International Journal of Government Auditing–April 2006


Financial Audit Guidelines Subcommittee Membership Changes

Since the last issue of the INTOSAI Journal, some significant changes have taken place in the membership of the Financial Audit Guidelines Subcommittee (FAS). During 2005, several SAIs and the European Court of Auditors (ECA) approached the FAS chair to express their interest in joining the subcommittee. The chair felt it necessary to wait until the organizational structure and terms of reference for the new Professional Standards Committee were finalized before making any final decisions. In addition, the chair’s aim has been to limit the subcommittee to 10 members to allow for active discussions, efficient meetings, and high levels of activity between meetings. The Austrian SAI decided to step down in favor of ECA. This allowed one more member to join, and an offer was extended to another SAI to broaden the regional representation.

Practice Note Task Forces Are Up and Running

When the cooperation agreement between the International Auditing and Assurance Standards Board (IAASB) and INTOSAI was signed, the IAASB had just revised a number of International Standards on Auditing (ISA). The subcommittee decided to set up task forces to develop practice notes for these ISAs (and for those that were not expected to be revised in the near future). Each task force was given the task of developing practice notes for two to four ISAs. The first two task forces were set up in January 2006 and started their work in February 2006. Four additional task forces will be formed during 2006 to develop practice notes to 11 other ISAs. The question of when to translate the practice note and corresponding ISA will be discussed at the Professional Standards Steering Committee meeting in Washington, D.C., in May 2006.
The first task forces will develop practice notes for the following ISAs:

Practice Note task Force 1: International Standards on Quality Control and ISA 220

Experts: Mr. Mike Suffield, United Kingdom; Mr. Robert Tjin Tsoe Jin, the Netherlands
Back-office experts: Mr. Roy Glass, New Zealand; Mr. Mohammad Heissat, Jordan

Practice Note task Force 2: ISA 300, ISA 315, and ISA 330

Experts: Ms. Marcia Buchanan, United States; Ms. Vijaya Moorthy, India Back-office experts: Mr. H. Ömer Köse, Turkey; Mr. Russel Frith, Scotland The timetable for developing practice notes for these ISAs will be a maximum of 13 months, including the exposure period.

Exposure Drafts for Comment

The subcommittee recently issued its two first practice notes (for ISA 230 and ISA 240) for comment by INTOSAI members. Comments were due by March 31, 2006. The practice notes and related ISAs, as well as information on the format for comments, can be found on the FAS Web site. The subcommittee welcomes comments on these drafts from all INTOSAI members, other committees, and other parties and will continue to expose all newly developed guidance on its Web site. The subcommittee will explore additional ways to encourage SAIs to comment on the draft practice notes.

Expanding the Reference Panel

In November 2005, a call was sent out to all INTOSAI members asking for new nominations of experts to the FAS Reference Panel. The Project Secretariat is now following up on the nominations. The Project Secretariat is updating its registers based on the responses received from many SAIs, and the work of finding suitable experts for the ISA and practice note task forces is continuing. In March 2006, the Project Secretariat sent out a letter asking SAIs to confirm whether the experts who had already been nominated would continue to serve or whether the new experts who have been nominated would replace them. The Project Secretariat encourages SAIs to nominate technically strong candidates who have excellent English language skills.

ISA Task Forces at Work

In each issue of the Journal, the Project Secretariat offers a brief update on the ongoing work with ISA task forces. The International Federation of Accountants (IFAC) Web site ( provides updated information on the IAASB task forces, exposure drafts of ISAs, and other related information. Work is in progress on the following ISAs where INTOSAI experts are involved:

ISA 230—Documentation

Expert: Ms. Kelly Ånerud, Norway
Back-office experts: Ms. Gail Vallieres, United States; Mr. Inge Danielsson, Sweden

ISA 701 (ISA 705 and ISA 706)—Modification to the auditor’s report
Expert: (Vacant)
Back-office experts: Ms. Marcia Buchanan, United States; Ms. Birgit Bach-Nielsen,

ISA 260—Communications with those charged with governance

Expert: Ms. Tove Myklebust, Norway
Back-office experts: Mr. Filip Cassel, Sweden; Ms. Gail Vallieres, United States

ISA 800 (isa 701 aNd 800)—auditor’s report on Special Purpose audit engagments

Expert: Mr. Jonas Hällström, Sweden
Back-office experts: Mr. Demsash Betemariam, Ethiopia; Mr. Martin Dees, the
Netherlands; Mr. Robert Cox, New Zealand

ISA 550—Related Parties

Expert: Mr. John Thorpe, United Kingdom
Back-office experts: Ms. Zainun Taib, Malaysia; Mr. Uwe Schreiner, Germany

ISA 580—Management Representation
Expert: Ms. Vijaya Moorthy, India
Back-office experts: Mr. Martin Garrido, Chile; Mr. Ennio Colasanti, Italy

ISA 620—Using the work of an expert
Expert: Mr. Claudio Branco, Brazil
Back-office experts: Mr. András Morvay, Hungary; Ms. Monica Besetsa, Lesotho

ISA on material weaknesses in Internal Controls (Number to be assigned)
Expert: Mr. Mohammad F Bajhatt, Saudi Arabia Back-office Experts: (Vacant); Mr. Filip Cassel, Sweden The subcommittee is also charged with developing practice notes for each ISA to
provide additional guidance that auditors in the public sector may need to apply to the ISA. The practice notes will be based on the contributions of the audit experts from the reference panel.

Other Ongoing Activities

The Project Secretariat is reviewing all the terms of reference for experts and other process-related documents to ensure that they are aligned and structured in a similar way. The memorandum of understanding between INTOSAI and the IAASB will be reviewed before the summer to reflect the new INTOSAI structure. At the end of February, the FAS provided the IAASB with comments on the proposed and redrafted ISA 240, ISA 300, ISA 315, and ISA 330. These comments will be displayed on the FAS Web site.


The subcommittee meets twice a year and has two additional meetings by telephone conference call for the whole group. The telephone conference calls allow the Project Secretariat to inform subcommittee members of ongoing activities and plans, while the face-to-face meetings focus more on discussing different issues, agreeing on ways to move forward, and approving different documents. In December 2005, the subcommittee held a telephone conference call, and on March 23–14, 2006, it held a meeting in Namibia, hosted by the Office of the Auditor General of Namibia. In September 2006, the subcommittee will meet in New York. This meeting will be sponsored by the IAASB.


The Project Secretariat is constantly seeking new sources of funding. As announced in the January 2006 Journal, the IAASB has offered to cover the traveling cost for the INTOSAI experts participating in IAASB task force meetings. This offer was effective January 1, 2006, and will be reconsidered annually. The offer recognizes the important role of INTOSAI experts in developing the ISAs and provides an opportunity for more SAIs to nominate experts to participate in IAASB task force meetings. The Project Secretariat has sent specific information about this to all INTOSAI members.

FAS Web site

The new FAS Web site ( provides current information on the work on the guidelines, exposure drafts on practice notes for comment, meeting agendas, approved minutes from subcommittee meetings, and much more. For additional information, contact the FAS Project Secretariat in Stockholm, Sweden:
Fax: ++46-8-5171 4111

Subcommittee on Internal Control Standards

In February 2006, a task force of delegates from the Professional Standards Committee’s Subcommittee on Internal Control Standards met in Brussels. The meeting focused on deliberations concerning the amplification and further elaboration of the updated Guidelines for Internal Control Standards for the Public Sector that were approved at the 18th INCOSAI. The task force—which included members from the SAIs of Bangladesh, Belgium, France, Hungary, Lithuania, the Netherlands, Oman, Romania, Ukraine, the United Kingdom, and the United States—worked in two groups. The SAI of the United Kingdom (NAO) coordinated the activities of the group considering the further elaboration of the guidelines, and the SAI of the United States (GAO) coordinated the activities of the group deliberating their amplification. To facilitate the task force’s work, the SAIs of the United States and the United Kingdom had prepared and disseminated discussion papers on their respective tasks in January. During the first part of the meeting, the two groups held separate meetings to discuss their respective issues. In a subsequent session, the groups presented the results of their discussions to the plenary task force, which agreed on a number of proposals that were sent to the full subcommittee for comment. The proposals are summarized below.

Regarding elaboration of the guidelines, the task force proposed that a supplement to INTOSAI’s Guidelines for Internal Control Standards for the Public Sector be developed to explain the relationship between the guidelines and the Committee on Sponsoring Organizations of the Treadway Commission (COSO) Enterprise Risk Management (ERM) framework. A number of countries are moving toward risk management Implementation based on the ERM model, and the task force agreed that by providing a high-level overview of the key features of the ERM model with links to the relevant detailed guidance, the supplement would help both public management and SAIs understand and apply the ERM framework. The NAO will coordinate the activities related to this supplement.

Regarding amplification of the internal control guidelines, the task force believes it is absolutely essential that tools be developed to promote the implementation and audit of internal controls. With this aim in mind, the task force proposed that a working group survey all SAIs regarding the following: in the status and context of internal controls in their countries’ public sector, n the internal controls in place (SAIs will be asked to submit one or two examples of tools available in their countries and identify initiatives to implement the guidelines), and n the internal control tools needed.

The survey responses will be evaluated and used by the task force to develop an internal control “toolkit” for public managers and SAIs. GAO will develop the survey questions and evaluate the replies. The task force also proposed amending the brochure Internal Control: Providing a Foundation for Accountability in Government after the toolkit is developed.

