International Journal of Auditing – January 2006
Governing Board Meeting Advances Strategic Plan
The influence of INTOSAI’s strategic plan was evident at the INTOSAI Governing Board’s annual meeting in Vienna on November 10-11, 2005. The meeting agenda was structured to reflect the four goals in the strategic plan (see new INTOSAI organization chart on p. 6) and, under the able leadership of Dr. Arpad Kovacs, the board continued to make progress in implementing the plan’s strategies and recommendations.
Board members were joined by observers representing committees, working groups, and task forces for 2 days of active discussion and deliberation on a range of critical issues. The terms of reference of the newly created Professional Standards (goal 1) and Capacity Building (goal 2) Committees were approved, and reports by their chairs were discussed and approved. In a departure from past practices, the Professional Standards Committee chair presented reports of its constituent subcommittees (e.g., the Accounting and Reporting and Financial Audit Subcommittees). In this way, the agenda was streamlined and subcommittee chairs did not necessarily need to travel to Vienna for the meeting. The annual reports of the General Secretariat, the INTOSAI Development Initiative, and this Journal were also presented and approved.
The Finance and Administration Committee chairman reported on the committee’s ongoing work to provide oversight of INTOSAI finances and to help implement goal 4 of the strategic plan (to be a model international organization). He emphasized the importance of maintaining the board’s March 2005 agreement, as noted in INTOSAI’s new strategic plan, to apply sanctions to those INTOSAI members who have significant arrearages in their dues. The committee noted that efforts to collect past due amounts have been successful (e.g., over US$20,000 in one case) and should continue and that the effective date for such sanctions would be determined at a future meeting. In addition, the board approved the committee’s recommendation that the savings gained by reducing INTOSAI’s annual allocation to the Journal (from 35 percent to 25 percent of the overall INTOSAI budget) should be reallocated equally to capacity-building/IDI and knowledge-sharing/collaboration tool activities in support of the strategic plan. The committee believes that INTOSAI’s enterprise-wide relations with global donors should be coordinated centrally and in advance within INTOSAI’s Governing Board and General Secretariat and with input from the Finance and Administration Committee. Regarding relations with external partners, the committee chairman stressed the importance of INTOSAI’s presenting a clear and coherent plan for dealing with global donors; this issue will be discussed further at the committee’s February 21-22, 2006, meeting in Riyadh.
The General Secretariat is finalizing the full proceedings of the board meeting and will make them available shortly. In the meantime, some of the board’s major decisions are summarized below.
For more information on this new task force, contact: firstname.lastname@example.org.
For more information on the board meeting, contact the General Secretariat:
or the Chairman of the Board:
Financial Audit Guidelines Subcommittee
In September 2005, the former Working Group on Financial Audit Guidelines became the Financial Audit Guidelines Subcommittee (FAS). The working group reported to the former Auditing Standards Committee (ASC); the subcommittee reports to the new Professional Standards Committee (PSC). Sweden chairs the subcommittee, as it did the working group, under the direction of Deputy Auditor General Gert Jönsson.
The subcommittee’s work continues without interruption. It provided INTOSAI experts to staff several International Auditing and Assurance Standards Board (IAASB) task forces and two practice note task forces in 2005. 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 currently updating its registers in response to the referrals received from many SAIs, and the work of finding suitable experts for International Standards on Auditing (ISA) task forces and ISA practice note task forces is about to begin. By the end of 2006, more than 80 positions will have been filled within the project. This will be possible only because of the generous support of the SAIs that have nominated experts to the FAS reference panel. This collaboration makes the Project Secretariat’s task easier to handle and speeds progress on the work of developing financial audit guidelines.
The FAS held its first meeting in conjunction with the joint final ASC and initial PSC meetings in Oslo in September 2005. At that time, participants decided that a new group was needed to focus on questions related to courts of account since the guidelines need to address specific aspects of the court system. A Court of Accounts Expert Group—initially including the SAIs of Turkey, Tunisia, Brazil, and Greece—was set up and will be chaired by the Greek reference panel expert, Mr. Aristides Alahouzos. At the meeting, the FAS also discussed audit scope, implementation of the guidelines, and the effect of the IAASB’s Clarity Project (which is defining professional requirements) on the subcommittee’s work. Since the Clarity Project is expected to influence the work of the FAS in many ways, the subcommittee decided to strengthen its focus group of reference panel experts to handle additional responsibilities related to providing comments on the project.
In December 2005, the subcommittee held a telephone conference, and it will hold a meeting in Namibia March 13-14, 2006, hosted by the Office of the Auditor General of Namibia.
