INTOSAI - public sector auditing

International Journal of Government Auditing–October 20001

Improving Public Services

By Sir John Bourn, Comptroller and Auditor General, United Kingdom

Sir John Bourn

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Over the last 20 years or so the delivery of public servicesin many countries has undergone radical change. The drivingforce behind this change has often been to increase theproductivity of public services – getting more for less – inkeeping with a general policy of tighter control over publicexpenditure so as to provide opportunities to reduce taxation.Reforms intended to achieve this have been diverse and far-reaching. They include privatisation, public privatepartnerships, the creation of internal markets, the separationof purchasers and providers of public services and theestablishment of new organisational structures to distinguishbetween the formulation of policy and its implementation. Andthe trinity of economy, efficiency and effectiveness, definedas lower costs, more efficient utilisation of resources anddelivery against objectives, has been an important principlefor those responsible for managing public money.

Improvements have also been driven by a wider aim tosecure ‘value for money’ in the delivery of public services.But value for money is not seen by everyone as an obviousand objective concept that gets to the heart of the improvementof public services. Some people argue that it carries a particularand biased connotation. Professor Howard Elcock, forexample, says that “the ‘3 Es’ are themselves the values of themiddle-class whose highest priorities are low taxes and minimalgovernment regulation. They are antagonistic to the interestof working class people who seek greater equality and areparticularly dependent on public services and welfare benefits.”(Elcock H. 2000, “Management is not enough: we needleadership!” Public Policy and Administration, Volume 15,No. 1, page 16). The public sector auditors must be alive tosuch criticisms and, while such interpretations are themselvesopen to question, auditors must be sensitive to the messagesthat their methodologies may unwittingly carry.

In more recent years greater emphasis has been given toimproving the quality of the services which citizens look togovernment to provide. Such improvements have includeddelivering services more quickly, making them more accessibleand providing them in a much more joined up way so thatcitizens can obtain services from one location or a “one stopshop” for example, in applying for financial support whileunemployed and at the same time seeking advice on getting ajob. This is all part of a general policy to make services moreresponsive to the needs of those who use them. The rapidadvances in information technology and the increasing use ofthe Internet provide opportunities to deliver public servicesmore efficiently and better suited to the needs of citizens in amodern society.

With their reliance on both the public and private sectorthese various initiatives reflect no single philosophy as tohow public services should be delivered. The term “thethird way” is being used to describe an approach whichaccepts that there are some things which the public sector,does better and some things which are better managed ordelivered by the private sector. The “third way” also placesmuch more emphasis on considering the needs of the endusers of public services and to reach those members ofsociety such as the long-term unemployed anddisadvantaged who in the past have often been excluded.

What is the Role of the SAI in ThisBrave New World?

Increasingly, in the United Kingdom we find ourselvesfacing a number of new issues. On the one hand as newways of delivering services are established we have to ensurethat reliable accountability arrangements exist for reportingto Parliament on how taxpayers’ money is being spent andin particular that value for money is being achieved andstandards of propriety maintained. This means remainingvigilant in ensuring that we can follow public money throughregardless of whether it is a public or private sectororganisation which is responsible for delivering the service.On the other hand, improving service delivery is also aboutinnovation and looking for new ways of doing things. Allinnovation involves some degree of risk but public sectorculture can often be risk averse because of fear of censureby auditors–both internal and external–and ultimately byParliament if things go wrong. The SAI should not be adisincentive or be used as one preventing public sectormanagers from taking initiatives which may involve some


risk but which have good potential to result in long-termsustainable improvements in service delivery. Our philosophyis to demonstrate that external audit and independent reportingto Parliament can be constructive and an agent for beneficialchange in the way government does business for the benefit oftaxpayers both as citizens and users of public services.

I thought that colleagues who are readers of the journalmight be interested in some of the key features of the approachwhich we have adopted to support public sector reform.

Adopting a Constructive Approach toNew Forms of Service Delivery

New forms of service delivery often involve significantdepartures from the accepted way in which government deliverspublic services. A good example in the United Kingdom (UK)are Private Finance Initiative (PFI) deals whereby departmentscontract to purchase quality services on a long term basis so asto take advantage of private sector management skillsincentivised by having private finance at risk. The public sectoris able to draw on private sector money to build and run majorassets such as a road or hospital which without such privatesector financing might not be afforded. The nature of PFIdeals means that departments are committed to a private sectorsupplier to provide services twenty or more years into the future.Being essentially new, government has to learn and refine itsapproach in implementing such initiatives. It is, therefore,important that while we examine them objectively and drawattention to where something has not gone as planned, - orvalue for money is at risk or not achieved that we do this in a

constructive way highlighting lessons for the future. Forexample, through a series of reports on over 50 privatisationsand 15 PFI deals we have built up an independent body ofknowledge of good practice which we have promulgated in aseries of general reports on conducting privatisations and PFIdeals.

Extending the Focus of our Value forMoney Examinations

The development of new ways of delivering services hasrequired a change in the focus of some of our examinations toassess the standards of quality which customers receive frompublic services. For example, economic regulators wereestablished for each of the major utility industries–gas,electricity, water and telecommunications following theirprivatisation to protect customers’ interests and to guard againstrestrictive practices. Our statutory remit includes the economicregulators and we have published a series of reports on howthey exercise their responsibilities. These bodies spend verylittle money but their regulatory responsibilities extend toindustries receiving revenue from customers worth severalbillion pounds. In one case, we assessed the effectiveness ofcompetition introduced into the domestic gas market in termsof how customers were benefiting from cheaper prices for theirgas, whether they had a real choice of supplier, whether thequality of service which they received from the new gascompanies was better than before competition was introduced;and whether the benefits obtained were sustainable in the longerterm. We produced an easy to read leaflet which showed howmembers of the public could make savings in the cost of theirgas – some 11,000 citizens phoned to request the leaflet.

Focusing More on Outcomes notProcesses

Traditionally, auditors have focused on the reliability ofprocesses and procedures. This is understandable because ifthese fail the risk of financial loss, poor value for money orimpropriety increases. Ultimately value for money depends,however, on the outputs and outcomes – improvements in healthcare, better education, more reliable transport systems –delivered by public money. This is what Parliament andtaxpayers are most interested in. The Modernising Governmentprogramme in the UK is encouraging departments to give muchmore attention to longer term sustainable outcomes in theirdevelopment of policies and programmes. Our VFMexaminations also now focus much more on outputs andoutcomes rather than the processes involved in delivering them.This does not mean that we will not assess whether there isscope to improve procedures but our starting point is intendedoutputs rather than the delivery process. We would normallyonly examine procedures when planned outputs were notachieved or if they appeared to be not cost-effective – thequestion in such cases would be whether the processes hadcontributed to the under performance. An example of a studywith a strong output focus was our report on measures tominimise the incidents of hospital acquired infection. Most

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The Third WayThe state should not produce goods and

services—this is best left to competitor markets;

The wealth generated by the private sector shouldbe used to finance such public services as health,education and social welfare;

Public services should be delivered in a varietyof ways; public authorities at both central and locallevels and private sector companies’ work on contractare among them;

Public service should set clear targets and theirperformance should be measured and assessed by avariety of audit mechanisms;

The view of citizens on the quality of serviceshould be a key factor in determining the scope andscale of public services and in assessing their success;

In particular, attention should be directed toproviding services in such a way to bring into thewider community those whom the pressures ofcontemporary life often exclude.


News in Brief

Belgium

F-16 Aircraft ConferenceSenior audit officials of the five

countries in the international F-16aircraft co-production program –Belgium, Denmark, Norway, theNetherlands and the USA – met inBrussels, June 21, 2000.

Participants discussed the results ofthe report on the management of the F-16 Mid-Life Update. GAO briefed theparticipants on the results of a GAOreview of the pricing of the mid-lifeupdate program (GAO/NSIAD-96-232,Sep-tember 24, 1996). The participantsalso received an overview of the effortsmade to reengineer the foreign militarysales system regarding contractnegotiations and speeding up contractcloseouts.

In 1977, the four Europeangovernments entered into an agreementwith the United States to co-produce 998F-16 lightweight multipurpose fighteraircraft. The objective was to aid in thestandardization of NATO weaponsystems, provide a low-cost fighter andincrease the industrial activity of theparticipating nations. The supreme auditinstitutions of the participating nationsagreed to annually to share experiencesrelated to the F-16 program and jointlyaudit specific issues.