In addition, the task force suggested surveying INTOSAI members on governance issues, including (1) the difficulty of reporting on the effectiveness of internal controls, (2) the involvement of independent members at board level, (3) audit committees, and (4) the role of internal audit. This information will be incorporated into a paper highlighting best practices. In the interim, the subcommittee is considering upgrading INTOSAI’s Web site by adding links to other professional audit organization Web sites that currently address best practices.

The two surveys discussed above (internal control tools and governance) will be incorporated into one survey that the SAI of Belgium will send to all INTOSAI members. Milestones for completing the tasks identified at the meeting were established. The subcommittee’s goals are to complete the supplement to the existing guidelines, the combined survey, and a first evaluation of the survey results before the next meeting of the subcommittee (in the Sultanate of Oman in January 2007) and finalize the internal control toolkit before the 19th INCOSAI in Mexico in 2007. If these time frames are met, both the supplement and toolkit may be approved at the 19th INCOSAI. The subcommittee plans to complete the best practices paper on governance frameworks after the next INCOSAI.

For additional information, contact the subcommittee chair, the Senior President of the Belgian Court of Audit:
Fax: ++32 (2) 551 86 22

Subcommittee on Performance Audit

The INTOSAI strategic plan approved at the 18th INCOSAI in Budapest called for the creation of the Professional Standards Committee (PSC), which encompassed the former Committees on Accounting and Reporting, Auditing Standards, and Internal Control Standards. In September 2005, the PSC had its first steering committee meeting in Oslo. On that occasion, the steering committee established a Subcommittee on Performance Audit and nominated the Brazilian Court of Audit as its chair.

At its meeting in November 2005, the INTOSAI Governing Board approved the terms of reference for the PSC. According to those terms, the PSC comprises the Subcommittees on Financial Audit Guidelines, Compliance Audit, SAI Independence, Internal Control Standards, Accounting and Reporting, and Performance Audit.

A primary task for the Subcommittee on Performance Audit will be disseminating the INTOSAI Implementation Guidelines for Performance Auditing and developing standards and guidelines concerning performance auditing.

Currently, the membership of the Subcommittee on Performance Audit is being determined. Minister Adylson Motta (the chair of the Subcommittee and President of the Brazilian Court of Audit) and Mr. Henrik Otbo (the chair of the Professional Standards Committee and Auditor General of Denmark) have asked the presidents of the INTOSAI regional groups to appoint one SAI to represent each region on the subcommittee. They have also invited 11 other SAIs and the European Court of Audit to become members.
For additional information, contact the subcommittee chair:
Fax: ++55 (61) 3316 - 7522

Task Force on the Audit of International Institutions

The INTOSAI Task Force on the Audit of International Institutions was established at the 18th INCOSAI in Budapest to coordinate and assist in identifying international institutions that (1) should have SAIs as their external auditors and (2) need to develop auditing arrangements in line with best audit arrangements, n cooperate with concerned SAIs in promoting to relevant international institutions and authorities the principles approved at the 18th INCOSAI with the aim of changing the audit arrangements, and to promote SAIs as external auditors and assist interested SAIs in preparing for such assignments.

In light of these duties, the task force is forwarding to the INTOSAI regions a letter for distribution to all SAIs during the spring of 2006. The letter will inform SAIs of the INTOSAI principles for best audit arrangements for international institutions and invite the SAIs to inform their relevant ministries/agencies about the principles. The goal of this activity is to increase government awareness of the requirements for audits of international institutions and help standardize and improve those audits.

Any SAI that does not receive the task force letter during the spring of 2006 should contact Mr. Bjoern Olsen, deputy chair of the Professional Standards Committee:
Telephone: ++ 45 33 92 83 80

Working Group on Environmental Auditing

Participants at the meeting sat in awe as they watched and listened to a special videotaped message from the two crew members aboard the International Space Station, William McArthur and Valery Tokarev:

“Looking at the Earth from space, we have the opportunity not only to see how beautiful our planet is but also to detect and warn about the wounds incurred to the earth as a result of mankind’s rash activities. Your work is very important and useful for people.”

It was a thrilling end to the opening morning of what turned out to be the most well- attended and successful meeting in the history of the INTOSAI Working Group on Environmental Auditing (WGEA)—its 10th meeting, held in Moscow, the Russian Federation, October 27–November 1, 2005. The meeting was organized by the Office of the Auditor General of Canada and hosted by the Accounts Chamber of the Russian Federation. The 124 participants, from 62 supreme audit institutions, benefited from the expert presentations, interactive workshops, small group discussions, and networking that took place.

