Theme discussion PSC Steering Committee
description
Transcript of Theme discussion PSC Steering Committee
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Theme discussionPSC Steering Committee
ISSAI International Standards of Supreme Audit
Institutions
Achieving consistency
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All existing documents in one framework – ISSAIs and INTOSAI GOVs
Official publication at www.issai.org
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All existing documents in one framework – ISSAIs and INTOSAI GOVs
Official publication at www.issai.org
By 2010:
Comprehensive set of guidelines
Reliable maintenance in a due process
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All existing documents in one framework – ISSAIs and INTOSAI GOVs
Official publication at www.issai.org
By 2010:
Comprehensive set of guidelines
Reliable maintenance in a due process
After 2010:
Consistency in the full set of ISSAIs and INTOSAI GOVs
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What the PSC is striving for…
Harmonizing public sector auditing internationally.
Recognizing, utilizing and building on standards issued by other standard setting bodies
and
developing supplementary guidance in areas where SAIs have special needs.
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What the PSC is striving for…
Harmonizing public sector auditing internationally.
Ensuring clear and user-friendly guidance on the special role of SAIs and public sector auditing.
Recognizing, utilizing and building on standards issued by other standard setting bodies
and
developing supplementary guidance in areas where SAIs have special needs.
Where the tasks are the same, the standards should be the same, where the tasks differ the standards should differ.
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INTOSAI Professional Standards Committee
Agenda
• How can we best use level 3 (ISSAI 100-999)?
• How can we solve the main inconsistencies in the concepts and definitions?
• How can we ensure that the ISSAIs are useful for all SAIs?
• How do we move forward after today’s discussion?
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INTOSAI Professional Standards Committee
Agenda
• How can we best use level 3 (ISSAI 100-999)?
• How can we solve the main inconsistencies in the concepts and definitions?
• How can we ensure that the ISSAIs are useful for all SAIs?
• How do we move forward after today’s discussion?
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INTOSAI Professional Standards Committee
76 % of SAIs use ISSAI 100-400
21 1955 5
INTOSAI(not IFAC)
INTOSAIand IFAC
Neither INTOSAInor IFAC
IFAC(not INTOSAI)
76 %
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INTOSAI Professional Standards Committee
- Describing the tasks and obligations of the SAIs to external parties (50 % of the SAIs)
- Reference for evaluation of the SAI, e.g. in peer reviews (30 % of the SAIs)
- Establishing the legal framework of the SAI (38 % of the SAIs)
- Developing audit strategy and methodology (69 % of the SAIs)
- Formulation of national standards and guidelines (56 % of the SAIs)
- Education and/or certification in public sector auditing (54% of the SAIs)
- International donors (24 % of the SAIs)
- Applied directly by auditors (58 % of the SAIs)
- Referred to in audit reports (49 % of the SAIs)
- Describing obligations to other auditors (subcontractors) (36 % of the SAIs)
Different purposes
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INTOSAI Professional Standards Committee
9
61
14
4No dif ference - no need for special guidance forSAIs
The auditing tasks are similar - special guidancefor SAIs needed on institutional issues only
Need for specif ic guidance on SAI institutionalissues and certain aspects of auditing
Almost no similarities betw een public and privatesector auditing - public sector guidance on allaspects needed
70 % support ISSAIs on auditing
70 %
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INTOSAI Professional Standards Committee
ISSAI 1 Founding Principles
ISSAI 10-99 Prerequisites for the Functioning of SAIs
ISSAI 100-999 Fundamental Auditing Principles
ISSAI 1000-5999 Auditing Guidelines
Implementation guidelines
Specific guidelines
INTOSAI GOV INTOSAI Guidance for Good Governance
9100-9299
The ISSAI Framework
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INTOSAI Professional Standards Committee
ISSAI 1 Founding Principles
ISSAI 10-99 Prerequisites for the Functioning of SAIs
ISSAI 100-999 Fundamental Auditing Principles
ISSAI 1000-5999 Auditing Guidelines
Implementation guidelines
Specific guidelines
INTOSAI GOV INTOSAI Guidance for Good Governance
9100-9299
The ISSAI Framework Concern institutional issues
Applies only to SAIs
Concern auditing
Brief statements – aimed at the SAI leadership and stakeholders
Provide a ”common language” and key recommendations
Elaborate further on the most important auditing tasks
Guidance to be used by auditors when performing the tasks
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INTOSAI Professional Standards Committee
ISSAI 1 Founding Principles
ISSAI 10-99 Prerequisites for the Functioning of SAIs
ISSAI 100-999 Fundamental Auditing Principles
ISSAI 1000-5999 Auditing Guidelines
Implementation guidelines
Specific guidelines
INTOSAI GOV INTOSAI Guidance for Good Governance
9100-9299
The ISSAI Framework Legality
Regularity
Performance audits
Regularity (financial) audit
Performance audit
Financial auditing (auditing of financial statements as defined by ISA 200)