For more information on the F-16SAI Conference, contact: Mr. J. Beckers,Belgian Court of Audit, Regents-chapsstraat 2, B-1000 Brussels, Belgium(Tel: 32-02-551-8248; fax: 32-02-551-8622;e-mail: [email protected]).

Bermuda

1999 Audit ReportThe Auditor General’s Report on the

1999 accounts was presented to theHouse of Assembly on March 10, 2000.As of 1998, the audit report highlightssix crosscutting and ongoing matters ofconcern that especially warrant theHouse’s attention.

First, the report stated that manyfunds and organizations are years inarrears with their financial reporting. Asa result, the House of Assembly cannothold the government responsible for itsstewardship of these moneys. Second,the Auditor General also expressed hisconcern about 74 unresolvedrecommendations arising from this andprevious reports. Third, the report notedthat some persons engaged in accountingmanagement were inadequately trainedand that there was a shortage ofaccounting expertise in the government

Fourth, the report stated thatinadequate financial management hadled to errors and control deficiencies inexpenditures, revenue collection, capitalassets, bank accounts, accountsreceivable and payable, and contractmanagement. Without proper financialcontrols and accurate and timelyinformation, managers are unable tomanage their financial resourcesefficiently.

Fifth, the report points out thatgovernment collection agencies are tootolerant of employers who are slow orwho fail to remit pension contributionsand payroll taxes. Sixth, late financialreporting has prevented the House ofAssembly and the public from knowingthe extent of pension plan cash flowdeficits.

For more information on the report,contact: Office of the Auditor General,Government Administration Bldg., 30Hamilton, HM-12, Bermuda.

Costa Rica

1999 Annual ReportOn May 1, 2000, the Office of the

Auditor General of Costa Rica presentedits annual report for 1999 to theLegislative Assembly. The annual reportconsists of the following four parts.

The first section renders an accountof the office’s work during the year. Insummary, it reported that the office hadcarried out the annual operating plansatisfactorily taking into account theinstitutional modernization process thatthe office is currently involved in. Also,the office was reorganized from 10hierarchical general directorates intothree divisions and an institutionalstrategic area. Finally, the expenses ofOffice of the Auditor General rose to4,000 million colones, which amountedto 15 cents for every 100 colones in thepublic sector budget.

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Participants from Belgium, Denmark, the Netherland, Norway and the United States met inBrussels meeting to discuss the F-16 aircraft cooperative project.


The second section reports on thefinancial and physical status of publicinstitutions. It first deals with thegovernment of the republic, thenanalyzes selected decentralized publicinstitutions, and finally presents financialand economic information about generalgovernment, the nonprofit public sector,and the total public sector.

The third section presents theopinions and suggestions the audit officewishes to present to the deputies of theLegislative Assembly as a basis forcarrying out their oversightresponsibility. This section dealt with thefollowing: a definition of the laws andregulations applicable to certain entities,especially those related to administrativecontracting; the most common internalcontrol weaknesses identified throughthe office’s audit work; the ongoing lackof resources available to carry outinternal audits, which leads to poormanagement of public resources; thetransfer of public funds to non-governmental organizations; and thelimitation of high level audits inmunicipal corporations.

The final section is a statisticalsupplement presenting importantfinancial information on Costa Ricanpublic sector institutions that was notdetailed in the second section of thereport.

For more information, pleasecontact: Contraloría General de laRepública de Costa Rica, P.O. Box1179-1000, San José, Costa Rica,telephone: (506) 220-3120, fax: (506)220-4385, e-mail: [email protected] orvisit our web site at: http://www.cgr.go.cr.

Hong Kong

Report to Legislative CouncilThe Director of Audit’s recent

report (No. 34), which includes theresults of eight value-for-money auditscompleted from October 1999 toFebruary 2000, was submitted to thePresident of the Legislative Council onMarch 15, 2000. It was tabled in theCouncil on March 29, 2000, and thePublic Accounts Committee tabled itsreport on the audit report in the Councilon June 21, 2000.

The audit report included majorstudies on the government’s vehicleremoval services and permanent vehicleimpound lots; services provided by theOfficial Receiver’s Office; themanagement of road maintenance staff;the administration of the Judiciary, anda review of pension adjustments. Thestudies identified US$53 million ofsavings and benefits to the Governmentof the Hong Kong Special Ad-ministrative Region.

In the majority of cases, the auditrecommendations were accepted by thegovernment and endorsed by the PublicAccounts Committee. For example, thestudy on the administration of theJudiciary identified ways to improvecourt waiting times, the use of theJudiciary’s resources, and the provisionof court support services. This, in turn,has increased the Judiciary’s efficiencyand public accountability.

For more information about thereport, please visit the AuditCommission’s Internet home page atwww.info.gov.hk/aud or contact theAudit Commission, 26 th Floor,Immigration Tower, 7 Gloucester Road,Wanchai, Hong Kong, e-mail:[email protected], fax: (852)2824 2087.

India

Cooperation Between Indian andPolish Auditor Generals

On May 10, 2000, during a trip toWarsaw, Poland, the Comptroller andAuditor General of India signed amemorandum of understanding (MOU)with the Supreme Chamber of Controlof the Republic of Poland to facilitatethe exchange of professional knowledgeand experience between the twocountries. The goal of the MOU is tooffer the staff of these two SAIs theopportunity to participate in selectedinternational conferences, seminars,internships, and training programs. Thesigning of the MOU and the visit of theComptroller and Auditor General ofIndia to Poland have opened a new andmutually beneficial phase in the bilateralrelations of these two countries.

For more information, contact:Office of the Comptroller and AuditorGeneral, 10, Bahadur Shah Zafar Marg,New Delhi 110002, India.

Mexico

First International Forum onSupreme Auditing

The Mexican Auditor General’sOffice (the Contaduría Mayor deHacienda of México) hosted its FirstInternational Forum on SupremeAuditing on October 21 and 22, 1999,in Mexico City. The forum’s theme was“Supreme Auditing in the NewMillennium,” and it was organized tosupport the upcoming establishment ofthe Supreme Audit Institution (SAI) forthe Federation of Mexico on January 1,2000. Officials from INTOSAI,OLACEFS, the European Court ofAuditors, and the SAIs of Austria, theUnited States, Peru, Canada, and theUnited Kingdom were among theparticipants.

Forum presentations followed bylively panel discussions covered manytopics of interest. These included thefollowing: the contributions of SAIs tothe accountability of public managementand government; the relationshipbetween SAIs and the executive,legislative, and legal branches ofgovernment in democratic nations; theINTOSAI Lima Declaration on thenature, structure, statutes and attributesof SAIs; core values and definingcharacteristics of SAIs; the SAIs’accountability role in the developmentof democracy; the importance of theSAIs’ technical and budgetaryindependence; value-for-money audits;the legal framework for the performanceof government officials; the SAI´sauthority to determine responsibilitiesand sanctions, such as codes of ethics,social participation in the auditingprocess, handling citizen complaints,and reporting fraud, waste, andcorruption; and the nature, scope; andcredibility of public auditing reports.

Distinguished participants in theforum included: Dr. Franz Fiedler,President of the Austrian Court of Audit


and INTOSAI´s General Secretary;Mr. David M. Walker, ComptrollerGeneral of the United States; CPC.Víctor Enrique Caso Lay, GeneralComptroller of Peru and Chairman ofOLACEFS; Mr. Michael McLaughlinand Mr. Ronald Thompson, Office of theAuditor General of Canada; Mr. MichaelWhitehouse, National Audit Office ofthe United Kingdom; Mr. Jesús LázaroCuenca, European Court of Auditors;heads of Parliamentary groups; deputiesand senators of the Mexican Congress;state ministers; heads of local auditingbodies; officials of the ContaduríaMayor de Hacienda; and citizens andothers interested in accountability issues.

For more information, contact theContaduría Mayor de Hacienda ofMéxico, Av. Coyoacan 1501, Col delValle, Deleg. Benito Juárez, 03100,México, D.F., MEXICO, e-mail:[email protected].

Russia

New Chairman of the AccountsChamber

On April 19, 2000, the State Dumaof the Federal Assembly of the RussianFederation appointed Mr. SergeyVadimovich Stepashin as the Chairmanof the Accounts Chamber of the RussianFederation. Mr. Stepashin was electedto the State Duma in December 1999and, prior to this appointment, hadserved as the Chairman of its Anti-Corruption Commission. In early 1999,Mr. Stepashin served as a Member ofthe Presidium of the Government and as

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the First Deputy Chairman of theGovernment of the Russian Federation,Ministry of the Interior. He also servedas Prime Minister of the RussianFederation.