Building Awareness of Environmental Issues

Enhancing participants’ knowledge of environmental issues was a major goal of the meeting. To achieve this end, the meeting featured speeches by renowned experts on biological diversity (Mr. Hamdallah Zedan, Executive Secretary, Secretariat of the Convention on Biological Diversity), climate change (Mr. Feng Gao, Coordinator, Implementation Programme of the United Nations Framework Convention on Climate Change), and the recently released United Nations Millennium Ecosystem Assessment (Dr. Marcus Lee, Program Office for Land, Division of Early Warning and Assessment, the United Nations Environment Programme). The assessment, with contributions from over 1,000 scientists around the world, describes the alarming deterioration of global and regional ecosystems as well as the consequences for economic development and human prosperity. As noted by Dr. Lee, the assessment concluded, “Human activity is putting such a strain on the natural functions of the Earth that the ability of the planet’s ecosystems to sustain future generations can no longer be taken for granted.”

Exchanging Experiences and Building Capacity

Another major goal of the meeting was exchanging experiences and building capacity within SAIs to undertake environmental audits. In the keynote address to the meeting, Ms. Carman Lapointe-Young, Auditor General of the World Bank, strongly endorsed the role and work of SAIs as an important part of global environmental governance. She stressed in particular the need to focus on significant risks, including environmental risks, during audit work. Mr. Christian Avérous, Head of the Environmental Performance and Information Division of the Organization for Economic Co-operation and Development, outlined the process and methods used in undertaking country environmental reviews and their similarities to auditing practices.

To facilitate information exchange, the meeting featured four interactive workshops and numerous presentations by SAIs organized around the following themes:

- biological diversity (Austria, the Czech Republic, Macedonia, Mongolia, Paraguay, and the Russian Federation);
- climate change (Australia, Canada, Estonia, the Netherlands, and the United States);
- facing the challenges (Denmark, Indonesia, Kenya, Libya, the Russian Federation,
Turkey, and Ukraine); and
- increasing the effect of environmental audits (India, Korea, Norway, Russian Federation, the United Kingdom, and the United States).

These presentations demonstrated that through financial, regularity, and performance audits, SAIs around the world are examining their governments’ management of environmental issues, funds, and programs. Moreover, it is clear that such audits are having a significant effect in their countries. For instance, environmental audits have led to the following results:

- new legislation and better enforcement of existing regulations;
- enhanced protection of national parks, wetlands, marine and freshwater ecosystems, forests, and ocean resources;
- improved compliance with international and regional environmental treaties;
- strengthened handling of municipal and hospital wastes; and
- improved targeting of public funds for environmental protection.

WGEA Projects Will Provide More Help for SAIs

A third major goal of the meeting was discussing and contributing to the many projects under way as part of the working group’s 2005–2007 work plan. To this end, the meeting featured several working sessions, small group discussions, and project updates. These projects include:
- guidance on auditing biological diversity,
- tips and examples for undertaking cooperative audits,
- guidance on the evolution of and trends in environmental auditing,
- explorations of SAI experiences related to the World Summit on Sustainable Development,
- tools to keep the former WGEA themes of water and waste management “alive,”
- the fifth survey on environmental auditing,
- enhancements to the WGEA Web site, and
- improved communications with SAIs and international organizations.

What Participants Said

At the conclusion of the workshops, participants shared what they had learned during the course of the meeting. Selected comments follow:

“We have a great responsibility and opportunity to push our governments to ensure they stop dangerous trends in [the] environment.”

“The conference opened our eyes about how we are doing things in comparison to other SAIs. It will help us to address the most important programs of government, to make the best use of resources, and to employ the most efficient communication.”

“An important first step in doing audits is training auditors on the environment using the WGEA/IDI training course. Then, environmental aspects can be introduced as part of larger audits that are not environment-only.”

“Parallel or coordinated audits are a great way to build capacity, share audit practices, and learn from one another. Plus, we can audit larger issues that way.”

“If we humans continue to live recklessly, we shall bequeath a lifeless and a more dangerous planet to our children. We should embark on impact/results-based audits if we want to have our environment preserved for future prosperity.”

“We are now convinced of the need to act and are confident in our ability to undertake environmental audits.”

For additional information, contact the WGEA Secretariat:
Fax: ++(613) 941-8286
Web site:

International Relations Network in OLACEFS

During the 18th INCOSAI in Budapest, the idea of establishing networks among the heads of international relations units in SAIs was set forth. It became part of the INTOSAI strategic plan as well as the OLACEFS strategic plan. This network has been established within OLACEFS. Its first meeting took place in El Salvador during the OLACEFS Assembly in June 2005. A second meeting took place in November 2005 in Lima, Peru, during the 4th EUROSAI-OLACEFS conference.

One of the first results of the network was the active participation of the heads of international relations units in the first annual report of OLACEFS (which was highlighted in Inside INTOSAI in the January 2006 Journal). This report will be a permanent and reciprocal working tool for the OLACEFS SAIs.

For additional information contact the OLACEFS General Secretariat:
Fax: ++507 210 43 99
Web site: