INTOSAI Compliance Audit Guidelines ISSAI 4000 4200 Presentation

INTOSAI Compliance Audit Guidelines (ISSAI 4000 -4200) Presentation by (name and tittle) Venue and date 1

Content 1 Implementation 4 2 Compliance Audit ISSAI 4000 -4200 INTOSAI and ISSAI framework 3 The Professional Standards Committee (PSC) and the Compliance Audit Subcommittee (CAS) 2

INTOSAI INCOSAI Regional Working Groups Professional Standards Committee Performance Audit Subcommittee Financial Audit Subcommittee Governing Board Secretary General Capacity Building Committee Knowledge Sharing Committee IDI International Journal of Government Auditing Finance and Administration Committee Compliance Audit Subcommittee 3

The South Africa Declaration XX INCOSAI (2010) resolves to call upon its members and other interested parties to: v Use the ISSAI framework as a common frame of reference for public sector auditing; v Measure their own performance and auditing guidance against the ISSAIs; v Implement the ISSAIs in accordance with their mandate and national legislation and regulations; v Raise the awareness of the ISSAIs and INTOSAI GOVs globally, regionally and at the national level; v Share experience, good practice and challenges in implementing the ISSAIs and INTOSAI GOVs with those responsible for developing and revising the ISSAIs and INTOSAI GOVs 4

The Purpose and Authority of the ISSAIs v provides an Institutionalised Framework for SAIs to: v promote development and transfer of knowledge v improve public sector auditing worldwide v enhance the professional capacities, standing and influence of its members in their respective countries v Two sets of professional standards: v ISSAIs - the International Standards of Supreme Audit Institutions v INTOSAI Gov - the Guidance for Good Governance 5

ISSAI Framework Level Subject ISSAI No 1 Founding Principles Lima Declaration 1 2 Prerequisites for functioning of SAIs Independence Transparency and Accountability Ethics Quality 10 -40 3 Fundamental Auditing Principles Basic Principles General -, Field – and Reporting Standards 100 -400 4 Auditing Guidelines Financial Audit Guidelines Performance Audit Guidelines Compliance Audit Guidelines Specific Guidelines 1000 -2999 3000 -3999 4000 -4999 5000 -5999 6

ISSAIs add value to the work of SAIs Adherence to the ISSAIs v Promotes transparency in the public sector and adds Credibility to our work as auditors v Improves the effectiveness and efficiency of the work of the SAI and provide the basis for high Quality audits v. Increases the perceived level of Professionalism of the SAI 7

Content 1 Implementation 4 2 Compliance Audit ISSAI 4000 -4200 INTOSAI and ISSAI framework 3 The Professional Standards Committee (PSC) and the Compliance Audit Subcommittee (CAS) 8

Professional Standards Committee (PSC) Objectives Promote strong, independent and multidisciplinary SAIs by: v Encoururaging SAIs to lead by example v Contributing to the development and adoption of appropriate and effective professional standards Partners The PSC is working together with other international, recognized standard-setting bodies: v The International Federation of Accountants (IFAC) v The Institute of Internal Auditors (IIA) 9

Compliance Audit Subcommittee

Compliance Audit Subcommittee (CAS) Objective Develop high quality, globally accepted guidelines for Compliance Audit in the public sector Strategy The objective will be reached by cooperation, participation and commitment by all committee members and the INTOSAI community, and by cooperation with other standard setting bodies. 11

Content 1 Implementation 4 2 Compliance Audit ISSAI 4000 -4200 INTOSAI and ISSAI framework 3 The Professional Standards Committee (PSC) and the Compliance Audit Subcommittee (CAS) 12

Three Audit types Financial audit Compliance audit Performance audit The reliability of financial reporting Compliance of a subject matter with criteria Economy Efficiency Effectiveness 13

Compliance Audit – bridging the gap

Compliance Audit The independent asessment of whether a particular subject matter is in compliance applicable authorities identified as criteria.

The Compliance Audit Guidelines - two main perspectives Ø ISSAI 4000 - General introduction to compliance audit Ø ISSAI 4100 - deals with compliance audit performed separately from the audit of financial statements, for example as a separate audit task or related to performance audit Ø ISSAI 4200 - deals with compliance audit related to the audit of financial statements Written as consistent, standalone documents

Compliance audit: the extended perspective v Origins of cash flow in the public sector are the decisions and premises of the legislature v Compliance audit provides guidance for compliance audit related to the audit of financial statements in the public sector, including; v concerns that public funds are used for the intended purposes v principles of sound management are followed in the execution of the budgets 17

Compliance Audit Guidelines: integrated approach with Financial Audit Guidelines v Compliance Audit guidelines developed within the same structure v Cross-references made to other relevant ISSAIs v Issues on compliance audit dealt with in the context of the audit of financial statements 18

Compliance Audit Guidelines: Compliance Audit performed separately from the audit of financial statements

Caracteristics of Compliance Audit li p m e c n a Co Transparency Accountability Stewardship Good governance A t i d u

Compliance Audit – The extended perspective

The specific constitutional arrangemement of the SAI THE LEGISTALURE AUTHORITIES THE EXECUTIVE AUTHORITIES THE ENTITY Compliance Audit

The three parties of an audit THE LEGISLATURE INTENDED USER ELEMENTS OF AN AUDIT THE SAI THE EXECUTIVE PRACTITIONER RESPONSIBLE PARTY

Extension in terms of AUDIT PRINCIPLES Regularity Propriety

Extension in terms of AUDIT APPROACH Quantitative Qualitative

Extension in terms of Reporting formats Attest engagements v Long form reporting v Short form reporting v Findings, conclusions, opinions Direct reporting

Variations of Compliance Audit SCOPE & SUBJECT MATTER AUDIT APPROACH REPORTING FORMATS AUDIT PRINCIPLES

Compliance Audit Process Do cu Initial conciderations tio nta me n, Planning the audit u mm Co ua , Q on ati nic Performing the audit and gather evidence Evaluating evidence & forming Conclutions lity l tro n Co Reporting

Court of Accounts issues

Summing up v Compliance audit is the missing link between financial audit and performance audit. v Compliance audit profits from structure and continuity of financial audit, and the political relevance and methodologically diversity of performance audit. v Compliance audit adds power and relevance to the annual audit report. v Compliance audit can be integrated in a variety of subject matters and audit approaches, tailored to different audit mandates and different jurisdictions. 30

Content 1 Implementation 4 2 ISSAI 4000 -4200 INTOSAI and ISSAI framework 3 The Professional Standards Committee (PSC) and the Compliance Audit Subcommittee (CAS) 31

Adoption and implementation v It is the responsibility of all INTOSAI members to help establish the ISSAI framework as a common frame of reference for public sector auditing. v In doing so, there are two main aspects to address: 1. The decision of adopting the ISSAIs by the SAI; 2. The implementation process.

ISSAIs can be implemented in two ways v. By developing national standards on the basis of ISSAI 400 Fundamental Principles of Compliance Auditing v. By adopting the Compliance Audit Guidelines as authoritative standards

Implementation steps Sustaining the results Applying the standards Learning the standards Link the ISSAIs to the priority needs of SAI Awareness ( highlighting the benefits of using the ISSAIs)

Implementation: to improve audit quality

Implementation: quality in SAI core business

Suitable audit criteria 37

Sufficient and appropriate audit evidence

Assurance & confidence of users 39

ISSAIs on Compliance Audit Outlines the basic steps and requirements on how to perform the SAI core process of Compliance Audit – adjusted to the specific constitutional arrangement of the SAI.

Compliance Audit li p m e c n a Co Transparency Accountability Stewardship Good governance A t i d u