Mr. Sergey Vadimovich Stepashin

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the Director of the AdministrativeDepartment of the GovernmentAdministration, the Minister of Justice,and the Minister of the Interior.

In assuming his new position,Mr. Stepashin also becomes the FirstVice-Chairman of EUROSAI.

Switzerland

1999 Annual Report on New WebSite

The Swiss Federal Audit Office(SFAO) has published its 1999 annualreport on its newly launched web site:www.sfao.admin.ch. While the report isavailable only in German, French andItalian, the web site has an Englishsection with comprehensive informationabout the SFAO.

The report reflects some 250 auditsthe SFAO carried out in 1999. Thoseaudits resulted not only in savings ofmillions of Swiss francs, but also, evenmore importantly, in the initiation ofmid- and long-term corrective measures.

On September 1, 1999, amendmentsto the SFAO’s authorizing legislationwhich strengthened the independence ofthe SFAO were enacted. In 1999, theSFAO also underwent an extensivereorganization. A new organization chartwith a matrix management structure wasintroduced on January 1, 2000. Underthis new structure, the SFAS has six auditsectors, each of which is responsible forpart of the federal administration.Auditors from different audit pools(financial audit, performance audit, ITaudit, and construction audit) are placedat the disposal of the heads of these auditsectors to carry out the audits.

Hard copies of the 1999 annualreport are available from: Swiss FederalAudit Office, Monbijoustrasse 51a, 3003Bern, Switzerland, e-mail: [email protected].

Thailand

New Auditor General NamedDr. Panya Tantiyavarong has been

named the new Auditor General ofThailand.

Mr. Stepashin graduated from theHigher Political College of the Ministryof the Interior of the USSR in 1973, andin 1981 received a Doctor of Law degreefrom the Lenin Military-PoliticalAcademy. During this time, he servedwith the Ministry of the Interior inLeningrad and Moscow. From 1989 to1993, Mr. Stepashin was the Deputy ofthe Supreme Soviet of the Russian SovietFederative Socialist Republic, where heheaded the Supreme Soviet Committeeon Defense Security. Mr. Stepashin alsoheld a variety of high-level governmentpositions from 1993-1998 in theGovernment of the Russian Federation,including serving as the First Deputy ofthe Minister of Security, the Director ofFederal Counterintelligence Service, theDirector of the Federal Security Service,

Heads of SAIs from many regions joined colleagues from Mexico for a formal group photo aspart of the forum on supreme auditing.


Dr. Tantiyavarong has broadexperience in finance, banking,insurance, business, and industry. Priorto his apointment to the audit office, heserved as director and advisor to theboard of the King Power InternationalGroup Company; chairman of theexecutive board of the V.R.J.International Company, and the C.A. S.Intertrade Company; director andadvisor to board of the BangkokMetropolitan Bank; executive directorof the Bangkok Metropolitan LifeAssurance Company. He has also servedas the chairman of the State Railway ofThailand, director of the NationalHousing Authority, and chairman of theState Audit Commission.

Dr. Panya Tantiyavarong

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Mr. Williams has many years ofexperience in auditing. Prior to hisappointment, he had worked for theQueensland Audit Office since 1988. Hewas a principal auditor in the LocalGovernment Audit team and alsosupervised the audits of two of the largestgovernment-owned corporations inQueensland. During the 1980s he wasan internal audit manager withQueensland Railways and acting chiefinternal auditor of Queensland Railways.Mr. Williams has significant experiencein both financial and computer auditing.

Mr. Williams has also been activein adult education and taught auditingin the Advanced Diploma of Businessin Queensland Colleges. In the early1990s he wrote the Queensland syllabusfor auditing.

Mr. Williams has extensiveexperience with computers and operateda business in the 1970s designing andprogramming computerized accountingsystems for large businesses. He was aMajor with the Australian Army Reserveuntil early 1999 and was the Officer inCommand of the Army’s ComputerProject Section based in Brisbane.

Mr. Edward Williams

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Mr. Williams is a Fellow with theAustralian Society of CertifiedPracticing Accountants. He was one ofthe first in Queensland to obtain theinternationally recognized qualificationof Certified Information SystemsAuditor. He has two degrees from theUniversity of Queensland, a bachelor’sof commerce and a bachelor’s ofeconomics.

For further information, contact:Office of the Auditor General, P.O. Box44, Funafuti Atoll, Tuvalu.

United Kingdom

International Training CourseThe National Audit Office (NAO)

hosted its 8th Annual InternationalTraining Course from September 7-October 6. Built around two modules,financial and value-for-money audits, theintensive 4-week program concentrateson the NAO’s audit methodologies. Itis classroom-based, but both modulesinclude practical illustrations, examples,and cases drawn from accounts auditedand value-for-money studies the NAOhas carried out. The course aims to beinteractive, and participants areencouraged to ask questions andintroduce elements from their ownexperience.

A major goal of the program is topromote dialogue between the courseparticipants while they are at the NAOand sustained communication once theyreturn home. In addition to theclassroom component, the participantshave many opportunities to meet andexchange views with NAO staff.

Since the pilot in 1993, more than100 staff from SAIs and otherorganizations have participated in thecourse. INTOSAI’s regional workinggroups have been strong supporters ofthe program, and the NAO expects its2001 course to have a full complementof 16 participants.

For more information, contact:National Audit Office, InternationalRelations, 157-197 Buckingham PalaceRoad, Victoria, London SW1W 9SP,United Kingdom, fax: 44-020 77987466, or e-mail: [email protected].

United Nations

Annual Meeting of InternalAuditors

The 31st Meeting ofRepresentatives of Internal AuditServices (RIAS) of the United Nations(UN) Organizations and MultilateralFinancial Institutions (MFI) was heldfrom June 5-7, 2000. The Office ofInternal Audit of the World FoodProgramme (WFP) hosted this year’s

Dr. Tantiyavarong received hisdoctorate in finance and banking fromthe University of Wisconsin in theUnited States, his master’s in businessadministration from the University ofSouth Wales in Australia, and hisbachelor’s degree in accounting fromChulalongkorn University in Thailand.

For further information, contact:Office of the Auditor General, SoiArresampan Rama VI Road, Bangkok10400, Thailand.

Tuvalu

New Auditor GeneralMr. Edward Williams has been

named the Auditor-General of Tuvalu.He brings to his new position a wealthof skills and experience that will be ofgreat benefit to the government ofTuvalu.


meeting at its Rome headquarters.Approximately 45 representatives fromover 30 different organizations, mainlyheads of audit/oversight functions,participated in the meeting,

Mr. Namanga Ngongi, DeputyExecutive Director of the World FoodProgramme, delivered the openingaddress. He described the importanceof oversight functions in ensuring thatresources are being used economically,efficiently, and effectively. Audit, inparticular, he said, should not be usedafter the fact but should be proactive andpreventive.

The sessions discussed commonorganizational and technical issuesaffecting audit and oversight services,including the following:

• presentations and highlights onaudits of computer systemsthroughout the UN and MFI;

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• a panel discussion on veri-fication visits by third partieswith presentations by the WorldBank, UNICEF, UNHCR, WFP,and the European Commission;

• working group discussions onoperational issues such astraining and sourcing of auditservices;

• a group discussion on auditcommittee/governance roles;and,

• a presentation on audits of jointlyfinanced bodies within the UNCommon System.

Several guest speakers presentedtopics of great interest to the group.

• Sir John Bourn—Comptrollerand Auditor General of theUnited Kingdom and Chairmanof the Panel of External Audit-

ors the United Nations, theSpecialized Agencies and theInternational Atomic EnergyAgency—gave an overview ofresults-based management.

• Mr. Piers Campbell from thefirm Mannet focused on aconceptual framework forgovernance.

• Mr. Jonathan Doyle, AndersenConsulting, gave a presentationon the current trends in e-commerce, and how auditors cantake advantage of thisphenomenon.

• Mr. Dileep Nair, the newlyappointed Under SecretaryGeneral for the UN Office ofInternal Oversight Services(OIOS) based in New York, wasalso present at the meeting. Hestated that each organizationneeds catalysts to make changesand that auditors should act aschange agents. Mr. Nair alsostressed the need for furthercoordination and collaborationamong the United Nations andall its entities.

For more information, pleasecontact: Mr. Bernd Kaess, Director,Office of Internal Audit, or Mr. DanielNelson, Senior Internal Auditor, WorldFood Programme, Via Cesare GiulioViola 68-70, Parco de Medici, 00148Rome, Italy, e-mail: [email protected], and [email protected],telephone: (+39-06) 6513-2045, and fax:(+39-06) 659-1204. ■Representatives from internal audit offices in 30 United Nations agencies pose for group photo

as part of their annual meeting in Rome.


people think that going to hospital is a way of getting better.But many patients who go to hospital actually get worse. Inthe UK about 9 percent of inpatients have a hospital-acquiredinfection at any one time, which is equivalent to at least 100,000infections a year. Our report was produced by a joint team ofdoctors and other health experts together with our own healthdirectorate. And the report highlighted ways in which goodpractice could be adopted throughout the country to reducethe incidents of infection. Another report dealt with hipreplacements. Over 30,000 hip replacements are performedby the National Health Service in England each year. Ourreport focused on measures to manage the patient care pathwayfrom hospital admission to full recovery. The emphasis of thisreport was squarely on the potential for improving the outcometo the patient.

Delivering Joined Up AuditDelivering a service to citizens is often not just the

responsibility of one department or agency– many organisationspublic, private and voluntary may be involved. If services areto be of good quality and cost-effective they need to bedeveloped jointly so that all those who have a contribution tomake are working to a common goal. Audit should be joinedup as well so as to minimise duplication–by external andinternal audit, inspectors and regulators–and to ensure that ourvalue for money examinations do not adopt a too narrowperspective but focus on all those who can influence the successof a programme. In this way, we can provide a morecomprehensive assessment and ensure that the good practicewhich our reports highlight is relevant to and accepted by allthose organisations involved in delivering the service. We havealways worked with other auditors, inspectors and regulatorswhen it is cost-effective to do so and likely to contribute to abetter examination and we are seeking to expand this. Throughmore joined up audit our contribution to public sector reformis to encourage departments to look more widely in developingand implementing programmes rather than confiningthemselves to their more narrow departmental responsibilities.We examine these issues in our recent report: “Criminal Justice:Working together”. In the working of the criminal justicesystem in the UK, those who are arrested by the police passthrough the prosecuting authorities who determine if their casegoes to court. Then there are the courts themselves, the prisonauthorities and, finally, the probation service who deal withprisoners after they are released. Traditionally, each of theseauthorities looked at its work in “silo” terms seeking to optimisethe achievement of its own goals. But measures that work tothe advantage of one authority can create costs for another.For example, the efficient dispatch of business in the courtsmay involve having to bring the prisoners to the court severaltimes if their cases are not reached on the original day set forthe hearing. We, therefore, examined the “supply chain” ofcriminal justice and listed steps which the authorities couldtake to improve collaboration and to speed the flow of prisonersthrough the justice system in ways which were, of course,properly consistent with their legal rights.

Promoting Improvements inPerformance Reporting

Performance measurement and reporting are intrinsic tothe whole process of public management, including planning,monitoring, evaluation and public accountability. Performanceresults included in agency annual reports provide an importantrecord of an agency’s progress towards meeting objectives andtheir publication makes it possible to exert pressure forimprovement. Good reports can help Parliament and the publicassess how well public money is being spent and what is beingachieved with it. We have carried out a number of independentvalidations of performance information, and are seeking astatutory mandate to validate performance informationpublished by departments and their agencies. An independentreview of Central Government’s audit requirements wasannounced by the UK Government in February 2000. Thiswill consider, among other things, the role of audit in validatingperformance information.

In 1999, we published a report to Parliament on goodpractice in performance reporting in executive agencies andnon-departmental public bodies which focused on a numberof aspects including – the need to align performance measureswith agencies’ aims and objectives; reporting the outcome ofagencies’ activities; the importance of considering the interestsand needs of stakeholders in formulating performancemeasures; and the need to provide a comprehensive view ofagency performance. We are now following this up with asurvey of all departments’ approaches to performancemeasurement.

Promoting Information AgeGovernment

Information technology provides many opportunities todeliver better services to citizens. It also has considerablepotential to improve the efficiency of government organisationsin all aspects of their business. Achieving information agegovernment is central to the modernising programme. For thisto become a reality, however, citizens must have confidence indepartments’ IT systems in terms of their reliability and theconfidentiality of information which citizens may provide.

We support the development of information agegovernment through our examinations of the implementationof IT projects and of the reliability of IT systems. We havealso published a report–Government on the Web whichreviewed progress in making the services provided bygovernment departments to citizens and businesses availableelectronically. And in particular, meeting the Governments’target that by 2002, 25 percent of all transactions betweencitizens and government should be capable of being conductedelectronically rising to 50 percent by 2005 and 100 percent by2008. This was the first NAO study to be contracted out in itsentirety–to the London School of Economics and PoliticalScience.

The study included a census of all central government Websites, a survey of all departments and agencies, comparisonswith leading private sector organisations, and assessed UK

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progress against three overseas governments–Australia,Germany and the United States. The report found that moreprogress is needed to harness fully the potential benefits of theWeb and realise potential cost savings. For example, if 12percent of the 160 million phone calls a year which theDepartments of Social Security receive could be shifted topeople looking up material on the Department’s Web site theycould save £7.7 million annually.

Supporting Well Managed Risk TakingMost innovation in the private sector comes about through

some risk taking and doing things differently to improveservices to key clients and so maintain and extend a company’scompetitive advantage. Taking well managed risk is equallyimportant in the public sector. Risk management can lead to –better service delivery through realising the benefits ofinnovation; more efficient use of resources; and help minimisewaste, fraud and poor value for money. We have in a series ofpublic statements emphasised our support for well managedrisk taking and recently published a report which highlightsgood practice in risk management. We are often asked whatwe mean by well thought through risk taking. Our response isthat as a general rule risks are taken where:

• there is good potential to realise sustainableimprovements in service delivery and value for money;

• there are reliable contingency arrangements in placeso that if problems arise services to the public will bemaintained and the adverse impact on key programmeoutcomes such as late delivery or reduced quality willbe minimised; and

• departments’ senior management are confident that thekey risks facing their organisation are identified,assessed and actively managed.

Marketing to Promote the Impact of ourWork

The Committee of Public Accounts’ close interest in ourwork and the fact that the heads of departments and agenciescan be called before the Committee to answer questions onour reports is a real incentive for departments to take our workseriously and act upon our recommendations. Increasingly,however, if our recommendations are to result in long lasting

improvements in value-for-money, departments need to regardour work as having real value and practical relevance to theadministrative reforms they are responsible for. To achievethis, we have put much more effort into marketing our reportsto key stakeholders in departments and presenting them indifferent ways which are more likely to encourage junior andmiddle managers to read them and implement ourrecommendations. Periodically, we publish a summary of keyfindings from recent reports in a newsletter called “Focus”which is widely disseminated among departments. We alsoregularly hold seminars and organise conferences to promoteour work. For example, we held a conference to launch ourreport on Hospital Acquired Infection at which 500 medicalpersonnel and health administrators attended including theMinister of Health. Marketing our work in this way does notin any way dilute the status of independent audit andParliamentary scrutiny. On the contrary, it is intended to ensurethat our work has maximum impact in improving value formoney.

SummaryMany countries have embarked on major programmes to

reform their public services to make better use of public moneyand to improve the quality of services for citizens. As SAIswe have to respond to this reform programme. Our experiencein the UK is that we can best do this by:

• ensuring that sound accountability arrangements arein place as each new reform is introduced;

• combining objective and independent scrutiny ofreforms with reporting which is forward looking andconstructive. For example, by highlighting goodpractice which can be more widely applied to promotebetter public administration; and

• adopting a general policy to demonstrate that in meetingits primary aim of ensuring sound accountability toParliament for the use of public money the work of theNAO can also be a stimulus for beneficial change.

I hope that colleagues in other countries faced with similarchallenges will find at least some of our experiences of interest.The strength of the international community of SAIs, whichhas always impressed me, is our commitment to sharingknowledge and experiences to which this Journal makes a veryvaluable contribution. ■


The governmental audit environment in Iceland haschanged in many ways in recent years. In 1987, the IcelandicParliament adopted legislation moving the Icelandic NationalAudit Office (INAO), the Rikisendurskodun, from theexecutive to the legislative branch, making it one of theinstitutions reporting directly to the Parliament and initiatingmajor changes in the scope of its work and its audit authority.Passage of the National Audit Office Act in 1997 furtherenhanced the INAO’s audit authority and required the officeto carry out new audits related to internal controls, performanceindicators, the outsourcing of services, and the environment.For these reasons, the INAO contracted to have a peer reviewof its operations and organization. This review was the firstof its kind for the INAO.