Information about FAS
During the fall of 2005, the Project Secretariat created a new Web site for the FAS (http://psc.rigsrevisionen.dk/fas). Since its launch at the end of November, 2005, the site has offered all SAIs, subcommittee members, and the general public current information on the subcommitee’s work on the guidelines, exposure drafts of practice notes for comment from all INTOSAI members, and approved agendas and minutes from subcommittee meetings. A new version of the FAS brochure was printed and distributed to all SAIs in November 2005.
Exposure Drafts for Comment
The subcommittee recently released the first practice notes for comment from INTOSAI members, other INTOSAI committees, and other parties. The practice notes and related ISAs, as well as information on the format for comments, can be found on the subcommittee Web site. Comments on the two first practice notes to ISA 230 and ISA 240 are due on March 31, 2006. The subcommittee will continue to post exposure drafts of all newly developed guidance on the Web site.
Ongoing Work on ISA Task Forces
In each issue of the Journal, the FAS Project Secretariat offers a brief update of the ongoing work with ISA task forces. The International Federation of Accountants (IFAC) Web site (www.ifac.org) provides updated information on the ISA task forces, exposure drafts of ISAs, and related matters.
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
Final version expected in September 2005 and final practice note expected in June 2006 (an exposure draft of the practice note has been posted for comments).
ISA 705 – MODIFICATIONS TO THE OPINION IN THE INDEPENDENT AUDITOR’S REPORT AND
ISA 706 – EMPHASIS OF MATTER PARAGRAPHS AND OTHER MATTERS
PARAGRAPHS IN THE INDEPENDENT AUDITOR’S REPORT
Expert: Ms. Mary Radford, United Kingdom
Back-office experts: Ms. Marcia Buchanan, United States; Ms. Birgit Bach-Nielsen, Denmark
Final version expected in March 2006 and practice note expected in December 2006.
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
Final version expected in March 2006 and practice note expected in December 2006.
ISA 800 – THE INDEPENDENT AUDITOR’S REPORT ON SPECIAL PURPOSE AUDIT
Expert: Mr. Jonas Hällström, Sweden
Back-office experts: Mr. Demsash Betemariam, Ethiopia; Mr. Martin Dees, the Netherlands; Mr. Robert Cox, New Zealand
Final version expected in March 2006 and practice note expected in December 2006.
ISA 550 – RELATED PARTIES
Expert: Mr. John Thorpe, United Kingdom
Back-office experts: Ms. Zainun Taib, Malaysia; Mr. Uwe Schreiner, Germany;
Ms. Goranka Kiralj, Slovenia
Final version expected in June 2006 and practice note expected in March 2007.
ISA 580 – MANAGEMENT REPRESENTATION
Expert: Ms. Vijaya Moorthy, India
Back-office experts: Mr. Martin Garrido, Chile; Mr. Ennio Colasanti, Italy
Final version expected in September 2006 and practice note expected in June 2007.
ISA 620 – USING THE WORK OF AN EXPERT
Expert: Mr. Cláudio Branco, Brazil
Back-office experts: Mr. András Morvay, Hungary; Ms. Monica Besetsa, Lesotho
Final version expected in December 2006 and practice note expected in September 2007.
The subcommittee is also charged with developing a practice note 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.
Practice notes will also be developed for ISAs already revised and approved by the IAASB where no experts participated in the IAASB task force. The Project Secretariat has started to form task forces with experts and back-office experts from the reference panel to develop practice notes for these ISAs.
The first practice note task forces will develop practice notes to the following ISAs:
These task forces were set up in December 2005 and will have two experts and two or three back-office experts. The timetable for developing practice notes to these ISAs will be 13 months, including the exposure period.
Four additional task forces will be formed during 2006 to develop practice notes to 11 other ISAs.
New Sources for Financing of the Project
The project entirely relies on the contributions of the experts and their respective SAIs, which have agreed to cover the costs. The Project Secretariat is continuously approaching external parties to seek funding. The project has so far been granted funding from the World Bank, and we are now very satisfied to have reached an understanding with the Asian Development Bank to fund parts of the project. These funds will, among other things, cover the costs for reference panel meetings, certain subcommittee meeting expenses, the operation of the Project Secretariat, translations of standards and guidelines to the official INTOSAI languages, and printing and distribution of approved guidelines.
The IAASB has decided that as of January 1, 2006, it will cover the expenses related to all participation of INTOSAI experts in its task forces. This financial commitment shows that the IAASB recognizes the important role of INTOSAI experts in developing the ISAs. While the IAASB’s action will not influence the need for external funding of the project, we hope it will allow more SAIs to nominate their best and most experienced experts.
For additional information about this project, contact the Project Secretariat in Stockholm, Sweden:
Fax: +46-8-5171 4111
First Annual Report of OLACEFS
The Organization of Latin American and Caribbean Supreme Audit Institutions (OLACEFS) issued its first annual report for the year 2004.
The President of OLACEFS, Mr. Gustavo Sciolla, presented the report to the OLACEFS Board in March 2005. The report was approved and ratified at the OLACEFS Assembly, which took place in El Salvador in June 2005. The Office of the Comptroller General of Chile prepared the document.
The report gives a brief history of OLACEFS and summarizes the main events the organization carried out during 2004. It also includes information about each member country. The heads of the OLACEFS SAIs wrote messages stressing the importance of unity and shared experiences, ethics and transparency in managing state enterprises, and the constant fight against corruption. Each member SAI shared information on its main reports, audit matters, and events for the year. These country reports demonstrate that financial and performance audits provided positive recommendations regarding government management, auditing of public works, and environmental audits to improve state administration. The reports also noted the importance of technological changes that occurred during the period and allowed for modernization and legal changes to enhance SAI performance. Some of the SAIs also reported on the importance of strategic planning in achieving their institutional aims.
The experiences recorded by each SAI, along with the issues and matters being audited, constitute a genuine exchange of knowledge and information. The OLACEFS annual report increases the value of this knowledge by comparing it in terms of time, manner, and place. In this way, the report helps to achieve the knowledge-sharing purposes of the INTOSAI strategic plan.
For additional information, contact OLACEFS General Secretariat:
Training Workshops in SPASAI
From November 28 to December 2, 2005, the Government of Samoa Audit Office hosted a workshop entitled “Dealing with Fraud and Corruption While Auditing” for staff of SPASAI member offices. The workshop, held in Apia, Samoa, and funded by the INTOSAI Development Initiative, was designed to familiarize participants with basic issues of fraud relevant to the auditor’s role.
In addition, the National Audit Office of the Peoples Republic of China hosted an audit training program for auditors general from SPASAI member offices. The workshop was held November 20-30, 2005, in Guangzhou and Beijing, China.
For additional information, contact SPASAI:
Fax: ++64 (4) 917 15 49
First Meeting of the Task Force on Accountability and Audit of Disaster-Related Aid
The Task Force on Accountability and Audit of Disaster-Related Aid held its first meeting in The Hague on December 20-21, 2005. The INTOSAI Governing Board approved the establishment of this task force at its meeting in November 2005, naming the president of the Netherlands Court of Audit, Saskia Stuiveling, as the chair and Indonesia and Korea as vice chairs. As outlined in the proposal approved by the Governing Board, the task force consists of two branches. The first branch, chaired by Indonesia, will focus on developing a framework to enhance transparency in the flow and use of tsunami-related aid. The second branch, chaired by Korea, will focus on formulating best practices and guidance on exercising accountability for and auditing disaster-related aid.
Mrs. Stuiveling hosted the December meeting in The Hague, and participants included Anwar Nasution, chairman of the board of the BPK (the Indonesian SAI), and delegates from the SAIs of the Netherlands, Indonesia, Korea, the United States, the United Kingdom, and Austria. During the meeting, the structure and future activities of the task force, as well as its relationship with the BPK Advisory Board, were discussed. In addition, presentations were made on the complexity of aid flows and on possibilities for a geographic approach to the task force’s work.
The delegates to the meeting agreed to expand the task force to ensure regional coverage and the participation of both donor countries and countries affected by the tsunami or other natural disasters. SAIs that positively responded to the INTOSAI Tsunami Initiative will be invited to join. The delegates also decided how to perform pilot studies of aid flows that would reflect both donor and recipient perspectives.
Other issues discussed at the December meeting included funding for the initiative and establishing contacts with other relevant organizations, such as the United Nations the Organision for Economic Co-operation and Development, nongovernmental organizations, and worldwide accountancy firms. The delegates agreed to set up a Web site to inform all INTOSAI members and other interested parties about task force activities. The Web site is to be operational by February 2006.
The first meeting of the complete task force is to be held in March 2006, probably in Geneva. The core members will meet again in April 2006 in Jakarta during a meeting of the BPK Advisory Board. In June 20006, the Austrian SAI will host a conference in its Parliament on disaster-related aid, where the results of the pilot studies of aid flows will be presented.
For additional information, contact Egbert Jongsma, tsunami project leader, Netherlands Court of Audit: