s 2014 Evaluation and Recommendations to completed responses were received (for a 62 per- Improve INTOSAI’s Standard Setting; and the cent response rate), representing a diverse range Capacity Building Committee’s 2014 “Professional of comments from countries in each of the seven Development in INTOSAI—a White Paper.” Regional Working Groups. This thoughtful input The project plan calls for the Task Force to is providing a solid foundation on which to build develop a draft strategic plan in 2015. All INTOSAI the next strategic plan. members, the FAC, and the Governing Board will The Task Force continuines to analyze the have ample opportunities to review and comment responses from the internal scan survey. The anal- on a draft plan. The Task Force plans to circu- ysis includes qualitative review of responses to late a final draft plan for all members’ review and individual questions as well as synthesis of themes comments in 2016, in time to deliver a consensus identified across the questions. As shown below, strategic plan for approval at the 2016 Congress. one initial finding is that the majority of those The Task Force will continue to work closely responding support the current goal structure. with the Finance and Administration Commit- tee and the INTOSAI Secretariat, including the Director of Strategic Planning, and will consult with INTOSAI’s Standing Supervisory Commit- Should the INTOSAI Strategic Goals tee for Emerging Issues as appropriate. The Task Remain the Same? Force will also continue to provide updates on its planning efforts through the INTOSAI website, The responses included a number of sugges- the International Journal of Government Auditing, tions for approaches to achieving, and the and discussions at meetings of INTOSAI’s Regional organizational structures supporting, the goals. Working Groups and other entities attended by Also, more than 69 percent of respondents Task Force members. n agreed that INTOSAI should move forward with offering a formal accreditation/certification for the International Standards of Supreme Audit For further information or to offer addi- Institutions (ISSAI). tional insights or suggestions, please In addition to the on-line internal scan ques- contact the Task Force at INTOSAIstrate- tionnaire, the Task Force also offered to interview [email protected]. INTOSAI leaders to provide them an opportunity

24 International Journal of Government Auditing January 2015 Inside INTOSAI

ISSAI 30 Review Project

The Steering Committee of the Professional The project proposal also sets the deadlines Standards Committee (PSC SC), at its meeting for completion of the consecutive stages of in Stockholm in June 2013, decided to conduct the revision, with the final deadline for the a review of the INTOSAI Code of Ethics – ISSAI development of the exposure draft being July 30. To this end, a project team was established 2015. The exposure draft will then go through composed of the supreme audit institutions the subsequent stages of the Due Process, to (SAIs) of the following countries: Indonesia, be ultimately submitted to XXII INCOSAI in Poland (project leader), Portugal, the United 2016 for approval. Kingdom, and the United States. Before the actual revision started, the team At the beginning of 2014, the team carried had been enlarged in order to provide for a out an initial assessment aimed at determining broader regional representation of INTOSAI. whether the Code of Ethics should be revised, It is now composed of 14 members: Alba- and—if so—to what extent. With this view, nia, Chile, Hungary, Indonesia, Kuwait, Mex- a survey was developed by the team and dis- ico, Namibia, the Netherlands, New Zealand, tributed among INTOSAI members in the first Poland (lead), Portugal, South Africa, the half of 2014. United Kingdom, the United States, and one On May 8-9, 2014, the team met in War- observer – the International Federation of saw to discuss the results of the survey and Accountants (IFAC). to decide whether to recommend the PSC SC The team had a working meeting in Warsaw should have the Code of Ethics revised. on October 13-14, 2014, aimed at discussing the According to the survey results, the INTO- form and contents of the revised document, SAI community generally believes that the and the division of work. Code of Ethics should be updated. The main The team has decided to modify the list of reason for revision is so that the Code will bet- values addressed in ISSAI 30 to comprise the ter meet the challenges of the current auditing following: independence/objectivity, integrity, world. competence, confidentiality, and profession- This recommendation was also in line with alism/professional behavior. Requirements the opinion of the participants of the EURO- and application guidance will be provided for SAI Seminar Enhancing Ethics within Supreme each value. Audit Institutions, held in Lisbon in early 2014. The revised ISSAI 30 is also planned to list On this basis, the team recommended a overall responsibilities of an SAI in the area revision of the Code of Ethics in the project of ethics. The first draft of the document is proposal that was approved by the PSC SC expected to be ready before the next working members at their latest meeting in Manama meeting of the team scheduled for February on May 20-22, 2014. 2015. The main objectives of the revision of ISSAI 30 will be, as set out in the project proposal, Documents related to the project can be to provide for the perspective of an SAI, apart downloaded from the Professional Standards from the perspective of an individual auditor; Committee website at: http://www.psc-intosai. to provide for consistency with other ISSAIs; org/psc-steering-committee/issai-30-project/ to review the fundamental principles and core values of the Code; to introduce some editorial For further questions please contact the changes aimed at improving the clarity of the project secretariat at: ISSAI30.Review@ document; and to update the terminology. nik.gov.pl

January 2015 International Journal of Government Auditing 25 Inside INTOSAI

SAI Peru hosts the XXIV OLACEFS General Assembly

Members of OLACEFS’ Governing Board gather at the XXIV General Assembly in Cusco, Peru.

The fight against corruption was a central practices. theme at the XXIV OLACEFS General Assem- OLACEFS Minister Augusto Nardes, Auditor bly, held November 25-28 in Cusco, Peru. Two General of SAI Brazil, highlighted the impor- hundred delegates from supreme audit institu- tance of integration and cooperation in the tions (SAIs) throughout Latin America and the search for good governance mechanisms to Caribbean gathered at the assembly to discuss promote the fight against corruption, national the following: development, and the quality of life of citizens. As an example of cooperative acts, Nardes • Technical subject I: The role of SAIs in mentioned cooperative audits—which started relation to public governance (chaired in Latin America and are now internationally by SAI Brazil) recognized—and cited the implementation of • Technical subject II: Internal control a Latin American and Caribbean network to from the perspective of transparency and combat corruption. accountability (chaired by SAI Paraguay) “These initiatives demonstrate that Latin • Technical subject III: Fiscal control and America is capable of showing all countries relationship with other autonomous enti- that this union is necessary, not only for the ties along the countries of the regions: development of our region, but for the whole scope, exception, and content (chaired world,” said Nardes. by SAI Honduras) A panel of experts from such organizations After keynote speeches and presentations as the Organization for Economic Coopera- on these topics, participants broke out into tion and Development, the World Bank, the smaller groups in which participants could Inter-American Development Bank, and the discuss issues and share experiences and best United Nations Development Program spoke to

26 International Journal of Government Auditing January 2015 Inside INTOSAI

the theme, “Governance and the fight against Post-2015 Development Agenda; corruption.” • promoting the efforts of INTOSAI and Manuel Vargas of the World Bank said that its regional working groups to support SAIs are crucial for the good administration common activities, such as efforts to of public finances, as they asses how public implement the United Nations Sustain- resources are deployed, taking into account able Development Goals by preparing financial information and regulation. SAIs eval- recommendations that shall be taken uate the performance of programs as well their into account in the Strategic Plan of efficiency and effectiveness. OLACEFS, and by participating in fol- “For the World Bank, this is necessary in low-up activities to implement the Sus- order to reduce poverty and promote the dis- tainable Development Goals; tribution of wealth,” said Vargas • providing impetus for supporting the The Declaration of Cusco (http://www.into- Latin American and Caribbean Network sai.org/fileadmin/downloads/downloads/0_ for the Fight against Corruption; news/2014/041214_XXIV_Asamblea_General_ • continuing inter-institutional efforts to OLACEFS_Declaracion_Cusco.pdf) was signed prevent, identify, and carry out follow-up by all full members of OLACEFS as the final measures on corruption, and to prepare document of the XXIV General Assembly. mechanisms concerning better coordina- The document is a milestone for OLACEFS tion and mutual support for the exchange members, as they commit to of relevant best-practice examples and • strengthening public governance for the experiences in the region. benefit of economic and social development and sustainability in environmental Also, in recognition to their outstanding matters within the framework of govern- trajectory and contributions to the INTOSAI, ment auditing; OLACEFS awarded the Order of Merit of Over- • supporting endeavors geared at achieving sight in the Americas to Jim Yong Kim, José a new resolution of the United Nations Manuel Durão Barroso, Josef Moser, Liu Jiay, General Assembly to include the basic Luis Alberto Moreno, Tanja Goner, Terence principles for the work of SAIs; Nombembe and Vítor Caldeira. • supporting the recent initiative of INTO- SAI to include independence and capacity building of SAIs as well as the improve- To learn more about OLACEFS, visit www. ment of public accounting systems in the olacefs.com

OLACEFS Knowledge Management System Implementation Workshop

The Knowledge Management System (KMS) is being developed within the framework of the Institutional Strengthening Program arising from the agreement between OLACEFS and the German Cooperation, implemented by GIZ. This tool will enhance the knowledge flow among OLACEFS members and will improve the capacity of SAIs, by facilitating availability of and access to information. This system registers information in three main categories: Fiscal Control, Public Governance, and Information Technology. In March 2014 a Knowledge System Implementation workshop was conducted under the coordination and planning of the OLACEFS Executive Secretariat, the Capacity Building Committee (CCC), and participating SAIs. Ninety public officers and professionals from regional SAIs participated, and were trained in the use of this tool.

January 2015 International Journal of Government Auditing 27 Inside INTOSAI

OLACEFS Capacity Building Committee reports on 2014 peer reviews

SAI Belize agreed to work with Peru in one of OLACEFS’ 2014 peer reviews.

Peer reviews performed during this year SAIs agreed to be reviewed to strengthen in OLACEFS have as a background the Semi- their management and to establish whether nar-Workshop on Peer Reviews held in Asun- 1) their organic structure is in line with con- cion, Paraguay, November 21-22, 2013. stitutional and legal roles, The commitment of the SAIs who agreed to 2) their activities are developed under the participate in a peer review was considered necessary tools for proper institutional prog- on the 2014 Annual Planning Activities of the ress, and OLACEFS Capacity Building Committee. 3) their functions meet current legislation and standards issued by the International Peer reviews performed include the following Organization of Supreme Audit Institutions SAIs: (INTOSAI). • SAI Paraguay (reviewed) and SAI Peru Participating SAIs elaborated and signed the (reviewer) Memorandum of Understanding for the execu- • SAI Dominican Republic (reviewed) and tion of the peer review project. SAI Honduras (reviewer), support of SAI Peru (advisor) To learn more about OLACEFS, visit • SAI Belize (reviewed) and SAI Peru www.olacefs.com (reviewer)

28 International Journal of Government Auditing January 2015 Inside INTOSAI

EUROSAI WGEA welcomes Estonia as new chair

EUROSAI Working Group on Environ- sessions. As gov- mental Auditing (WGEA) has had a busy ernment officials year with fruitful meetings, transfer of receive various the chairmanship and updated strategic questionnaires on directions. practically a daily The Office of the Auditor General of basis, the need for Norway concluded its second term of chair- better survey plan- ing the Working Group on Environmental ning was empha- Auditing at the EUROSAI congress in June sized as a way to 2014. Since then the chair and secretar- increase the bene- iat of EUROSAI WGEA is hosted by the fit of using surveys Dr Alar Karis, National Audit Office of Estonia. in audits. Auditor General of Continuing the practice of previous The 12th Annual Meeting marked the end Estonia and chair years, the 12th Annual Meeting of the of one working period and the beginning of EUROSAI WGEA, working group was organized in autumn. of another. Therefore, a new Steering Com- opened the 12th Annual Meeting in This time the meeting was held in Vilnius, mittee was formed and the Strategy and Vilnius, Lithuania. Lithuania, October 7-9, 2014. Activity Plan for the next three years was Together with our host, the National adopted. Audit Office of Lithuania, we had the During this new working period, EURO- pleasure of welcoming delegations of 26 SAI WGEA plans to turn its attention supreme audit institutions (SAIs). toward the citizen perspective in environ- The Annual Meeting was dedicated to mental audits. One of our four strategic the topic of biodiversity. The one-day ses- goals is altered every working period to sion on biodiversity included two keynote respond to the topical issues in environ- speeches, followed by a panel discussion mental auditing in Europe. on the emerging challenges of national Now we are turning our attention more governments to maintain the favorable toward encouraging SAIs to conduct audits status of natural habitats. in areas where there is a risk that policies There were also various presentations can negatively affect the achievement of from SAIs on experiences of auditing bio- environmental objectives, which in turn diversity issues. Few SAIs have experi- could affect environmental health and eco- ence auditing biodiversity, and the range system services provided to citizens. The of problems presented during the session citizen perspective will be kept in mind proves that the topic needs more attention when addressing all other environmental from auditors. topics. The cross-cutting topic for the meeting was survey data analysis, which was also addressed during a one-day session that For further information about the included two keynote speeches. working group’s activities, reports The keynote speeches were followed by from the meetings, and latest news see SAI presentations, a panel discussion on the EUROSAI WGEA website at www. how to increase the efficiency of surveys eurosaiwgea.org or contact us at euro- and obtain relevant data, and parallel [email protected].

