Reforms in Mongolian Government Auditing

1

• Reforms in Mongolian Government Auditing
• by Mr. BATBAYAR Badamdorj
• Deputy Auditor General of Mongolia

2
Brief History

• 19221990 State control organization changed its
  mandate, status, functions and title 13 times
• 1995 SAIC was established by the Law on State
  Audit and Inspection
• 2003 MNAO established by the Law on State Audit

3
New Legal Environment

• Public Sector Management and Finance Law (June
  27, 2002)
• Law on State Audit (January 3, 2003)

4
Reference Documents

• Lima Declaration
• Generic Audit Model Law prepared by UNDP/PACT

5
Changes in Mandate

• Former SAIC
• Traditional Financial Related Audit (Document
  Review)

• Current MNAO
• Performance Audit
• Financial Statement Audit

6
Methodology for Performance Audit

• GAS introduced in 2002.
• These include 4 general standards, 5 fieldwork
  standards, and 5 reporting standards for PA.
• The standards are based upon INTOSAI Auditing
  Standards and the US GAO Yellow Book.

7
Methodology for Performance Audit

• Performance Auditing Guidelines (based on the
  Fifth ASOSAI Research Project)

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Methodology for Performance Audit

• Handbook on how to use government auditing
  standards

9
Methodology for Financial Audit

• Translation and publication of International
  Standards on Auditing issued by the IFAC
• Development of Financial Audit Manual.

10
Changes in Organizational Structure

• Former SAIC
• Chairperson and 8 non-staff members
• (Board Model)

• Current MNAO
• Auditor General makes decision individually
• (Westminster Model)

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MNAO and Audit Service Providers

• The need to cooperate with external audit service
  providers.
• 34 private audit firms in UB (with 13 branch
  offices) and 15 audit firms in provinces.
• MNAO makes contract with these firms for audit
  services.

12
New Requirements for Knowledge and Skills

• Law sets high standards for knowledge and skills
  required of auditors
• It is also requirement of the standards
• Training program for 2004-2006
• Training materials on Performance, Financial, IT
  and Environmental Auditing
• CPA training

13
New Code of Ethics

• Law sets higher standard for ethical behavior
• Code of Ethics (based on INTOSAI Code of Ethics)
  integrity, independence, objectivity,
  impartiality, political neutrality, professional
  secrecy, speaking writing
• Code of Ethics for Professional Accountants by
  IFAC

14
SAI as Pilot Entity

• Supported the government policy on reforming the
  management and financing systems of government
  agencies.
• Piloted the new public management and financing
  systems in 2001.

15
Results of Piloting

• First introduced business strategic plan, output
  planning and reporting, financial statements, and
  performance agreements.
• Pilot results facilitated the enactment of the
  PSMFL.

16
SAI and Democratic Governance

• MNAO is contributing to promote good governance,
  principles of transparency and accountability in
  Mongolian public administration.

17
Audit Reports

• Performance audit reports are submitted to the
  Parliament.
• These reports are also public documents.

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Annual Report

• MNAO reports to the Parliament annually.

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International Cooperation

• INTOSAI - International Organization of Supreme
  Audit Institutions since 1996
• ASOSAI - Asian Organization of Supreme Audit
  Institutions since 1996
• WGEA - INTOSAI Working Group on Environmental
  Auditing since 2004

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Signed MOUs with

• China National Audit Office (2000)
• Accounts Chamber of Russian Federation (1998,
  2003)
• Office of the CAG of India (1999)
• State Audit Bureau of Kuwait (2001)
• NAO of UK (2003)
• National Audit Office of Bulgaria (2003)
• Turkish Court of Audit (2004)
• Supreme Chamber of Control of Poland (2004)
• Swedish National Audit Office (2005)

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Assistance provided by

• GTZ, Courts of Audit of Hessen and Berlin
  (Project on Support the MNAO)
• Victorian Auditor Generals Office, Australia (3
  month secondment of 2 auditors on financial
  auditing)
• GAO, USA (International Auditor Fellowship
  Program)
• BAI, Republic of Korea (computers)
• ADB (training, equipment, consultancy)
• WB (IDF Grant for introducing ISA and FAM)

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Some Challenges

• CPE requirements for government auditors
• Ensuring independence of SAI in the Mongolian
  Constitution