INTOSAI Compliance Audit Guidelines(ISSAI 4000-4200)

Presentation by (name and tittle)Venue and date

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Content

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4INTOSAI and ISSAI framework

The Professional Standards Committee (PSC) and the Compliance Audit Subcommittee (CAS)

Compliance AuditISSAI 4000-4200

Implementation

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INTOSAIINCOSAI

Governing Board Secretary GeneralRegional Working

Groups

Capacity Building Committee

Professional Standards Committee

IDIPerformance Audit Subcommittee

Knowledge Sharing Committee

Finance and Administration Committee

International Journal of Government Auditing

Financial Audit Subcommittee

Compliance Audit Subcommittee

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The South Africa DeclarationXX INCOSAI (2010) resolves to call upon its members and

other interested parties to: Use the ISSAI framework as a common frame of reference for

public sector auditing; Measure their own performance and auditing guidance against

the ISSAIs; Implement the ISSAIs in accordance with their mandate and

national legislation and regulations; Raise the awareness of the ISSAIs and INTOSAI GOVs globally,

regionally and at the national level; 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

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The Purpose and Authority of the ISSAIs

provides an Institutionalised Framework for SAIs to: promote development and transfer of knowledge improve public sector auditing worldwide enhance the professional capacities, standing and

influence of its members in their respective countries

Two sets of professional standards: ISSAIs - the International Standards of Supreme Audit

Institutions INTOSAI Gov - the Guidance for Good Governance

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ISSAI FrameworkLevel Subject ISSAI No1 Founding Principles Lima Declaration 12 Prerequisites for

functioning of SAIsIndependenceTransparency and AccountabilityEthicsQuality

10-40

3 Fundamental Auditing Principles

Basic PrinciplesGeneral -, Field – and Reporting Standards

100-400

4 Auditing Guidelines Financial Audit GuidelinesPerformance Audit GuidelinesCompliance Audit GuidelinesSpecific Guidelines

1000-29993000-39994000-49995000-5999

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ISSAIs add value to the work of SAIs

Adherence to the ISSAIs

Promotes transparency in the public sector and adds Credibility to our work as auditors

Improves the effectiveness and efficiency of the work of the SAI and provide the basis for high Quality audits

Increases the perceived level of Professionalism of the SAI

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Content

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4INTOSAI and ISSAI framework

The Professional Standards Committee (PSC) and the Compliance Audit Subcommittee (CAS)

Compliance Audit ISSAI 4000-4200

Implementation

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Professional Standards Committee(PSC)

ObjectivesPromote strong, independent and multidisciplinary SAIs by:

Encoururaging SAIs to lead by example

Contributing to the development and adoption of appropriate and effective professional standards

PartnersThe PSC is working together with other international, recognized standard-setting bodies:

The International Federation of Accountants (IFAC)

The Institute of Internal Auditors (IIA)

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Compliance Audit Subcommittee

Compliance Audit Subcommittee (CAS)

ObjectiveDevelop high quality, globally accepted guidelines for Compliance Audit in the public sector

StrategyThe 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.

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Content

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4INTOSAI and ISSAI framework

The Professional Standards Committee (PSC) and the Compliance Audit Subcommittee (CAS)

Compliance AuditISSAI 4000-4200

Implementation

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Three Audit types

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Financial audit

The reliability of financial reporting

Compliance audit

Compliance of a subject matter with criteria

Performance audit

Economy Efficiency Effectiveness

Compliance Audit – bridging the gap

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

The Compliance Audit Guidelines - two main perspectives

ISSAI 4000 - General introduction to compliance audit

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

ISSAI 4200 - deals with compliance audit related to the audit of financial statements

Written as consistent, stand-alone documents

Compliance audit:the extended perspective

Origins of cash flow in the public sector are the decisions and premises of the legislature

Compliance audit provides guidance for compliance audit related to the audit of financial statements in the public sector, including; concerns that public funds are used for the intended

purposes principles of sound management are followed in the

execution of the budgets

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Compliance Audit Guidelines:integrated approach with Financial

Audit Guidelines Compliance Audit guidelines

developed within the same structure

Cross-references made to other relevant ISSAIs

Issues on compliance audit dealt with in the context of the audit of financial statements

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Compliance Audit Guidelines:Compliance Audit performed separately from

the audit of financial statements

Caracteristics of Compliance Audit

TransparencyAccountabilityStewardshipGood governance

Compliance Audit

Compliance Audit – The extended perspective

The specific constitutional arrangemement of the SAI

Compliance Audit

THE LEGISTALURE

THE EXECUTIVE

THE ENTITY

AUTHORITIES

AUTHORITIES

AUTHORITIES

INTENDED USER

PRACTITIONER

ELEMENTS OF AN AUDIT

RESPONSIBLE PARTY

THE LEGISLATURE

THE EXECUTIVETHE SAI

The three parties of an audit

Extension in terms ofAUDIT PRINCIPLES

Propriety

Regularity

Extension in terms ofAUDIT APPROACH

Quantitative Qualitative

Extension in terms ofReporting formats

Long form reporting Short form reporting Findings, conclusions,

opinions

Attest engagements

Direct reporting

Variations of Compliance Audit

SCOPE & SUBJECT MATTER

REPORTING FORMATS

AUDITAPPROACH

AUDIT PRINCIPLES

Compliance Audit Process

Documentation, Com

munication, Quality Control

Initial conciderations

Planning the audit

Performing the audit and gather evidence

Evaluating evidence & forming Conclutions

Reporting

Court of Accounts issues

Summing up Compliance audit is the missing link between financial

audit and performance audit.

Compliance audit profits from structure and continuity of financial audit, and the political relevance and methodologically diversity of performance audit.

Compliance audit adds power and relevance to the annual audit report.

Compliance audit can be integrated in a variety of subject matters and audit approaches, tailored to different audit mandates and different jurisdictions.

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Content

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4INTOSAI and ISSAI framework

The Professional Standards Committee (PSC) and the Compliance Audit Subcommittee (CAS)

ISSAI 4000-4200

Implementation

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Adoption and implementation

It is the responsibility of all INTOSAI members to help establish the ISSAI framework as a common frame of reference for public sector auditing.

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

By developing national standards on the basis of ISSAI 400 Fundamental Principles of Compliance Auditing

By adopting the Compliance Audit Guidelines as authoritative standards

Implementation steps

Awareness ( highlighting the benefits of using the

ISSAIs)

Sustaining the results

Applying the standards

Learning the standards

Link the ISSAIs to the priority needs of SAI

Implementation:to improve audit quality

Implementation:quality in SAI core business

Suitable audit criteria

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Sufficient and appropriate audit evidence

Assurance & confidence of users

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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

TransparencyAccountabilityStewardshipGood governance

Compliance Audit