Performance auditing
Compliance auditing
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INTOSAI Professional Standards Committee
ISSAI 1 Founding Principles
ISSAI 10-99 Prerequisites for the Functioning of SAIs
ISSAI 100-999 Fundamental Auditing Principles
ISSAI 1000-5999 Auditing Guidelines
Implementation guidelines
Specific guidelines
INTOSAI GOV INTOSAI Guidance for Good Governance
9100-9299
The ISSAI FrameworkA possible new outline:
ISSAI 100 Basic concepts of public auditing
ISSAI 200 Fundamental principles of financial auditing
ISSAI 300 Fundamental principles of performance auditing
ISSAI 400 Fundamental principles of compliance auditing
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INTOSAI Professional Standards Committee
Proposed directions
The fundamental auditing principles should:
• Provide a “common language” which can be used for explaining and comparing the tasks of SAIs across their different national settings.
• Bridge the gap between the Lima Declaration and the guidelines of FAS, PAS and CAS by providing a coherent definition of public auditing and its three branches - financial, performance and compliance auditing
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INTOSAI Professional Standards Committee
Agenda
• How can we best use level 3 (ISSAI 100-999)?
• How can we solve the main inconsistencies in the concepts and definitions?
• How can we ensure that the ISSAIs are useful for all SAIs?
• How do we move forward after todays discussion?
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INTOSAI Professional Standards Committee
ISSAI 100 Basic concepts of public auditing Provide a coherent definition of public auditing and its three branches - financial, performance and compliance auditing – and define what “regularity” and “legality” audits mean.
ISSAI 200 Fundamental principles of financial auditing
- State the principle that the ISAs should be used for financial auditing - Other general principles in the practice notes of ISSAI 1000-1999?
ISSAI 300 Fundamental principles of performance auditing
- State the most important principles on how to conduct performance auditing based on ISSAI 3000 (and the suggested new guidelines)
ISSAI 400 Fundamental principles of compliance auditing
- State the most important principles on how to conduct compliance auditing based on ISSAI 4000-4200
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INTOSAI Professional Standards Committee
The public auditing role of SAIs
The concept and establishment of audit is inherent in public financial administration as the management of public funds represents a trust.
Audit is not an end in itself but an indispensable part of a regulatory system whose aim is to reveal deviations from accepted standards and violations of the principles of legality, efficiency, effectiveness and economy of financial management early enough
-to make it possible to take corrective action in individual cases,
-to make those accountable accept responsibility,
-to obtain compensation,
-or to take steps to prevent -or at least render more difficult -such breaches.
ISSAI 1/Section 1. (Lima Declaration)
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INTOSAI Professional Standards Committee
The public auditing role of SAIs
Executive/Administrative
function
Budgetary/legislativefunction
SAI
Publicly funded organisations, activities or policy programs
Instructions and/or supervision
Audits
OversightInsight Foresight
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INTOSAI Professional Standards Committee
The role of SAIs - using other auditors
Executive/Administrative
function
Budgetary/legislativefunction
SAI
Publicly funded organisations, activities or policy programs
Instructions and/or supervision
Audits
OversightInsight Foresight
Auditors
Auditors
Auditors
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INTOSAI Professional Standards Committee
The scope of the ISSAIs
Executive/Administrative
function
Budgetary/legislativefunction
SAI
Publicly funded organisations, activities or policy programs
Instructions and/or supervision
Audits
Auditors
Auditors
Auditors
The auditor: A SAI (or other auditors performing work on behalf of the SAI)
The responsible party: Those entrusted with the management of public funds
The intended users: Authorities within the constitutional system exercising monitoring and corrective functions
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INTOSAI Professional Standards Committee
The scope of the ISSAIs
Executive/Administrative
function
Budgetary/legislativefunction
SAI
Publicly funded organisations, activities or policy programs
Instructions and/or supervision
Audits
Auditors
Auditors
Auditors
The auditor: A SAI (or other auditors performing work on behalf of the SAI)
The responsible party: Those entrusted with the management of public funds
The intended users: Authorities within the constitutional system exercising monitoring and corrective functions
The criteria: Requirements that follow from the responsibility for the management of public funds
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INTOSAI Professional Standards Committee
Scope of the ISSAIs: Public auditing
ISSAI 100-5999 applies to public auditing assignments. Public auditing is a function within a constitutional arrangement with a distribution of powers and responsibilities between bodies ascribed with budgetary, legislative, judicial or executive authority or with a general responsibility for upholding the constitution.