January 2015 International Journal of Government Auditing 29 Inside INTOSAI EUROSAI Working Group on the Audit of Funds Allocated to Disasters and Catastrophes

On June 16-19, 2014, at the IXth EUROSAI Con- The Working Group currently involves 17 SAIs. gress held in The Hague, the Netherlands, the The Accounting Chamber of Ukraine invites coop- EUROSAI Task Force on the Audit of Funds Allo- eration from other interested SAIs. cated to Disasters and Catastrophes was trans- The Working Group is preparing its first meet- formed into the Working Group. It was agreed ing, to be held February 5, 2015, in Luxembourg, that the Accounting Chamber of Ukraine would the Grand Duchy of Luxembourg. chair the Working Group until 2017. During the meeting, the activity plan for the The EUROSAI Working Group’s mission is to current period through 2017 will be presented. coordinate and consolidate the efforts of the Euro- Participants will also share experiences on issues pean SAIs in assisting national governments to concerning the international cooperative audits of develop effective and efficient instruments of funds allocated to prevention and consequences disaster and catastrophe prevention. The group elimination of disasters, discuss questions related will continue the practice of conducting joint inter- to the implementation of the ISSAIs of series 5500, national audits, and relevant training and advisory and the role and place of the Working Group in activities. these matters. The group will focus its activity on the implementation of the International Standards of To learn more about the EUROSAI Work- Supreme Audit Institutions (ISSAIs), particularly ing Group on the Audit of Funds Allocated those providing guidance on the audit of disas- to Disasters and Catastrophes, visit http:// ter-related aid. www.ac-rada.gov.ua/control/eurosai/en/ INTOSAI Journal welcomes new staff

New staf members of the International Journal of Government Auditing.

INTOSAI’s International Journal of Govern- Above are pictured, from left, Bill Keller, GAO ment Auditing (IJGA) welcomes James-Christian Director of International Relations and IJGA Edi- Blockwood, Managing Director of Strategic Plan- tor; Kristie Conserve, SPEL International Relations ning and External Liaison (SPEL) for the Gov- Program Specialist; James-Christian Blockwood, ernment Accountability Office (GAO), as the new IJGA Board President; and Amy Condra, GAO Com- president of the IJGA Board. municatons Analyst and IJGA Assistant Editor.

30 International Journal of Government Auditing January 2015 IDI Update IDI Update IDI Update IDI Update keeps you informed of developments in the New Employees join IDI work and programs IDI is pleased to welcome the following new employees: of the INTOSAI • Anibal Guillermo Kohlhuber: Manager Capacity Development (OLACEFS) who has joined Development IDI on secondment from SAI, Argentina. • Minor Sancho Rodriguez: Manager ELearning and Web Solutions has joined on second- Initiative (IDI). ment from SAI, Costa Rica. To find out more • Camilla Constance Fredriksen: Adviser (INTOSAI-Donor Secretariat) has joined on sec- about the IDI and ondment from Office of Auditor General, Norway. to keep up to date between editions of the Journal look IDI Staff Meeting 2014 held in Oslo at the IDI website: http://www.idi.no The annual IDI staff meeting 2014 was held in Oslo from 25-27 August 2014. Key results over 2013-2014 and the plans for 2014-2015 were discussed. Results and indications from the 2013 For information IDI Global Survey were also discussed. The focus areas for IDI programs during 2015-2018 were related to the ISSAI identified and discussed. Updates were shared regarding several IDI policies and internal proj- Implementation ects. The following are the six priority areas: Initiative (3i Programme), please visit http://www. idicommunity.org/3i

In addition to the six areas mentioned above, the IDI Board has also identified a program on ‘Developing Young SAI Leaders’ as a priority area.

INTOSAI-Donor Steering Committee meeting held in Paris The 7th Steering Committee Meeting of the INTOSAI-Donor Cooperation was hosted by the Cour des Comptes in Paris September 17-18. The meeting was attended by 70 delegates representing donors and the INTOSAI community. Key items on the meeting agenda were progress of matching donors with concept notes received under the Global Call for Proposals 2013, discussion of the initial results of the IDI’s 2013 Global Survey, progress on the piloting phase »

31 International Journal of Government Auditing January 2015 IDI Update

of the roll out of the SAI PMF, the ongoing evaluation of the reviewed by other SAI member teams. The teams also received INTOSAI-Donor Cooperation, and approval of the 2015 Work expert feedback and guidance. Plan for the INTOSAI-Donor Secretariat. The INTOSAI-Donor Cooperation Memorandum of Under- IDI’s bilateral support program standing had its 22nd donor signatory - the Organization for Eco- The IDI in cooperation with the World Bank provided support nomic Cooperation and Development (OECD). Mr. Jon Lomoy, to SAI Iraq in developing its learning plan. IDI conducted a Director of the OECD Development Co-operation Directorate workshop for 17 staff members from SAI Iraq in Tunis, Tunisia expressed that the signature demonstrates OECD’s significant from August 4-8, 2014. The workshop is based on the IDI’s commitment towards strengthening accountability, transparency Learning for Impact guidance. Following the workshop, the and the effectiveness of Supreme Audit Institutions worldwide. team from SAI Iraq is developing their own learning plan which will be reviewed by the IDI. ISSAI Implementation Initiative (3i Program) 3i Workshop for Facilitating ISSAI Implementation IDI-CBC support program (Compliance Audit) for ASOSAI and PASAI IDI facilitated the participation of seven participants from Workshop on Facilitating ISSAI Implementation for six SAIs to the 2014 annual meeting of the INTOSAI Capacity ASOSAI and PASAI region was held July 28- August 2, Building Committee at Lima, Peru, held from September 9-11, 2014, in Manila, Philippines. The workshop was the last 2014. The strategic plan of the committee from 2014-2016 was part of the ISSAI Certification Program for the partici- discussed in the meeting. pants from ASOSAI and PASAI in Compliance Audit. At the workshop 31 participants learned how to play their roles as ISSAI advocates, project managers and learning IT Audit program facilitators. Participants also drafted their individual The IT Audit Planning Meeting for the first group of SAIs action plans for supporting ISSAI implementation. participating in the capacity development program on IT Auditing was held in Noida, India. SAI teams from 18 coun- 3i OLACEFS product adaptation meeting tries in ASOSAI and PASAI regions received expert guidance and support in developing their audit plans for conducting IT A team of eleven ISSAI experts and mentors met in Perufrom audits. August 5-22, 2014, to adapt 3i Products and courseware for the ISSAI certification programs in OLACEFS. SAI PMF Trainings A SAI PMF training course was held in San Jose, Costa Rica 3i Workshop on Facilitating ISSAI Implementation September 22-24, 2014, organized by the CEDEIR (Evaluación (Compliance Audit) for AFROSAI-E and EUROSAI Del Desempeño E Indicadores De Rendimiento, OLACEFS), SAI Brazil, and the INTOSAI-Donor Secretariat. The course A workshop on Facilitating ISSAI Implementation for had 28 participants from 15 SAIs in OLACEFS, in addition to AFROSAI-E and EUROSAI region was held from 8 to 13 Sep- participants from the Inter-American Development Bank. tember 2014 in Dar-es-Salaam, Tanzania. The workshop was Many of the participating SAIs are already in the process of the third and final stage of the ISSAI Certification Program conducting a pilot SAI PMF assessment. for the AFROSAI-E and EUROSAI participants of compliance Pilot SAI PMF workshops on Lessons Learned and Quality audit. Twenty-one participants of the compliance audit ISSAI Assurance of SAI PMF assessments were held in San Jose, certification program from the AFROSAI-E and EUROSAI Costa Rica, September 25-26, 2014. The event was organized regions attended the workshop. by the CEDEIR and the INTOSAI-Donor Secretariat. The workshops had 23 participants from 12 SAIs in OLACEFS and Online test for candidates nominated to participate in the Inter-American Development Bank. Key objectives of the the 3i Program in OLACEFS workshops were to expand the use of and improve the quality On September 22, 2014, the IDI carried out an online test of SAI PMF in OLACEFS, through sharing experiences of SAI for selecting participants for the 3i Program in OLACEFS. PMF pilots between OLACEFS members and through the Ninety-two candidates from 17 SAIs took the test which was INTOSAI-Donor Secretariat sharing experiences and guidance conducted on an IDI platform. on conducting quality assurance (QA) reviews of SAI PMF reports. The event was also a first step in developing a pool of ISSAI-Based Cooperative Financial Audit reporting QA reviewers with a working knowledge in Spanish. meeting held in Nadi, Fiji Stakeholder communication through IDI’s The IDI-PASAI ISSAI-based Cooperative Financial Audit participation in meetings Reporting meeting was held in Nadi, Fiji October 13-17, 2014. Ten participants from six SAIs participated in the meeting IDI engaged with its stakeholders through participation in to finalize their draft audit reports . The reports were peer different meetings:

32 International Journal of Government Auditing January 2015 IDI Update

Participants at the SAI PMF training course in San Jose, Costa Rica.

