Dias nummer 1

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ISSAI International Standards of Supreme Audit
Institutions
Achieving consistency
Theme discussionPSC Steering Committee
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(No Transcript)
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• All existing documents in one framework
• ISSAIs and INTOSAI GOVs
• Official publication at www.issai.org

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• All existing documents in one framework
• ISSAIs and INTOSAI GOVs
• Official publication at www.issai.org
• By 2010
• Comprehensive set of guidelines
• Reliable maintenance in a due process

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• All existing documents in one framework
• ISSAIs and INTOSAI GOVs
• Official publication at www.issai.org
• By 2010
• Comprehensive set of guidelines
• Reliable maintenance in a due process
• After 2010
• Consistency in the full set of ISSAIs and INTOSAI
  GOVs

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What the PSC is striving for

• Harmonizing public sector auditing
  internationally.

Recognizing, utilizing and building on standards
issued by other standard setting bodies and
developing supplementary guidance in areas where
SAIs have special needs.
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What the PSC is striving for

• Harmonizing public sector auditing
  internationally.
• Ensuring clear and user-friendly guidance on the
  special role of SAIs and public sector auditing.
  

Recognizing, utilizing and building on standards
issued by other standard setting bodies and
developing supplementary guidance in areas where
SAIs have special needs.
Where the tasks are the same, the standards
should be the same, where the tasks differ the
standards should differ.
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Agenda

• How can we best use level 3 (ISSAI 100-999)?
• How can we solve the main inconsistencies in the
  concepts and definitions?
• How can we ensure that the ISSAIs are useful for
  all SAIs?
• How do we move forward after todays discussion?

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Agenda

• How can we best use level 3 (ISSAI 100-999)?
• How can we solve the main inconsistencies in the
  concepts and definitions?
• How can we ensure that the ISSAIs are useful for
  all SAIs?
• How do we move forward after todays discussion?

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76 of SAIs use ISSAI 100-400
76
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Different purposes

• - Describing the tasks and obligations of the
  SAIs to external parties (50 of the SAIs)
• - Reference for evaluation of the SAI, e.g. in
  peer reviews (30 of the SAIs)
• - Establishing the legal framework of the SAI (38
  of the SAIs)
• - Developing audit strategy and methodology (69
  of the SAIs)
• - Formulation of national standards and
  guidelines (56 of the SAIs)
• - Education and/or certification in public sector
  auditing (54 of the SAIs)
• - International donors (24 of the SAIs)
• - Applied directly by auditors (58 of the SAIs)
• - Referred to in audit reports (49 of the SAIs)
• - Describing obligations to other auditors
  (subcontractors) (36 of the SAIs)
•  

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70 support ISSAIs on auditing
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The ISSAI Framework

• ISSAI 1 Founding Principles
• ISSAI 10-99 Prerequisites for the Functioning of
  SAIs
• ISSAI 100-999 Fundamental Auditing Principles
• ISSAI 1000-5999 Auditing Guidelines
• Implementation guidelines
• Specific guidelines
• INTOSAI GOV INTOSAI Guidance for Good Governance
• 9100-9299

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The ISSAI Framework
Concern institutional issues Applies only to SAIs

• ISSAI 1 Founding Principles
• ISSAI 10-99 Prerequisites for the Functioning of
  SAIs
• ISSAI 100-999 Fundamental Auditing Principles
• ISSAI 1000-5999 Auditing Guidelines
• Implementation guidelines
• Specific guidelines
• INTOSAI GOV INTOSAI Guidance for Good Governance
• 9100-9299

Concern auditing Brief statements aimed at the
SAI leadership and stakeholders Provide a
common language and key recommendations
Elaborate further on the most important
auditing tasks Guidance to be used by auditors
when performing the tasks
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The ISSAI Framework
Legality Regularity Performance audits

• ISSAI 1 Founding Principles
• ISSAI 10-99 Prerequisites for the Functioning of
  SAIs
• ISSAI 100-999 Fundamental Auditing Principles
• ISSAI 1000-5999 Auditing Guidelines
• Implementation guidelines
• Specific guidelines
• INTOSAI GOV INTOSAI Guidance for Good Governance
• 9100-9299

Regularity (financial) audit Performance audit
Financial auditing (auditing of financial
statements as defined by ISA 200) Performance
auditing Compliance auditing
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The ISSAI Framework

• A possible new outline
• ISSAI 100 Basic concepts of public auditing
• ISSAI 200 Fundamental principles of financial
  auditing
• ISSAI 300 Fundamental principles of performance
  auditing
• ISSAI 400 Fundamental principles of compliance
  auditing

• ISSAI 1 Founding Principles
• ISSAI 10-99 Prerequisites for the Functioning of
  SAIs
• ISSAI 100-999 Fundamental Auditing Principles
• ISSAI 1000-5999 Auditing Guidelines
• Implementation guidelines
• Specific guidelines
• INTOSAI GOV INTOSAI Guidance for Good Governance
• 9100-9299

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Proposed directions

• The fundamental auditing principles should
• Provide a common language which can be used for
  explaining and comparing the tasks of SAIs across
  their different national settings.
• Bridge the gap between the Lima Declaration and
  the guidelines of FAS, PAS and CAS by providing a
  coherent definition of public auditing and its
  three branches - financial, performance and
  compliance auditing

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Agenda

• How can we best use level 3 (ISSAI 100-999)?
• How can we solve the main inconsistencies in the
  concepts and definitions?
• How can we ensure that the ISSAIs are useful for
  all SAIs?
• How do we move forward after todays discussion?

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ISSAI 100 Basic concepts of public auditing
Provide a coherent definition of public auditing
and its three branches - financial, performance
and compliance auditing and define what
regularity and legality audits mean. ISSAI
200 Fundamental principles of financial
auditing - State the principle that the ISAs
should be used for financial auditing - Other
general principles in the practice notes of ISSAI
1000-1999? ISSAI 300 Fundamental principles of
performance auditing - State the most important
principles on how to conduct performance auditing
based on ISSAI 3000 (and the suggested new
guidelines) ISSAI 400 Fundamental principles of
compliance auditing - State the most important
principles on how to conduct compliance auditing
based on ISSAI 4000-4200
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The public auditing role of SAIs

•  
• The concept and establishment of audit is
  inherent in public financial administration as
  the management of public funds represents a
  trust.
• Audit is not an end in itself but an
  indispensable part of a regulatory system whose
  aim is to reveal deviations from accepted
  standards and violations of the principles of
  legality, efficiency, effectiveness and economy
  of financial management early enough
• to make it possible to take corrective action in
  individual cases,
• to make those accountable accept responsibility,
• to obtain compensation,
• or to take steps to prevent -or at least render
  more difficult -such breaches.
• ISSAI 1/Section 1. (Lima Declaration)

