Does the SAI Issue an Opinion of the Status of the Internal Control System?

1
Does the SAI Issue an Opinion of the Status of
the Internal Control System?
Tõnis SaarNAO of Estonia
Workshop on Audit/Evaluation of Public
InternalFinancial Control (PIFC)
SystemsAnkara , 8 9 July 2008
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Key learning points

• Theory
• SAIs in the accountability circle
• Giving assurance and taking assurance
• Practice
• What PiFC is in Estonia (critical view)
• NAOE role 5 years ago, today and tomorrow
• Some recommendations

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SAIs in the accountability circle
Parliament
Report
Opinion
Money
SAI
Government
Auditing
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Is that a PIFC?
5
How to make it work?
RISK
ICS
SAI
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Conclusion

• SAIs must evaluate, assess, monitor and take
  assurance from the internal control systems
  constantly (in every audit)
• Approach - Everybody are auditing everyring!
  must be avoided, it is waste of resources
• Take a risk based approach
• Today
• Is NAO giving overall (horizontal) opinion on IC
  system NO
• Is NAO giving recommendations YES and MUST do
• Is IA giving overall opinion on IC system
  streching target
• Is management giving overall assurance on IC
  system MUST
• Tomorrow
• Will NAO give overall opinion on IC systems?
  Serious dobts
• Will NAO evaluate IC and make recommendations?
  Its a MUST

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PiFC in Estonia (Critical view)

• God we believe, everything else we audit?
• Difficult start- no standards, no help, no
  interest
• Guidelines - One girl show and one time
  exercise with weak underling processes
• Mistakes pay back
• Management accountability did not really work
• IA audit was a campain and luckily took off -
  some mistakes helped
• External pressure was important
• EU money still has different PiFC than rest of
  the budget
• Management is still not sure what is the sense of
  this nonsense?

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Role of the NAO of Estonia

• 5 Years ago
• Get the accountability in the place
• Push the standards and internal audit
• Improve NAOs own quality
• Budgeting process, accounting reform, commission
  roadmap(s)
• Today
• Understanding really the key issues and trying to
  make accountability work
• Valuing experience, quality of people and
  transparency
• Addmiting mistakes and change step by step
• Tomorrow
• Financial audit shift SAI as a Group auditor
• Sertification IA and EA, havent really acheived
  yet
• Capacity building of NAO and IA

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Reccommendations

• Help MoF by creating extra pressure to them and
  to gov.
• Never forget the parliament
• You always need a case hard evidence to justify
  the change. Nobody likes the theory!
• It is easy to change the law, difficult to change
  processes, takes time and leaders to change
  thinking (culture and values)
• Take it from the start as a ongoing process
  forget the chapters you need it anyway
• Find help and define your own needs talk to
  people
• PUSH, learn and admit mistakes, PUSH, learn and
  admit mistakes, PUSH ... etc
• It is not the audit what matters, but the
  communication
• Value the people and experience