IDI participated in the annual meeting of the INTO- region were discussed. SAI Capacity Development Committee held in Lima, IDI attended the 16th WGEA (INTOSAI Working Peru September 9-11 , 2014. An update was provided Group on Environment Audit) assembly in Philip- on the IDI’s activities. Information brochures were pines from September 29 to October 2, 2014. IDI’s distributed regarding IDI’ capacity development pro- last cooperation with WGEA was on forestry audit grams. IDI participated in the discussions regarding ending in 2012. Among other issues a program on the CBC’s strategic priorities and discussed ways to disaster management based on ISSAI 5500 series strengthen the ongoing cooperation. was discussed. The INTOSAI-Donor Secretariat attended the 7th On September 18, 2014, IDI participated in the meeting of the Working Group for Values and Ben- INTOSAI Finance and Administration Committee efits of SAIs (WGVBS) in Mexico City September meeting in Paris. A wide range of issues were dis- 10-11, 2014. An important part of the agenda was the cussed, including the work of the INTOSAI-Donor INTOSAI-Donor Secretariat’s progress report on the Cooperation and the scheme of INTOSAI certification roll out of the SAI PMF with the following discussions, and accreditation. and the approval of a time schedule for finalising and At the 6th Steering Committee meeting of the approving the SAI PMF. INTOSAI Knowledge Sharing Committee in Cairo, IDI participated in the 47th ASOSAI Governing Egypt October 14-15, 2014, an update on IDI’s activi- Board meeting in Moscow, Russia from 21-26 Sep- ties was provided with a focus on sustained coopera- tember 2014. The Governing Board was updated about tion with the KSC and its constituent working groups IDI’s activities with specific focus on supporting the on specialised areas of SAIs’ operations. implementation of ISSAIs and cooperation with SAIs The annual meeting of the Working Group on Pub- in the ASOSAI region. A tripartite meeting was also lic Debt took place in Seoul, Korea October 22-24 held between the IDI, ASOSAI Secretariat SAI Korea ,2014. IDI’s ongoing program on audit of sovereign and ASOSAI Training Administrator SAI Japan. The borrowing and lending frameworks was discussed. draft strategic plan of ASOSAI was discussed. The IDI IDI also participated in the AFROSAI Governing also participated in the joint ASOSAI-EUROSAI sem- Board in Sharm-El-Sheik in Egypt October 23-30, inar on lessons learned from implementing ISSAIs. 2014. Issues regarding cooperation and support in At the CREFIAF CRRI (Comité régional De Ren- capacity development of SAIs were discussed. forcement Institutionnel Des Isc D’Afrique Fran- cophone SubSaharienne) meeting held in Yaoundé, Contacting the IDI Cameroon August 5-6, IDI’s cooperation with the SAIs in French speaking Africa was discussed. To discuss any of the issues presented in this From August 19-22, 2014, IDI participated in the edition of the IDI Update, please contact us: 17th PASAI Congress in Apia, Samoa. Capacity devel- Telephone: +47 21 54 08 10 opment issues of relevance to the SAIs in the PASAI E-mail: [email protected].

January 2015 International Journal of Government Auditing 33 INTOSAI-Donor Cooperation INTOSAI-Donor Cooperation Update

The Roll-Out of SAI PMF: Progress and risks identified in relation to the pilot phase

All targets set in the SAI PMF Roll-Out Strategy pilots and inputs from consultations, update SAI regarding training assessors and developing facil- PMF, and work through INTOSAI due process. The itators have been reached. However, risks have been aim is approval at INCOSAI XXII in December 2016. identified in relation to quality assurance of SAI PMF SAI PMF is not an ISSAI and is therefore not pilots and receiving enough finalised reports and required to follow the due process for ISSAIs. How- feedback for further development of the framework. ever, the SAI PMF task team is committed to following the INTOSAI due process as far as it applies. The INTOSAI-Donor Secretariat within the IDI Background is coordinator for the task team, and provides support to SAI PMF assessments through providing The SAI Performance Measurement Framework training courses in SAI PMF, advising on planning (PMF) pilot version was approved in July 2013, and implementation of a SAI PMF pilot assess- and officially launched at INCOSAI in Beijing ment, responding to ad hoc queries and clarifica- in October 2013. The SAI PMF is an objective tions on the SAI PMF, and offering a function of performance measurement framework designed quality assurance of pilots. to aid communication on the value and bene- As a coordinator for the task team the INTO- fits of SAIs, give a high level overview of SAI SAI-Donor Secretariat is also responsible for performance (against the ISSAIs and other gathering final pilot reports and feedback on the international good practices), and to facilitate framework and in the development of the frame- managing, measuring, and monitoring of SAI work itself. performance over time. The pilot phase was planned for July 2013 – The SAI PMF Roll-Out Strategy March 2015. A formal consultation period for the The SAI PMF roll-out strategy (Draft Roll-out SAI PMF Pilot version was planned for the end of Strategy 2013, August 2013) has three main November 2014, to last until March 31, 2015. All objectives: INTOSAI members will receive a formal notifica- 1. Ensuring the framework is relevant and tion inviting them to give comments to the frame- applicable to all SAIs, regardless of their level work. Following this, the SAI PMF task team (the of development, administrative heritage, task team comprises a number of SAIs, INTOSAI and legal mandate bodies and one donor agency, and is supported by 2. Ensuring that the mechanism for measuring a wider reference group)is scheduled to review the performance is properly calibrated so that

