International Journal of Auditing – October 2003

New Initiatives in the State Audit Institution of Oman - Abdullah Bin Hamad Bin Saif Al Busaidy President State Audit Institution of Oman

I am honored to have been invited to contribute the editorial for this issue of the International Journal of Government Auditing, especially in the 50th anniversary year of INTOSAI’s establishment. INTOSAI has been a pioneer in promoting good public financial governance, which is a critical area in these days of shrinking budgets and increasing public expectations. Since this Journal enables SAIs to share their experiences, I will take this opportunity to highlight some of the key initiatives taken by my organization in the past few years. I hope that way our perspective will be useful to a large number of similarly placed SAIs around the world.


The State Audit Function in Oman dates back to before 1970 and has undergone several transformations over the years, the main ones being the issuance of the first audit regulations in 1985 and the issuance of a new Audit Law in 1991. The SAI has continued to pursue improvements with the aim of enhancing its function. In 2000, a new State Audit Law was promulgated through a Royal Decree.

The objectives of the SAI’s audit, as laid down in the State Audit Law are

  • to conduct “post facto” audit of state public funds in order to protect them and ensure their proper and effective use;
  • to expose cases of financial irregularities; and
  • to highlight deficiencies in financial laws, rules, and regulations and recommend means of correcting these deficiencies.

New Audit Law

The new State Audit Law of 2000 introduced two major changes. First, the SAI was made an autonomous, independent institution headed by a President with the rank of Minister. Second, the audit mandate of the SAI was expanded substantially to cover the following areas:

  • Commercial enterprises, where the government has a majority shareholding or where government has granted a concession for a public utility or to exploit a natural resource;
  • Pension funds for employees of government institutions, which are a major investor in the local private sector.

Interestingly, the new State Audit Law explicitly mandates the SAI to provide assurance with regard to the appropriateness of IT-based controls, systems and procedures and has specific references to the audit of, and access to, electronic data. The expanded audit mandate also covers the entire oil and gas sector (which forms the backbone of the Omani economy) in addition to other government-controlled commercial enterprises.

Human Resources Development

To cope with the new requirements of our expanded mandate in the short-term, we launched a major initiative to upgrade the skills of our staff, with an emphasis on obtaining professional audit certifications, supported by specialized training courses and on-the-job attachments with other SAIs. We are now reaping the benefits of this initiative, with our younger staff obtaining professional certifications and taking on increased responsibilities for challenging audits.

Modernizing the SAI

In addition to human resources development, we recognize the need to modernize our organization to meet the challenges of a globalized economy. The Government of Oman is also changing rapidly by adopting cutting-edge technology, such as e-governance. The oil sector, which constitutes a major portion of our audit coverage, has been known for adhering to international best practices and adopting state-of-the art technology. As an audit institution, we need to keep pace with these developments.

Towards this objective, we are moving our audit focus from a traditional compliance-based approach to a value-for-money or performance-based approach, with an emphasis on economy, efficiency, and effectiveness. Initially, we started with performance audits of government-controlled commercial enterprises, which we expanded to audits of government ministries and departments.

Because the oil and gas industry is vital to Oman’s economy, we have been concentrating our performance audit resources mainly on this sector. Our performance audits have covered areas such as the following:

  • the administered pricing mechanism for an oil refinery’s petroleum products, as well s its treasury management practices;
  • project management of a gas pipeline company’s high-value construction projects as well as financing models for corporatization of existing government pipeline assets; and
  • techno-commercial audits of a national oil company’s operational contracts, followed by audits of exploration and production activities.

In addition to the oil and gas sector, we have conducted an evaluation of the business and fleet expansion plans for an airline, as well as core IT systems of specialized financial institutions. We are also working on an audit methodology initiative, which is intended to update our audit manuals, guidelines, and procedures and reengineer our internal business processes to minimize bottlenecks.

Pending the development of customized auditing standards and procedures, we are following the INTOSAI Auditing Standards, supplemented by (1) International Auditing Standards of the International Federation of Accountants for financial auditing and (2) Standards for Professional Practice issued by the Institute of Internal Auditors for operational/performance auditing.

We are adopting a phased approach to preparing manuals, starting with the newly formed Companies and Public Authorities Department. The manual for this department is being drawn up in four parts:

  • Part I (which was finalized in mid-2002 and has been in use since then): procedures for administration and management of company audits.
  • Part II: general principles and guidelines for conducting commercial audits.
  • Part III: audit issues specific to each auditee company.
  • Part IV: standard/suggested formats for different documents.

Constructive Relationship with Auditees

We have also reoriented our relationship with our auditees to act more as an aid to management in order to optimize scarce government resources. In doing so, we have ensured that our independence continues to be maintained. In fact, our clients have appreciated the objective, third-party perspective that we provide as a strategic input to their decision-making processes. By doing so, we have established high credibility in the eyes of our auditees.

In addition to issuing formal written reports on critical audits, we have been making computer-based presentations followed by detailed discussions of our key audit findings to top management auditees. Our clients have participated enthusiastically in these efforts and have also given valuable suggestions for future audits. These presentation-cum-discussion sessions provide client feedback on our audit findings and facilitate immediate corrective action on them, which is the ultimate objective of our audit.

Use of Information Technology

We have successfully leveraged IT to add value to our administrative and audit management processes, using intranet-based technologies, which minimize training costs as well as implementation difficulties. In addition, we have developed considerable expertise in the analysis of computerized auditee data, especially for our performance and investigative audits. Our expertise in this area has been recognized by our auditees, who, from time to time, have availed themselves of our assistance to finetune their own IT plans.

International Cooperation

We have been a long-standing member of INTOSAI and are also members of both ARABOSAI and ASOSAI. In addition, we are members of INTOSAI’s standing committees/working groups on IT audit, internal control, and privatization audit. Our association with INTOSAI members has enriched our SAI’s capabilities. In turn, we have been sharing our experiences by conducting training courses on Computer Assisted Audit Techniques (CAATs) for staff from other Arab SAIs. We have also led a project on “Intranets for SAIs” and updated CAATs Training Courseware on behalf of the INTOSAI IT Audit Committee. We are presently hosting the Arabic language web site of the Committee, and we are leading a project on “Use of CAATs for Nonfinancial Audits.” With regard to the Internal Control Committee, we have rendered assistance in translation of the Committee’s products into Arabic. These activities have been highly appreciated and have motivated us to continue further work in this direction.

In addition to multilateral exchanges, we had the pleasure of hosting the Auditors General of the U.K. and India this year. These bilateral exchanges were highly fruitful, and we plan to continue our close cooperation with other SAIs to our mutual benefit.


Auditors the world over need to update their skills and reinvent themselves to meet the emerging challenges in their environments – both technological and methodological. This is facilitated by the practice of Continuing Professional Education, which is a requirement of the INTOSAI Auditing Standards. This Journal provides a useful forum for such exchanges of experiences and information. With these words, I commend this issue to our readers.