External factors also influenced this decision. INTOSAIauditing standards stress the importance of quality in the workperformed by supreme audit institutions (SAIs). Moreover,INTOSAI standards state that “the quality of the work of theSAI can be enhanced by strengthening internal review andprobably by independent appraisal of its work.” The auditingprofession also emphasizes the importance of reviewing theefficiency and effectiveness of organizational policies andprocedures. In addition, the 4th EUROSAI Congress in 1999concluded that when SAIs submit to external audits, they offerthe public a guarantee that they are following sound operationalpractices while not compromising their independence.

After deciding to have a peer review, the INAO had tochoose between contracting with a private audit firm orapproaching another supreme audit institution to perform thereview. Because peer review covers a broad range ofprofessional areas in addition to financial audits, it is importantto consider such factors as the professional qualifications,experience, and resources of the audit firm or institution. Privateaudit firms were considered less appropriate for the reviewbecause they do not normally possess the specializedknowledge of governmental affairs needed to audit an SAI’sperformance. Therefore, during an official visit to the UnitedKingdom (UK) in October 1996, I asked the UK National AuditOffice (NAO) to review the INAO’s operations andorganization. The UK NAO was chosen because of itsinternational reputation and expertise in working with auditentities in countries around the world. This was the first peerreview UK NAO had undertaken.

Auditing the Auditor: A Peer Reviewof the Icelandic National Audit OfficeBy Sigurdur Thordarsson, Auditor General of Iceland

The Initial ReviewIn January 1997, a senior audit director from the UK NAO

came to Iceland for a week to carry out the initial review andgather data regarding financial audits. Figure 1 gives an overallpicture of the major phases in the review.

The initial review covered two major items: (1) the INAO’sstructure and audit methodologies and (2) financial audits.


Initial Review of INAO Structure and MethodologiesFor the review of INAO structure and methodologies, the

team’s objective was to evaluate the INAO’s effectiveness incomplying with all the major audit requirements of the NationalAudit Act. These requirements are summarized in table 1.

The UK NAO associate director worked with two seniorINAO auditors to look at the following areas during the initialreview.

Audit planningOverall audit planning and allocation of resources were

reviewed. This included, for example, an examination of thesystem used to record staff hours for different assignments anda comparison of actual and planned staff hours. It also covereda review of the INAO’s overall audit methodology, includingthe rules for establishing priorities and methods for evaluatingand analyzing risks.

Audit methodology and guidanceThe INAO’s audit methodology and guidance is provided

in a three-volume handbook based on INTOSAI auditingstandards. It covers financial audits, performance audits, andall other required audit tasks, including budget monitoring andthe control of private funds registered with the Minister ofJustice. The UK NAO associate director could not review thehandbook itself because it is only available in Icelandic;however, he gained an understanding of its structure and contentby interviewing INAO staff.

Table 1: Major INAO Audit RequirementsSpecified in the National AuditAct

• Single audit opinion of the central governmental financial statements.

• Evaluation of the adequacy of internalcontrols.

• Compliance with regulations.

• Evaluation of performance indicators.

• Performance audit and specific examinationsrequested by Members of Parliament.

• Monitoring of the budget.

• Audit of services being outsourced.

• Environmental audit.

• Control of funds registered with the Ministerof Justice (this requirement is covered byother legislation).

Evaluation of internal structureThe initial review covered the INAO’s internal

organizational structure, including divisional arrangements andstaff allocations within both the financial and performance auditunits. Because about 10 percent of financial audits arecontracted out to private sector accounting firms, proceduresfor dealing with those firms were also assessed.

Relationship with the ParliamentTo review the relationship and communication between

the Icelandic Parliament and the INAO, discussions were heldwith the staff of the Secretariat and the Chairman and Secretaryof the Parliamentary Budget Committee. This Committeeperforms detailed reviews of the INAO’s public reports.

Initial Review of Financial AuditsThe second area in the initial review was the INAO’s

financial auditing and methodology for compliance audits.INTOSAI auditing standards were the basis for this aspect ofthe review. These standards differ in many material respectsfrom those used by the private sector, in particular theaccounting and auditing standards and regulatory requirements.The INAO’s financial accounting arrangements were found tobe similar to those in the UK, particularly in their move towardsaccrual-based accounting.

The review also considered the INAO´s reporting onfinancial audits, which is a two-stage process. The first stageinvolves detailed audits of individual organizations and resultsin the issuance of an audit report sent to the auditees,government ministries, and state-owned enterprises. Thesecond stage involves an annual audit of the consolidatedcentral government financial statements, which forms the basisof the single audit opinion of the Auditor General. When thisstage is completed, an overall audit report is submitted toParliament. The overall report covers all significant findingsarising from the individual audits and the consolidated audit.This process, the reporting which accompanies it, anddocumentation of both the consolidated financial statementsfor the year and the monthly statements were reviewed anddiscussed with the INAO staff.

The INAO’s budget monitoring was also reviewed. Auditreports and procedures were discussed with the INAO staff,and the overall governmental budgeting cycle and budgetingprocess were considered.

The UK NAO initial visit ended with an interim reportoutlining what had been covered in the initial phase and makingrecommendations for improvement. The UK NAO reportedthat the INAO demonstrated a high degree of professionalism,was well organized, and had strong planning and reportingprocedures. They recommended the following:

• a more flexible approach to financial audit staffing toform an interchangeable staff pool for financial auditdepartments II and III,


• a full competitive tendering process when contractingout audit assignments to the private sector, and

• a visit by representatives of the Icelandic Parliamentto the UK’s Committee of Public Accounts to gain anappreciation of the UK Parliamentary accountabilityprocess.

The UK NAO concluded that a further review of financialauditing would not be necessary but recommended that expertsfrom the UK NAO carry out:

• a detailed review of the performance audit unit’smethodologies, and

• a general review of the functions of the informationtechnology (IT) unit, which is responsible for auditingmajor computerized financial systems designed tosupport the financial audit program.

Scope of the Review of the PerformanceAudit Unit

Two UK NAO experts in value-for-money audits carriedout the detailed review of the performance audit unit in June1997. The INAO´s audit methods were compared withrecognized best practices in other supreme audit institutions.The UK NAO team interviewed unit staff regarding three recentstudies on the Housing Loan Agency, the RegionalDevelopment Agency, and the Ministry for Foreign Affairs.The team also read English summaries of the respective auditreports and, to assess the impact of the INAO´s work,interviewed representatives from the Housing Loan Agencyto obtain agency views on the quality and usefulness of itsrecent performance audit. At the end of the review, the teamprepared an interim report highlighting its conclusions andrecommendations.

Scope of the IT Audit Unit ReviewIn August 1997, an IT audit expert from the UK NAO

visited Iceland to review the INAO’s newly established IT unit.The expert reviewed initial audit plans and provided adviceon IT audit methods. The review was based on discussionswith the IT audit unit staff and with the Auditor General. ITaudit methodology for the Icelandic value-added tax (VAT)system —the indirect tax applied all over Europe instead of asales tax—was discussed, and IT methodology in the UK wasdemonstrated by reviewing three recent NAO reports. Theexpert compiled a review report with recommendations andconclusions.

The Final ReportAs the final stage of the review process, the UK NAO

team wrote a comprehensive report that consolidated andevaluated material from the three interim reports and broughttogether conclusions from the earlier reports in an executivesummary. This report was published in English, with asummary in Icelandic, and submitted to the Parliament. The

final report was veryfavorably received andhad a positive impact bothinternally and externallyfor the INAO. Internally,the INAO implemented allthe recommendations thatwere made. The recom-mendations related to theinternal organization andprocedures for matterssuch as the planning ofperformance audits andquality assurance. Externally, the final report strengthened theINAO´s position in relation to the executive branch and offereda greater assurance of the professionalism and quality of thework the INAO performs. The report also had a positive impacton the INAO’s relationship with the media, the general public,and others who evaluate the INAO’s work.

What Lessons Can Be Learned Fromthe Review?

The INAO has identified a number of important benefitsgrowing out of the UK peer review.

Confirmation of positive featuresThe review confirmed important positive features of the

INAO’s operations and organization, some of which we werenot fully aware of before, and placed them into an internationalperspective. For example, the INAO received very favorable“grades” for its professionalism and overall organization andgood “grades” for performance audit analysis and coverage aswell as the planning and reporting of financial audits.

Highlights of shortcomingsThe peer review’s report made valuable recommendations,

which we have now implemented, to address identifiedweaknesses. For example:

• Three recommendations related to financial audits havealready been mentioned—increased flexibility instaffing, more competitive tendering, and additionalParliamentary follow-up.

• For performance audits, the review recommended thatthe INAO (1) be more proactive in selecting the studiesit will undertake (instead of relying on requests fromthe Parliament), (2) improve the planning and designof studies, (3) improve the presentation and format ofperformance audit reports, and (4) increase the follow-up of audit reports.

• For IT audits, the review recommended a 3-yearplanning cycle in relation to financial audits,introducing a simple IT audit questionnaire,encouraging continuing education related to IT audits,and reviewing the working papers of audits contractedout to private sector.


Follow-up legislative proceduresAs mentioned earlier, the UK experts recommended that

representatives of the Icelandic Parliament visit the UK´sCommittee of Public Accounts to gain an understanding of theUK parliamentary accountability process. In response to thisrecommendation, a group of representatives from the IcelandicParliament visited the Committee on Public Accounts early in1998. Follow-up procedures to be adopted by the Parliamenthave been identified, and the Presidential ParliamentaryCommittee is discussing whether to adopt some of the featuresof the UK Parliamentary accountability process. Severalimportant changes have been made as a result of this visit.The INAO now presents all reports on performance audits andspecial examinations at a meeting of the Budget Committee;some are also presented to the Committee on Trade and theEconomy. Just recently, these committees, like their

counterparts in the UK, have written an opinion on the INAO´sreports.

The quality assurance provided by a peer review isimportant to ensuring an SAI’s effectiveness and high standardof work. The decision to select the UK NAO to carry out thepeer review has greatly strengthened the INAO. Furthermore,the UK Comptroller and Auditor General, Sir John Bourn,stated that the benefits of a peer review can be mutual. Inview of the benefits the INAO derived from its peer review,we highly recommend that other supreme audit institutionsconsider such reviews for their organizations.

For more information, please contact: The IcelandicNational Audit Office (INAO), Skulagata 57, IS-105Reykjavik, Iceland, e-mail: [email protected], fax:(+354) 562-45-46. ■


Audit Prof ile: The Audit Directorateof BahrainBy Anwar Ali Al-Ansari, Head, Computer and Accounting Systems Audit Section

In September 1994, The Audit Directorate was establishedwithin Bahrain’s Ministry of Finance and National Economyunder the supervision of the Ministry’s Under Secretary. Thisnew directorate replaced an existing entity in the Ministry’sDirectorate of Accounting Systems Development. Itsestablishment underlined the increased importance attachedto the audit function within the government.

Legal MandateThe Audit Directorate is the main tool His Excellency the

Minster of Finance and National Economy uses to carry outthe responsibilities assigned to him by the Budget Law of1975. The Budget Law gives the Minister authority to issueorders governing the audit and examination of governmentaccounts. Such orders establish the format of records anddocuments required for financial transactions and the termsand conditions the government must comply with forexpenditures, collections, and other accounting procedures.

The Mission and Duties of the AuditDirectorate

According to the directions of top management in theministry, the mission of The Audit Directorate is to “ enhanceaccountability and promote honesty in discharging public dutiesto increase productivity and ensure the best utilization ofavailable resources.”

To achieve its mission, The Audit Directorate carries outthe following main duties:

• Developing government financial auditing procedures,which are to be regularly reviewed and amended asnecessary.

• Developing and implementing an annual audit plan.

• Enhancing the performance of government agenciesby providing appropriate technical assistance.

• Carrying out independent performance (value-for-money) audits of governmental programs and providingnecessary advice to improve their economy,effectiveness, and efficiency.

• Carrying out EDP audits of government investment inand usage of information technology resources.

• Supporting government agencies in developingeffective and efficient systems of internal control.

• Performing special duties aimed at reducingexpenditures of government agencies without impairingtheir performance.

• Participating in the annual financial audit of theaccounts of The Secretary General of GulfCooperation Council Countries (GCC), of whichBahrain is a member.

• Upon request, participating in developing trainingprograms to aid other government agencies in theproper selection of new accountants and internalauditors.

• Preparing a report containing a summary of the AuditDirectorate’s annual professional and administrativeperformance to be presented to His Highness the PrimeMinister.

OrganizationWhen The Audit Directorate was established in 1994, The

Director of Audit faced the challenge of proposing anorganization chart that would support the new directorate’sgoals and objectives, perform the work assigned to it, and alsokeep pace with the latest developments in audit practices. TheAudit Directorate now includes 14 professional staff and 4support staff. It is headed by the Under Secretary of theMinistry of Finance and National Economy, who is appointed—and can only be dismissed —by His Highness the Amir ofBahrain. The Audit Directorate is composed of the followingthree sections.

Financial Audit SectionThe Financial Audit Section is responsible for carrying

out financial-related audits, which are the most common auditsperformed by SAIs. These audits include the following:

• an overall opinion on the government’s financialstatements;

• a report on internal controls; and

• a report on compliance with applicable policies,procedures, rules, and regulations.

Performance Audit SectionPerformance or value-for-money audits are a relatively new

and increasingly important concept for SAIs. Through


performance indicators that measure economy, efficiency, andeffectiveness, governments can evaluate the quality andquantity of services offered to the public as well as the degreeto which government agencies achieve the objectives for whichthey have been established. The Performance Audit Sectionof the Audit Directorate is responsible for reviewing andcommenting on the program and project results of variousgovernment agencies.

Computer and Accounting SystemsAudit Section

Governmental operations are increasingly automated.Information technology resources are used extensively to storevast amounts of financial and non-financial data. Governmentaldecision-making processes rely heavily on the data that areentered and processed by these computer systems. It is,therefore, crucial to create and maintain the integrity of theunderlying computer facilities and systems on which they run.The Computer and Accounting Systems Audit Section has beenestablished to assess the reliability of timely and accurateinformation technology operations in the government. Thesection also provides technical assistance to other sectionswithin The Audit Directorate in the following areas:

• Reviewing and commenting on the sufficiency ofinternal controls in computerized accounting systems.Financial auditors use the results of these reviews toassess the extent and appropriateness of reliance onthe data provided by underlying accounting systems.

• Increasing the efficiency and effectiveness of financialaudits by using computer-assisted audit techniques forsuch areas as data analysis, testing, and sampling.Interactive Data Extraction and Analysis (IDEA)software is the primary tool used for this purpose.

Government Audit StandardsThe establishment of The Audit Directorate has highlighted

the need for government audit standards to give auditors clearlydefined guidelines and a framework of quality. The AuditDirectorate initiated a project to develop government auditstandards in 1994. It referred to a number of sources to set thestandards:

• international auditing standards,

• auditing standards used in the United States andCanada, and

• draft governmental auditing standards issued by theGCC.

The Government Audit Standards have been issued as finalin July 1998. It is to be noted here that The AccountingDirectorate of the Ministry is responsible for setting accountingand internal control standards for the government.

The standards cover the following topics.

General standards• Basic assumptions

• Independence

• Effectiveness

• Due professional care

• Continuous professional education

• Quality assurance

• Reliance on other auditors’ work types of governmentaudits

Fieldwork Standards• Planning, supervising, and documenting the audit

• Analytical review

• Compliance audits

• Structure of internal controls/audits

• Following international auditing standards

Reporting Standards• General guidelines for audit reports

• Issuance of the audit opinion

• Systems audit reports

• Performance audit reports

• Supplementary appendixes/indexes

The Audit Directorate has also taken the initiative todevelop an audit manual for its auditors as well as externalauditors participating in government audits. The audit manualwas issued in July 1997. It contains the following parts:

Part 1: Introduction

Part 2: Planning

Part 3: Internal audit/controls

Part 4: Performance of audit tests

Part 5: Issuance of reports

Part 6: Supplementary appendixes/indexes

Both the audit standards and the audit manual will preventmisunderstandings between all parties involved in governmentaudits and help to promote quality in the audit work conducted.

Use of Computer Assisted AuditTechniques in Audit Work

Within the Ministry of Finance and National Economy,The Audit Directorate is one of the primary users of personal


computers; all auditors have their own personal computers. Inaddition to the standard Microsoft office programs, the AuditDirectorate has installed the IDEA software. To take fulladvantage of this software, the Audit Directorate has developedprocedures covering the following areas:

• downloading data from the government’s centralcomputer facilities;

• reformatting the downloaded data into formats readableby IDEA; and

• performing the required analysis, data extraction andsampling, audits, etc., of general ledger transactions,budget details, government payroll, inventorytransactions…etc.

Recruitment and Training PolicyDue to the nature of the work it performs and the high

degree of professionalism required, The Audit Directorate hasdeveloped specialized training requirements, which aresupported by the Ministry’s top management. New staffappointed to the directorate must have, at a minimum, aBachelor of Science in Accounting and must receive specializedtraining soon after they are hired in order to obtain aninternationally recognized professional certificate. Auditorsalso receive both in-house and external training on other generaltopics to promote their professionalism and enhance theirfamiliarity with the operations of other government agencies.As a result of this policy, the Audit Directorate now has a solidcore of professionally qualified employees capable ofperforming the work assigned to them in the most efficientand effective manner. ■


Reports in Print

The International Federation of Accountants (IFAC) haspublished a Preface to International Public Sector AccountingStandards. The Preface sets out the objectives and operatingprocedures of the IFAC’s Public Sector Committee and explainsthe scope and authority of the International Public SectorAccounting Standards (IPSASs). The Preface, issued in May2000, provides an introduction to the Public Sector Committeeand its objectives, sets out the general purpose of financialstatements, describes the authority and scope of theInternational Public Sector Accounting Standards, and dueprocess procedures. For more information about IFAC and toobtain copies, in English, of the Preface, contact theInternational Federation of Accountants, 535 Fifth Avenue,26th Floor, New York, New York 10017 or visit the websiteat www.ifac.org.

* * * * *Journal readers may be interested to know that the Swedish

National Audit Office has published its Performance AuditReports 1999 which provides an overview of its workexamining, and promoting efficiency and effectiveness ingovernment activities. The Report summarizes each reportpublished by the Performance Audit Department, and includesaudits of the Ministries of Justice, Defense, Finance, Healthand Social Affairs, Agriculture, Education and Science,Environment, and Industry and Commerce. To order a copyof the Report (in English), contact The Swedish NationalAudit Office, RRV Publication Service, P. O. Box 45070,Se 104 30 Stockholm, Sweden (fax++46-8-690-41-01) [email protected].

* * * * *Nationally and internationally, development partnerships

are shifting in substance and direction. In many developingcountries, the roles of government, private sector and civilsociety are being redefined, bringing with it new patterns ofcooperation among them. Regionally and globally, more openeconomies and competitive markets mean a reshaping ofrelationships and rethinking of inter-country institutions. Withthis in mind, the Special Unit for Technical Cooperation AmongDeveloping Countries of the UNDP has published its secondedition of Cooperation South. In this edition, eleven writersexplore how development partnerships are evolving at threelevels—north-south, south-south, and nationally. CooperationSouth-Partnerships for Development is available in ENGLISH,SPANISH, and FRENCH at UNDP, One United NationsPlaza, New York, New York 1001, USA (tel++212-906-5737;fax++212-906-6352).

* * * * *The Institute of Internal Auditors (IIA) launched its six-

part Critical Infrastructure Assurance Conference series on

April 18, 2000 in Washington, DC. Including an array of high-level government officials, corporate directors, businessexecutives, and information security specialist, the conferencewas aimed at directing board-level, top-management attentiontoward the threat of information systems assault in the wake ofrecent virus attacks and denial-of-service problems. Topics ofgeneral discussion included (1) the auditor’s role in riskmanagement and assurance, (2) risk management and tools,and (3) successful case studies. For more information aboutthe Washington DC event, as well as future CriticalInfrastructure Assurance conferences, visit the IIA’s websiteat www.theiia.org. For a copy of Information SecurityManagement and Assurance: A Call to Action for CorporateGovernance (order No. W399) call ++(770-442-8633extension 275, or fax++770-442-9742, or email [email protected]).

* * * * *A recent quarterly newsletter from the Public Management

Service (PUMA) of the Organization for Cooperation andEconomic Development (OECD) examines the efforts ofcountries to improve its information flow through theinvolvement of citizens in policy development. Many countrieshave voiced concern over low or declining confidence in publicinstitutions, and as a result, thirty representatives from twenty-two countries met in Paris to participate in the OECD workinggroup on Government-Citizen Connections. Five country’scase studies were presented from Canada, Denmark, The USA,France, and Hungary. In addition, twenty-one membercountries and the European Commission responded to theOECD survey on “Strengthening Government-CitizenConnections”. Readers can take advantage of the newelectronic subscriptions to FOCUS via e-mail in AdobePortable Document Format (PDF), rather than by post by goingto the Focus website atwww.oecd.org/puma/focus. To obtaincopies of FOCUS by mail contact PUMA/OECD 2, rue Andre’-Pascal 75775 Paris Cedex 16 France (fax++33-1-45-24-87-96) or e-mail: [email protected]. Website www.oced.org/puma/focus.

* * * * *Journal readers might be interested in subscribing to a new

publication called Global Futures Bulletin, published by TheInstitute for Global Futures Research (IGFR). IGFR wasestablished as an independent research center to explore urgentglobal issues. The publication Global Futures Bulletin isproduced twice-monthly and disseminated via e-mail to allmembers and subscribers. For more information about GlobalFutures Bulletin, contact the Institute for Global FuturesResearch P. O. Box 263E, Earlville, Qld 4870, Australia,e-mail [email protected]. ■


Inside INTOSAI

The Secretariat for the17th INCOSAI has receivedabout 75 percent of thetheme and sub-themecountry papers in electronicformat. The Board of Auditand Inspection (BAI) willpost these papers along withsummary papers and otherrelevant materials on the

pledged full to do everything it can to prevent or minimize anypossible problem during the Congress.

Use of TechnologyThe Korean SAI has taken advantage of recent

developments in information technology to ensure theconvenience, economy, and efficiency for both participants andorganizers of the 47th INTOSAI Governing Board meeting,and it plans to do the same for the 17th Congress.

In February 2000, an Internet homepage was establishedin the five INTOSAI working languages for the GoverningBoard meeting. This homepage was the first of its kind in thehistory of INTOSAI. Using the homepage, INTOSAI memberswere able to register online for the meeting and get informationthey needed. The members were encouraged to communicatewith the Korean SAI via e-mail. The SAIs prepared conferencedocuments and sent them to the Korean SAI electronically,which was quicker and cheaper than in the past. In addition,the Korean SAI produced all the necessary documents, stickers,and stationery for the Governing Board meeting by using wordprocessing, graphics, and desktop publishing programs insteadof contracting this work out. During the meeting, participantsused five computers connected to a LAN (local area network)to create documents, surf the worldwide web, and send e-mail.All the users said they found the computers and e-mail servicesvery useful and convenient.

For more information about the 2001 Congress, pleasecontact the: XVII INCOSAI Secretariat, Board of Audit andInspection, #25-23 Samchung-dong, Chongro-ku, Seoul 110-706, Korea (tel: ++82-2-7219-290; fax: ++82-2-7219-297,276;and e-mail: [email protected].

Update: XVII INCOSAI 2001

Getting Ready for the 17th INTOSAI Congress 2001

Congress homepage (www.koreasai.go.kr) so that participantscan access the information they need beforehand to preparefor discussions during the Congress.

Furthermore, based on its experiences in hosting the 47th

INTOSAI Governing Board meeting in May 2000, the BAIwill update its homepage for the 17th INCOSAI by March 2001and provide a variety of information for Congress participants.The host SAI is making every effort to ensure that thecommunication flow between the Congress Secretariat and theINTOSAI member countries is economical, convenient, andefficient.

To ensure the success of the 17th INCOSAI, the BAI isreviewing in detail all facets of preparations, includingconferences, theme discussions, receiving and assisting theparticipants, conference rooms and accommodations,interpretation and translation services, cultural events, and theaccompanying persons program. Korea will rely on itsexperience in hosting the Governing Board meeting and has

The Third Performance AuditingSeminar Scheduled for 2001

INTOSAI’s Standing Committee on EDP Audit will hostthe Third Performance Auditing Seminar in Slovenia in May2001. The INTOSAI Governing Board confirmed this decision,which had been proposed by the Standing Committee on EDPAudit, at its 44th meeting in Montevideo in October 1998, Sincethat time, many SAIs have expressed interest in participatingin the seminar.

During the fall of 1999 and spring of 2000, different themesand topics that had been suggested by different SAIs. In July2000 were discussed, and these five themes were selected:

• government business-driven IT investment,

• why IT system projects fail,

• resources spent on IT projects,

• information technology procurement, and

• information communication technology (ICT), withmany parties involved in the information exchange.

Five SAIs (India, the United Kingdom, Poland, Canada,and the Netherlands) have been asked to produce the leadpapers for the seminar. These papers are to be distributed tocontributors of country papers during the fall of 2000. To date,seminar plans are proceeding on schedule.

For more information, contact: Bengt E.W. Andersson([email protected]), Swedish National Audit Office,Coordinator of Editorial Board, or Silva Jamnik, Member ofthe Audit Court of Slovenia.


First Euro-American Conference ofSupreme Audit Institutions

“Cooperation by SAIs in the Processes of Integration andGlobalization” was the theme of the First Euro-AmericanConference of Supreme Audit Institutions held February 17and 18 in Madrid, Spain. The conference was initiated by theSpanish Court of Audit under the honorable presidency of HisHighness, the King of Spain.

This conference brought together 27 foreign delegations(12 European countries, 14 Latin American Countries, and theEuropean Court of Auditors) in addition to the Spanish Courtof Audit. The delegations included senior representatives ofthe SAIs of Argentina, Austria, Bolivia, Brazil, Chile,Colombia, the Czech Republic, Denmark, Ecuador, ElSalvador, Estonia, France, Germany, Guatemala, Honduras,Mexico, Nicaragua, Norway, Paraguay, Peru, Poland, Portugal,the Russian Federation, Slovenia, the United Kingdom, andVenezuela.

The SAIs of most of these countries are members ofEUROSAI (European Organization of Supreme AuditInstitutions, which is made up of 41 institutions) or OLACEFS(Organization of Latin American and Caribbean Supreme Audit

Institutions, which is made up of 20 institutions). The otherparticipants were invited representatives with whom theseorganizations have signed cooperation agreements.

The conference theme was chosen for its relevance to theSAIs, and because of the importance of sharing experiencesand discussing the cooperative strategies these governmentaudit institutions need for working efficiently in the context ofglobalization and decentralization. For example, a number ofcountries in Europe are candidates to join the European Unionor the Monetary Union. Likewise, in Latin America, variousprocesses for regional integration have been set up, such asthe Common Market of the South (MERCOSUR), CAN (theAndean Community), and SICA (the Central AmericanIntegration System).

The processes of integration and globalization not onlyinvolve important political, economic, and social changes, butalso have affected the organization of the public sector as wellas its management and control. External audit institutionsintegrated into open systems are facing new and competitiveenvironments at all levels (national, supranational, andregional). For all these reasons, this conference provided avaluable opportunity to share experiences and discusspossibilities for cooperation.

INTOSAI Public Debt CommitteeMeeting Held in London

INTOSAI’s Public Debt Committee met in London,England on May 4 and 5, 2000. The country participantsincluded Mexico (Chair), Canada, Jordan, Lithuania, Portugal,Russia, Sweden, the United Kingdom, the United States ofAmerica, and Zambia.

The meeting opened with a welcome from Sir John Bourn,the Comptroller and Auditor General of the United Kingdom.Following a presentation by Mike Williams, Chief Executiveof the United Kingdom’s Debt Management Office, theMexican delegate presented an extract from a paper entitled“Legal Aspects of the Mexican Public Debt.”

On the first day of the meeting, the Committee membersdiscussed matters arising from the November 1999 meeting.The first topic was progress on the publication of Guidancefor Planning and Conducting an Audit of Internal Controls ofPublic Debt and Guidance on the Reporting of Public Debt.The United States presented the published English and Spanishdocument on the audit of internal controls and distributedcopies. The members discussed whether this could be issuedas an official document since it was not yet available inINTOSAI’s three other official languages—French, German,and Arabic. Canada noted that the French translation wasavailable. The members concluded that if possible, thedocument should be translated into Arabic and German, thatall five versions should be posted on the Web, and that theArabic and German versions should not be published as paperdocuments.

The United Kingdom explained that it had received proofsof Guidance on the Reporting of Public Debt from the UnitedStates the week before and had not yet had time to review theproofs and arrange for printing.

Zambia provided an update on its project to develop asystem for identifying, measuring, and reporting on public debt.Zambia outlined its progress, noting that it had reached thestage where it was possible to “audit the numbers.” Themembers agreed that other nations could also learn from theZambian model of having their finance ministries working withtheir respective SAIs on public debt matters. Zambia agreedto write a case study and provide an outline for the nextCommittee meeting.Members of the Public Debt Committee take a break from their

deliberations to pose for a group photo.

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The Committee discussed the INTOSAI Public DebtCommittee website (that the Mexican SAI is developing.Mexico explained elements of the site and stated that it plansto add details in Spanish. Member countries were encouragedto send Mexico information about websites of interest that couldbe linked to the website; they noted, however, that there mightbe language barriers in some cases. The Committee agreedthat Mexico should set up a link with the INTOSAI website.

The Committee also discussed expanding its role to coverthe audit of other financial institutions. Canada agreed to drafta statement for the next meeting outlining the benefits of sucha role expansion and will also investigate whether this effortmight overlap with the Privatizations Committee’s work.

Finally, the Committee discussed its liaison with otherINTOSAI Committees. Canada will propose that INTOSAIcommittee procedures require the minutes of each committee’smeetings to be posted on the website.

The remainder of the first day of the meeting consisted oftwo presentations on recent reports produced by members. Thefirst presentation, by the United States, was on accrualbudgeting in other nations, and the second, by Canada, was onthe management of Canada’s debt.

The United States noted that it would be beneficial for theCommittee to increase its profile by attending and/or providingmaterials to the World Debt Conference. The Committeeagreed that it should be proactive in publicizing the work ofINTOSAI. Therefore, the United States agreed to contact theWorld Bank and the OECD about the conference, and Canadaagreed to investigate possible opportunities to publicizeINTOSAI’s work through the International Monetary Fund.The Committee agreed to leave this issue as an open agendaitem for the next meeting.

The Committee also discussed the progress of its currentprojects. First, the United States presented a paper entitled“Fiscal Claims: Implications for Debt Management and theRole of the SAIs.” The United States noted that this was a

The Public Debt Committee’s latestpublication is available in English,French and Spanish; pictured here arethe English and Spanish versions.

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discussion paper and that it would appreciate receivingadditional examples to include in the document. Second,Canada presented a paper entitled “Public Debt Managementand Vulnerability: Role for SAIs?” Canada noted that it wouldbe looking to amend the document to, among other things, tryto specify the types of testing appropriate and to include theU.S. example mentioned at the meeting.

In support of INTOSAI’s communications strategy, the Journalmaintains a list of e-mail and internet addresses of SAIs, INTOSAIprograms, and related professional organizations. If you wouldlike to receive the list, which is updated regularly, please contactthe Journal at <[email protected]>.

The remainder of the meeting involved two presentationson recent work by member SAIs. The United States made apresentation on debt management in a time of surplus andSweden outlined its recent work and findings at the SwedishDebt Management Office. At the close of the meeting, the Chairthanked the members for their contributions to the Committee’sdeliberations and the United Kingdom for its hospitality.

For more information, contact: Contador Mayor deHacienda, Av. Coyocan 1501, Col. Del Valle, Deleg. BenitoJuarez 03100, Mexico D.F., Mexico, e-mail:[email protected]. ■

2000/01 Calendar of INTOSAI Events

OctoberSPASAI CongressSydney, AustraliaNovember 16-18

CAROSAI CongressBasseterre, St. KittsNovembetr 19-25

INTOSAI Standing Committee on EDP AuditNew Delhi, IndiaNovember 20-21

OLACEFS 10th General AssemblyBrasilia, BrazilNovember 20-24

December

Editor’s Note: This calendar is published in support of INTOSAI’s communications strategy and as a way of helping INTOSAImembers plan and coordinate schedules. Included in this regular Journal feature will be INTOSAI-wide events and region-wideevents such as congresses, general assemblies, and Board meetings. Because of limited space, the many training courses andother professional meetings offered by the regions cannot be included. For additional information, contact the SecretaryGeneral of each regional working group.

February March

JuneApril May

NovemberASOSAI 8th AssemblyChiang Mai, ThailandOctober 10-14

INTOSAI Public Debt Committee MeetingWashington, D.C., U.S.A.October 27

January

INTOSAI EDP Audit Committee MeetingLjubljana, SloveniaMay 14-16

July August September

2001

Documents

INTOSAI - public sector auditing