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The public auditing role of SAIs
Budgetary/ legislative function
Oversight Insight Foresight
Executive/ Administrative function
SAI
Audits
Instructions and/or supervision
Publicly funded organisations, activities or
policy programs
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The role of SAIs - using other auditors
Budgetary/ legislative function
Oversight Insight Foresight
Executive/ Administrative function
SAI
Audits
Auditors
Instructions and/or supervision
Auditors
Publicly funded organisations, activities or
policy programs
Auditors
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The scope of the ISSAIs
The responsible party Those entrusted with the
management of public funds
Budgetary/ legislative function
The intended users Authorities within the
constitutional system exercising monitoring and
corrective functions
Executive/ Administrative function
SAI
Audits
The auditor A SAI (or other auditors
performing work on behalf of the SAI)
Auditors
Instructions and/or supervision
Auditors
Publicly funded organisations, activities or
policy programs
Auditors
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The scope of the ISSAIs
The responsible party Those entrusted with the
management of public funds
Budgetary/ legislative function
The intended users Authorities within the
constitutional system exercising monitoring and
corrective functions
Executive/ Administrative function
SAI
Audits
The auditor A SAI (or other auditors
performing work on behalf of the SAI)
The criteria Requirements that follow from
the responsibility for the management of public
funds
Auditors
Instructions and/or supervision
Auditors
Publicly funded organisations, activities or
policy programs
Auditors
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Scope of the ISSAIs Public auditing
ISSAI 100-5999 applies to public auditing
assignments.   Public auditing is a function
within a constitutional arrangement with a
distribution of powers and responsibilities
between bodies ascribed with budgetary,
legislative, judicial or executive authority or
with a general responsibility for upholding the
constitution. The purpose of public auditing is
to enhance the oversight, insight and foresight
with the use of public funds of those authorities
exercising monitoring and corrective functions
and encourage continuous improvement in the
management of public funds.   Public auditing is
conducted in a three-party relationship
between - those responsible for the management
of public funds - those authorities within the
constitutional arrangement, which
exercise monitoring and corrective functions -
the independent auditing function mandated to
carry out public auditing in order to facilitate
the monitoring 
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Scope of the ISSAIs Public auditing
A public auditing assignment is defined as The
tasks which are to be performed by the auditor
according to an auditing mandate in order to
reach a conclusion supported by sufficient
appropriate evidence on whether public
authorities and other publicly funded entities
have observed the requirements that follow from
their responsibility for the management of public
funds.   
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The audit criteria

• The purpose of the requirements may be to ensure
  
• Reliable recording and reporting of historical
  financial information on the use of public funds
  
• That public funds are obtained and used
  economically, efficiently and effectively
• That public funds are obtained and used in
  accordance with law and propriety
•  

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The audit criteria

• The purpose of the requirements may be to ensure
  
• Reliable recording and reporting of historical
  financial information on the use of public funds
  
• That public funds are obtained and used
  economically, efficiently and effectively
• That public funds are obtained and used in
  accordance with law and propriety
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3 branches of public auditing
Financial auditing
Performance auditing
Compliance auditing
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The audit criteria

• The requirements may concern
• The processes and systems to be used in the
  management of public funds (measures to ensure
  sound financial management)
• The outcome to be achieved as a result of the
  management of public funds
• Reporting on the use and management of public
  funds
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The subject to which the criteria apply

• The requirements may concern
• The processes and systems to be used in the
  management of public funds (measures to ensure
  sound financial management)
• The outcome to be achieved as a result of the
  management of public funds
• Reporting on the use and management of public
  funds
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3 kinds of requirements
Proces
Outcome
Reporting
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No 4 (Australia) The Auditor-Generals
functions include auditing financial statements
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No 20 (South Africa) the reported information
relating to the performance of the auditee
against predetermined objectives
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No 47 (Belgium) The Court of auditors performs
ex-post reviews of the sound administration of
public resources it ensures they were used in
compliance with the principles of economy,
effectiveness and efficiency
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No 8 (Ireland) (i) whether the receipts and
expenditure recorded in the account are supported
by substantiating documentation, (ii) whether
the amounts expended have been applied by the
Department concerned for the purposes for which
the appropriation made by the Oireachtas was
intended (iii) whether the transactions
recorded in the account conform with the
authority under which they purport to have been
carried out.
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No 9 (Ireland) Records of stocks or stores of
any kind (including stocks of securities or
stamps (i) whether any record is accurate,
and (ii) whether the systems, procedures and
practices (including the system of stock-taking)
employed by the Department concerned for
controlling the stocks or stores to which the
record relates are adequate and whether the
manner in which the systems, procedures and
practices are employed and applied is adequate.
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Regularity audits
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Legality
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Scope of the ISSAIs Public auditing
A public auditing assignment is defined as The
tasks which are to be performed by the auditor
according to an auditing mandate in order to
reach a conclusion supported by sufficient
appropriate evidence on whether public
authorities and other publicly funded entities
have observed the requirements that follow from
their responsibility for the management of public
funds.   
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Tentative definitions
Financial auditing is a branch of public
auditing where the audit criteria are
requirements serving the purpose of ensuring
reliable recording and reporting of historical
financial information on the use of public
funds.   Performance auditing is a branch of
public auditing where the audit criteria are
requirements serving the purpose of ensuring that
public funds are obtained and used economically,
efficiently and effectively.   Compliance
auditing is a branch of public auditing where the
audit criteria are requirements serving the
purpose of ensuring that public funds are
obtained and used in accordance with law and
propriety.
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Tentative definitions
A public auditing assignment may combine
auditing objectives from all three branches of
public auditing. Financial auditing may concern
process and reporting requirements. Performance
and compliance auditing may concern outcome
requirements as well as process and reporting
requirements. The process, outcome and reporting
requirements may follow from a direct
responsibility or supervisory responsibility for
the management of public funds.
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Tentative definitions
As stated in the Lima Declaration a traditional
task of Supreme Audit Institutions is to audit
the legality and regularity of financial
management and of accounting. (Cf. ISSAI
1/Section 4).   Legality and regularity audits
are specific ways to organize the auditing
activities of a SAI. Auditing objectives of a
financial, compliance or performance auditing
nature may also be performed in other
combinations.  
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Tentative definitions
As stated in the Lima Declaration a traditional
task of Supreme Audit Institutions is to audit
the legality and regularity of financial
management and of accounting. (Cf. ISSAI
1/Section 4).   Legality and regularity audits
are specific ways to organize the auditing
activities of a SAI. Auditing objectives of a
financial, compliance or performance auditing
nature may also be performed in other
combinations.  
Legality audit Auditing objectives are the
outcome requirements that the use of funds is in
compliance with the applicable law  
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Tentative definitions
As stated in the Lima Declaration a traditional
task of Supreme Audit Institutions is to audit
the legality and regularity of financial
management and of accounting. (Cf. ISSAI
1/Section 4).   Legality and regularity audits
are specific ways to organize the auditing
activities of a SAI. Auditing objectives of a
financial, compliance or performance auditing
nature may also be performed in other
combinations.  
Legality audit Auditing objectives are the
outcome requirements that the use of funds is in
compliance with the applicable law  
Regularity audit Auditing objectives are -
Requirements to report historical financial
information (reporting requirements) - Process
requirements concerning the systems for
accounting and registration and internal
controls, and - Outcome requirements concerning
the compliance with law and propriety of the
transactions reflected in the reported historical
financial information  
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Proposed directions

• The fundamental auditing principles should
• Provide a brief statement of the most important
  general recommendations contained in the over 800
  pages of implementation guidelines on financial,
  performance and compliance auditing.
• Regularity and legality audits should be
  treated as one particular way to organizing the
  audits (but not be especially recommended over
  other ways to organize financial and compliance
  auditing)

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Agenda

• How can we best use level 3 (ISSAI 100-999)?
• How can we solve the main inconsistencies in the
  concepts and definitions?
• How can we ensure that the ISSAIs are useful for
  all SAIs?
• How do we move forward after todays discussion?

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SAIs different functions
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Different public auditing assignments

• Express a statement of assurance
• Provide assessments
• Conduct inquiries

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The public auditing role of SAIs
Budgetary/ legislative function
Executive/ Administrative function
SAI
Audits
Instructions and/or supervision
Publicly funded organisations, activities or
policy programs
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(No Transcript)
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• No 15 (Norway)
• By auditing accounts, the Office of the Auditor
  General shall monitor whether the financial
  statements give a correct picture of the
  financial activity, including
• confirm that the financial statements are free of
  material errors and omissions, and
• b) monitor whether the dispositions reflected in
  the financial statements are in accordance with
  the decisions and intentions of the Storting and
  the current regulations and whether they are
  acceptable in the light of the norms and
  standards for financial management in the central
  government.

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Entities
Consolidated
No 2 (Sweden) The audit shall be conducted in
accordance with good auditing standards and be
intended to assess whether the accounts and the
underlying accounting are reliable and the
accounting records true and fair. The auditors
report on the annual accounts of the State shall
be submitted to the Government and Parliament
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State accounts
No 40 (France) The accounts of public
administrations shall be lawful and faithful.
They shall provide a true and fair view of the
result of the management, assets and financial
situation of the said public administrations .. As
surance statement on the state accounts
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ISSAI 1000-1999
ISSAI 4000 - 4200
ISSAI 3000
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The IAASB framework
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ISSAI 1000-1999
ISSAI 4000 - 4200
ISSAI 3000
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ISAs

ISAs
Other assurance engagements
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• ISA 200
• ISAs are relevant to engagements in the public
  sector.
• The public sector auditors responsibilities,
  however, may . encompass a broader scope than
  an audit of financial statements in accordance
  with the ISAs.
• These additional responsibilities are not dealt
  with in the ISAs.
• They may be dealt with in the pronouncements of
  the International Organization of Supreme Audit
  Institutions.

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The European Court of Auditors annual report for
2007

• The Court conducted its audit in accordance
  with the IFAC International Standards on Auditing
  and Codes of Ethics and the INTOSAI International
  Standards of Supreme Audit Institutions, in so
  far as these are applicable in the European
  Community context

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Different claims

• That the SAI performs its duties in accordance
  with the ISSAIs
• That a set of standards or manuals conforms to
  the ISSAIs
• That a task of auditing has been carried out in
  accordance with the ISSAIs
• That a financial auditing task has been carried
  out in accordance with the ISAs as further
  elaborated by the ISSAI financial auditing
  guidelines

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Proposed directions

• The fundamental auditing principles should
• Ensure the ISSAIs are applicable to the many
  different kinds of public auditing assignments,
  which SAIs in the different regions of the world
  have been given by their legal mandates
• Define how claims of compliance with the ISSAIs
  should be understood

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Agenda

• How can we best use level 3 (ISSAI 100-999)?
• How can we solve the main inconsistencies in the
  concepts and definitions?
• How can we ensure that the ISSAIs are useful for
  all SAIs?
• How do we move forward after todays discussion?

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Caracteristics of an auditing assignment

• The object
• The subject (subject matter or subject matter
  information)
• The audit criteria
• The resolve (result to be achieved by the
  auditor)
• The reporting
• The intended users

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Ways to build on other standards

• Inspiration Consider a variety of documents
  from different sources but draw up an original
  new text.
• Patchwork Merge concepts and text of standards
  or guidance documents from more than one source
  in order to arrive at a new text.
• Cover version Use the concepts and texts from
  a single source and elaborate or modify in order
  to arrive at a new text.
• Commenting Refer explicitly to a specific set
  of documents and elaborate further on these by
  drafting additional and detailed guidance.
• Gate keeping State a few general principles
  and leave it to another standard setter to
  provide further standards which are to apply
  unless they are in conflict with the principles.
• Reference State as a principle that any
  standards supplied by a specific standard setter
  should apply.

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Criteria for choice of external standards

• Applicability
• Relevance
• Usefulness
• Languages and user concerns
• Reciprocity
• Wide recognition

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Proposed directions

• The initial assessment - phase 1
• Gather information from INTOSAIs regions on the
  mandates of SAIs on the following characteristics
  of the auditing assignments The object, subject,
  criteria and resolve of the audit and the
  reporting to intended users.
• Develop the necessary and appropriate
  distinctions between different kinds of
  assignments (e.g. assignments to provide a
  statement of assurance vs. other assignments).

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Proposed directions

• The initial assessment - phase 2
•  
• Consider standards from the relevant national,
  regional and international sources which may be
  of relevance to the assignments identified (the
  dual approach).
•  
• The dual approach will not be fully applied to
  assignments designed to provide assurance
  statements. Instead, the consideration of other
  standard setters will from the outset be limited
  to the standards of IAASB/IFAC.
•  
• The key criteria when considering standards from
  other standard setters will be applicability,
  relevance, usefulness, languages and user
  concerns, reciprocity and wide recognition.