Quality Assurance System of the Audit Process at

Quality Assurance System of the Audit Process at NIK Wiesław Karliński Department of Audit Methodology & Professional Development

Factors affecting the quality of audits HUMAN FACTOR (Code of Ethics) SUPPORTING & ASSISTING TOOLS (standards, guidelines, methodologies, trainings, workshops, etc. ) ERRORS ELIMINATION TOOLS (preventive or detecting mechanisms that are a part of the internal audit system) MEASUREMENT AND EVALUATION OF QUALITY (assessment of task performance, audit evaluation) ity al Qu stem y K S I N ance ur Ass 2

Conditions of the NIK Organizational PRESIDENT of the NIK Vice-Presidents (3) AD 11 Methodology • Coordinated audits AD 3 Legal aspects AD 9 AD 4 Advisers to the President AD 8 Estimated number (per year): • Auditors AD 2 Planning AD 10 Functional 1, 100 200 • Audited entities 2, 200 • Unit audit reports 2, 200 • Final audit reports 200 AD 5 AD 7 AD 6 Regional Branches (16) 3

Quality control system at NIK Until 2014: sectoral management of NIK units, quality control system without monitoring and evaluation mechanisms, paper quality control documents. From the end of 2014: project management for all planned and coordinated audits, precise allocation of roles within the framework of audit projects, quality assurance system including: planning, quality control, evaluation of task implementation by auditors, evaluation of audit projects and products, implementation of all quality assurance related documents in the electronic documents’ management system (DMS). 4

Three pillars of the quality assurance system RES PON SIBI LITY Each participant in the audit process is responsible for the quality of the task being performed HIE RAR CHY The responsibility and quality control is organized hierarchically AC COUN TABI LITY Once the task is completed, the quality of its implementation will be assessed at each level of the hierarchy 5

Three levels of error elimination EQCR Auditor: quality requirements quality checklist – optionally documented Self – assessment EQCR – Engagement Quality Control Review Internal assessment Independent team: opinion and acceptance – obligatory documented in DMS Parent unit: quality checklist – obligatory documented in DMS The quality control procedures and its documentation concern all planned audits and coordinated ad hoc audits. 6

Stages of the audit process stage Planning of audits Audit program developement final output Annual Work Plan Project Initiating Documents Audit program Performing an audit Unit audit report Audit files Reporting Final audit report Follow up actions Evaluation Monitoring of applications quality control output audit recommendations quality questionnaire, list of opinions quality questionnaire filled out by auditor, supervisor, coordinator quality questionnaire, list of opinions questionnairs: • evaluating of task performance • evaluating of audit 7

Audits planning procedure April - June March • • Risk analysis Work plan assumptio ns • • Selection of topic proposals Balance of labor intensity Annual Work Plan September • • Panel on audit assumptions Project Initiating Documents November Approval of the NIK work plan Assignation of projects to vice presidents Project Initiating Documents will be presented in detail tomorrow 8

Preparing an audit program / final report Quality assessment Opinions (EQCR) Arrangements Approval Support departments (3) Coordinating unit Self-assessment Internal-assessment President's advisor Units participating in the audit review team Vice. Presi dent*) *) only on final audit report 9

Performing an audit Selfassessment Auditor / audit team • Audit activities • Audit file • Draft of unit audit report Internal quality control Review of the report (EQCR) Supervisor Director Auditor / audit team …. . Coordinating unit [. . . ] Auditor / audit team …. . Project managem ent Vice. Presi dent Supervisor Director 10

Evaluation Auditor task’s evaluation Supervisor evaluates the individual task of the auditor (score) Auditor can make comments on the evaluation Director • approves the task evaluation • performs interim evaluation of the auditor (once a year) Audit project’s evaluation V-ce President evaluates the project and its participating units President compiles a ranking of projects & allocates rewards Director assigns the rewards to participants 11

Challenges at the implementation stage of the system • Regardless of automation, the system requires extra work and we have to convince users that this work is needed • We need to teach auditors to work on audit documents and quality documents at the same time • We need to learn the skills of objective evaluation of the work of colleagues. We have been able to meet these challenges to a large extent. Nevertheless various opinions are articulated, e. g. an opinion from the Parliament, that quality is an immanent feature of auditors and there is no need to manage it with a dedicated quality assurance system. 12

THANK YOU FOR YOUR ATTENTION Wieslaw. Karlinski@nik. gov. pl