SIGMA Papers No. 34 Achieving High Quality in the Work of Supreme OECD Audit Institutions https://dx.doi.org/10.1787/5kml60v9gsd6-en Unclassified GOV/SIGMA(2004)1 Organisation de Coopération et de Développement Economiques Organisation for Economic Co-operation and Development 14-Jun-2005 ___________________________________________________________________________________________ _____________ English - Or. English PUBLIC GOVERNANCE AND TERRITORIAL DEVELOPMENT DIRECTORATE Unclassified GOV/SIGMA(2004)1 SIGMA - A JOINT INITIATIVE OF THE OECD AND THE EUROPEAN UNION, PRINCIPALLY FINANCED BY THE EU ACHIEVING HIGH QUALITY IN THE WORK OF SUPREME AUDIT INSTITUTIONS SIGMA PAPER No. 34, 2004 For further information, please contact Nicolas John Treen, Senior Adviser of the Financial Control Management Programme in SIGMA. Tel: +33 (0)1 45 24 83 56 - Fax: +33 (0)1 45 24 13 00. English - Or. English Email: [email protected] JT00186347 Document complet disponible sur OLIS dans son format d'origine Complete document available on OLIS in its original format GOV/SIGMA(2004)1 2 GOV/SIGMA(2004)1 FOREWORD This paper, focusing on the issue of how to achieve high quality in the audit process, is an outgrowth of a report on audit quality control and a subsequent set of guidelines for audit quality, both of which were prepared at the direction of the Presidents of the Supreme Audit Institutions (SAIs) of the Central and Eastern European Countries, Cyprus, Malta and Turkey and of the European Court of Auditors. In view of the importance of the subject, SIGMA has prepared this paper for distribution to a wider audience. SIGMA is publishing this paper in the belief that the information it contains should be of broad interest, both to those involved in government auditing and to those who use the audit reports and other products developed by SAIs. Ensuring the high quality of those reports is a vital factor in the chain of accountability and the effectiveness of public sector governance. SIGMA appreciates the efforts of all those who developed the information on which this paper is based. This includes representatives of the SAIs of Albania, Bulgaria, Croatia, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia, Slovenia and Turkey and of the ECA – the “participant SAIs” – who contributed to the underlying study and guidelines. We especially appreciate the work of the Expert Group on Audit Quality in preparing the guidelines referred to above. The Expert Group comprised the Supreme Chamber of Control of Poland (Najwy sza Izba Kontroli), the National Audit Office of Malta (Ufficcju Nazzjonali tal-Verifika), the State Audit Office of Hungary (Allami Szamvevoszek), and the Court of Accounts of France (Cour des Comptes). Important contributions were also made by representatives of other EU SAIs, who provided information about quality practices in their organisations. Special thanks must be given to Harry Havens (formerly of the US Government Accountability Office), and Annes McGoogan, Pamela Barnes Edwards and Patricia Prinsen Geerligs from SIGMA, for their excellent work on the paper. For further information, please contact Nick Treen, SIGMA Principal Administrator, External Audit and Financial Control, at the address shown below. This document and other SIGMA papers are available on the SIGMA web site: www.SIGMAweb.orghttp:/// OECD, 2 rue Andre Pascal, 75775 Paris Cedex 16 email: [email protected] or [email protected] This document has been produced with the financial assistance of the European Union. The views expressed herein can in no way be taken to reflect the official opinion of the European Union and do not necessarily reflect the views of the OECD and its Member countries or of the beneficiary countries participating in the SIGMA Programme. 3 GOV/SIGMA(2004)1 TABLE OF CONTENTS FOREWORD.................................................................................................................................................. 3 EXECUTIVE SUMMARY ............................................................................................................................ 7 CHAPTER 1 - INTRODUCTION................................................................................................................ 11 Basic Concepts.......................................................................................................................................... 11 Principles................................................................................................................................................... 12 Requisites .................................................................................................................................................. 13 Types of SAIs............................................................................................................................................ 15 Types of Audits......................................................................................................................................... 16 Definitions................................................................................................................................................. 16 Conclusions............................................................................................................................................... 17 Acknowledgements ................................................................................................................................... 17 CHAPTER 2 - QUALITY CONTROL ........................................................................................................ 19 Introduction............................................................................................................................................... 19 Quality Management in the Audit Process................................................................................................ 19 Sources for Quality Control Criteria ......................................................................................................... 20 Quality in Audit Planning ......................................................................................................................... 21 Quality in Audit Execution ....................................................................................................................... 26 Quality in Audit Reporting........................................................................................................................ 29 Audit Follow-up ........................................................................................................................................ 34 CHAPTER 3 - POST-AUDIT QUALITY ASSURANCE........................................................................... 35 General ...................................................................................................................................................... 35 Types of Post-Audit (“Cold”) Quality Reviews........................................................................................ 36 Objectives of Post-Audit Reviews ............................................................................................................ 36 Internal Assessments................................................................................................................................. 37 External Assessments................................................................................................................................ 37 Conclusions............................................................................................................................................... 38 CHAPTER 4 - INSTITUTIONAL MANAGEMENT.................................................................................. 39 Introduction............................................................................................................................................... 39 Organisational Structure............................................................................................................................ 39 Managing Human Resources .................................................................................................................... 41 Managing Institutional Risk...................................................................................................................... 43 Managing External Relations.................................................................................................................... 44 Conclusions............................................................................................................................................... 45 ANNEX A: PRACTICES IN COURTS OF AUDIT ................................................................................... 46 AUSTRIA ..................................................................................................................................................... 46 Quality control in the planning phase of an audit ..................................................................................... 46 Quality control in the execution phase of an audit.................................................................................... 46 Quality control in the reporting phase of an audit..................................................................................... 47 4 GOV/SIGMA(2004)1 Practical problems in operating Quality