34 International Journal of Government Auditing January 2015 INTOSAI-Donor Cooperation

it is neither too hard nor too soft, and can ARABOSAI, and PASAI. identify differences in levels of performance According to the information received by the between SAIs INTOSAI-Donor Secretariat none of the pilot 3. Ensuring that assessors applying the frame- reports are finalized—nine have reached draft work are appropriately experienced, trained, stage, additional four are at the stage of field and supported to ensure the framework is work, the remaining eight pilots are at the plan- applied consistently ning phase. With these numbers in mind, there is a risk that it will fall just short of the target of 20 The first two points necessitate extensive testing finalized pilots by March 2015. of the framework in a number of diverse environ- ments, obtaining assessment results and feedback from assessments, and analysis of the resulting Timetable for finalizing and approving SAI indicator scores to ensure the scoring system is PMF properly calibrated. Consistent application of the The INTOSAI Working Group on the Value and framework requires the development of sufficient Benefit of SAIs (WGVBS) had their annual meet- numbers of SAI PMF assessors to participate in ing in Mexico in September. During the meeting pilots in each of INTOSAI’s different regions and the working group agreed on the due process to language groupings, and the development of SAI be followed regarding the update and approval of PMF facilitators capable of training assessors, in the SAI PMF, leading up to the INTOSAI Con- different languages, on the use of the SAI PMF, and gress in 2016. Key extracts from the timetable is: raising awareness of the framework. Mar-15: close pilots and consultation Aug-15: WGVBS to approve proposed response Progress to date to consultation comments and experiences Apr-16: SAI PMF endorsement version to WGVBS The targets in the SAI PMF Roll-Out Strategy May-16 – Jul-16: 90 day re-exposure period were to deliver 12 training courses, train 130 (if required) SAI PMF assessors, and develop 12 experienced Aug-16: WGVBS approve endorsement version SAI PMF facilitators. As of today, 16 SAI PMF Sep-16: The Committee on Knowledge Sharing training courses have been run since March 2013, and Knowledge Services and about 500 people have been trained. Thir- Dec-16: Governing Board, INCOSAI approve ty-four experienced facilitators of the SAI PMF endorsement version have been developed, 10 courses have been run However, the timetable was approved by the in English, two in French, two in Spanish, one in WGVBS with the condition that close to 20 pilots Arabic, and one in Portuguese. had been implemented by the date for closure of The course has not yet been delivered in Russian, the pilot phase, and that the SAI PMF task team but the training materials are being translated into received enough feedback on the SAI PMF and Russian for future use. copies of final reports to identify and rectify weak- SAI PMF courses have been held in all INTOSAI nesses in the tool. regions except from CREFIAF and AFROSAI-E, but some SAIs in these regions have sent staff to participate on courses in other regions. Sharing of experiences from pilots and A key element in the SAI PMF Roll-Out Strategy final reports is to pilot the SAI PMF Pilot Version in at least 20 countries, covering all INTOSAI regions and Those responsible for each SAI PMF pilot are languages, levels of development, administrative requested to provide a short summary of expe- heritages, and varying SAI sizes and complexities. riences from the pilot, remarks on the SAI PMF As of today, the INTOSAI-Donor Secretariat has and a copy of the final assessment report (includ- received information from 21 Heads of SAIs deciding indicator scoring) to the INTOSAI-Donor ing on the implementation of the pilot version of Secretariat. This will enable the SAI PMF task the framework. Nine of these are in OLACEFS, team to analyze the experiences and assessment four in ASOSAI, three in EUROSAI, and one in each results (including examining the spread of scores of the regions CAROSAI, CREFIAF, AFROSAI-E, for each indicator) so as to improve the SAI PMF. »

January 2015 International Journal of Government Auditing 35 INTOSAI-Donor Cooperation

All assessment reports and indicator scores building and PFM systmes. The INTOSAI-Do- shared with the INTOSAI-Donor Secretariat will nor Secretariat has noted that the number of be treated in strict confidence and will not be potential and available team leaders for SAI shared or published without the consent of the PMF assessments are lower than the demand SAI. Any analysis of the spread of indicator scores for this, especially in regards to pilots that have will be anonymized to remove reference to indi- an external or peer assessment approach. vidual SAIs. Lack of sharing of final reports and Risks regarding SAI PMF Pilot phase providing feedback There is a risk that the INTOSAI-Donor Sec- Quality assurance of SAI PMF pilots retariat does not receive feedback and final reports for the pilots undertaken. This will Quality assurance (QA) is crucial for objectivity undermine the ability of the SAI PMF task and credibility of SAI PMF pilot assessments, team to identify and rectify weaknesses in the which is fundamental to producing reports that SAI PMF, potentially diminishing the quality of add value to the development efforts of the the product that will be put to INCOSAI 2016 SAI. QA entails that the assessment is reviewed for approval. by someone who has not directly participated in the assessment, either someone internally from the SAI or someone external. Way forward The QA reviewer should have experience from attending and facilitating SAI PMF The INTOSAI-Donor Secretariat, the INTOSAI training, and should have taken part in a SAI task team for SAI PMF and champions from PMF pilot (including in the writing of the SAI around the world will continue to communicate Performance report) and showed good ana- on the purposes of SAI PMF, the importance of lytical skills. Since it is considered a necessary quality assurance, and the confidentiality that condition for QA reviewers to have taken part goes with sharing both draft and final assess- in an assessment, this clearly limits the list of ments with the INTOSAI-Donor Secretariat. potential candidates. The importance of pilot assessors to provide The responsibility for coordinating a QA func- copies of final reports and feedback to the tion is assigned to the INTOSAI-Donor Secretar- INTOSAI-Donor Secretariat will be emphasized iat. The INTOSAI-Donor Secretariat developed, in several forums. tested and published SAI PMF QA guidance in The INTOSAI-Donor Secretariat sees the need May 2014. The INTOSAI-Donor Secretariat’s for the establishment of a pool of available QA tracking record of pilots has no information about reviewers and potential SAI PMF assessment the planned QA arrangements for 10 of the 21 team leaders with working knowledge in all INTO- pilots under implementation. SAI working languages. To meet this need the This does not necessarily mean that there are INTOSAI-Donor Secretariat will run advanced no planned QA arrangements, but it is a matter SAI PMF training courses with workshops on of concern for the INTOSAI-Donor Secretariat. QA and Lessons Learned from pilots. The courses The risks of not having a proper QA process are will target SAIs that have already started imple- low quality reports which misuse the framework, menting the framework and their assessment and undermine stakeholders’ trust in the SAI team members, including assessors from consul- PMF, damaging its reputation as a credible and tancy companies and donor organizations. The useful tool to add value to SAIs. workshop on QA will cover both QA of indicators and the analysis in the SAI Performance Report. The Lessons Learned workshops will provide a Team leaders for SAI PMF assessments forum for sharing experiences from SAI PMF pilots. The workshops on QA and Lessons Learned A team leader for a SAI PMF assessment were piloted in OLACEFS in September. The INTO- should have good analytical skills and exten- SAI-Donor Secretariat plans to hold similar work- sive knowledge of the SAI PMF and ISSAIs, shops in other INTOSAI regions in 2015. n in addition to knowledge about SAI capacity

36 International Journal of Government Auditing January 2015 30˚N

15˚N INTOSAI 2015 Events 75˚W 60˚W 15˚E 30˚E

75˚S

January February March

Meeting of the FAC 48th /49th Governing 23rd UN/INTOSAI 28-28 Task Force on Strategic 10-13 Board Meetings and 13th 2-4 Symposium, Vienna, Planning, Washington, Assembly of ASOSAI, Austria D.C., U.S.A. Kuala Lumpur, Malaysia 2nd Meeting of the FAC 5 Task Force on Strategic Planning, Vienna, Austria

XXXXIIIrd EUROSAI 10 Governing Board Meeting, Helsinki, Finland

IDI Board Meeting, Oslo, 12-13 Norway

9th Meeting of the 24-25 Performance Audit Subcommittee, New Delhi, India

8th Meeting of the INTOSAI 24-26 Working Group on Key Naitonal Indicators, Sofia, Bulgaria

April May June

23rd Meeting of the 5–7 Working Group on IT Audit, Warsaw, Poland

2nd Meeting of the 13-14 Working Group on Financial Modernization and Regulatory Reform, Washington, D.C., U.S.A.

11th Meeting of 14-15 the Finance and Administration Committee, Washington, D.C, U.S.A.

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 will be included according to space available. For additional information, contact the Secretary General of each regional working group. For contact information visit http://www.intosai.org/regional-working-groups.html INTOSAI Events