The purpose of public auditing is to enhance the oversight, insight and foresight with the use of public funds of those authorities exercising monitoring and corrective functions and encourage continuous improvement in the management of public funds. Public auditing is conducted in a three-party relationship between:- those responsible for the management of public funds- those authorities within the constitutional arrangement, which exercisemonitoring and corrective functions - the independent auditing function mandated to carry out public auditing in order to facilitate the monitoring
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INTOSAI Professional Standards Committee
Scope of the ISSAIs: Public auditing
A public auditing assignment is defined as:
The tasks which are to be performed by the auditor according to an
auditing mandate in order to reach a conclusion supported by sufficient
appropriate evidence on whether public authorities and other publicly
funded entities have observed the requirements that follow from their
responsibility for the management of public funds.
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INTOSAI Professional Standards Committee
The audit criteria
The purpose of the requirements may be to ensure:
Reliable recording and reporting of historical financial information on the use of public funds
That public funds are obtained and used economically, efficiently and effectively
That public funds are obtained and used in accordance with law and propriety
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INTOSAI Professional Standards Committee
The audit criteria
The purpose of the requirements may be to ensure:
Reliable recording and reporting of historical financial information on the use of public funds
That public funds are obtained and used economically, efficiently and effectively
That public funds are obtained and used in accordance with law and propriety
Financial auditing
Performance auditing
Compliance auditing
3 branches of public auditing:
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INTOSAI Professional Standards Committee
The audit criteria
The requirements may concern:
The processes and systems to be used in the management of public funds (measures to ensure sound financial management)
The outcome to be achieved as a result of the management of public funds
Reporting on the use and management of public funds
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INTOSAI Professional Standards Committee
The subject to which the criteria apply
The requirements may concern:
The processes and systems to be used in the management of public funds (measures to ensure sound financial management)
The outcome to be achieved as a result of the management of public funds
Reporting on the use and management of public funds
Proces
Outcome
Reporting
3 kinds of requirements:
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INTOSAI Professional Standards Committee
Proces-requirements
Outcome- requirements
Reporting- requirements
Financial Processes of registration and internal controls
(Recording in accounts which reflects the financial result)
Reporting of historical financial information
Compliance Procedures for the processing of cases and internal controls
The public funds are obtained and used in accordance with law and propriety
(Statements on compliance)
Performance Strategies, planning and target setting on performance
Achievement of the purposes intended in the most cost-effective way
Reporting of non-financial information on performance
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INTOSAI Professional Standards Committee
Proces-requirements
Outcome- requirements
Reporting- requirements
Financial Processes of registration and internal controls
(Recording in accounts which reflects the financial result)
Reporting of historical financial information
Compliance Procedures for the processing of cases and internal controls
The public funds are obtained and used in accordance with law and propriety
(Statements on compliance)
Performance Strategies, planning and target setting on performance
Achievement of the purposes intended in the most cost-effective way
Reporting of non-financial information on performance
No 4 (Australia)
´The Auditor-General’s functions include auditing financial statements´
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INTOSAI Professional Standards Committee
Proces-requirements
Outcome- requirements
Reporting- requirements
Financial Processes of registration and internal controls
(Recording in accounts which reflects the financial result)
Reporting of historical financial information
Compliance Procedures for the processing of cases and internal controls
The public funds are obtained and used in accordance with law and propriety
(Statements on compliance)
Performance Strategies, planning and target setting on performance
Achievement of the purposes intended in the most cost-effective way
Reporting of non-financial information on performance
No 20 (South Africa)
‘the reported information relating to the performance of the auditee against predetermined objectives’
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INTOSAI Professional Standards Committee
Proces-requirements
Outcome- requirements
Reporting- requirements
Financial Processes of registration and internal controls
(Recording in accounts which reflects the financial result)
Reporting of historical financial information
Compliance Procedures for the processing of cases and internal controls
The public funds are obtained and used in accordance with law and propriety
(Statements on compliance)
Performance Strategies, planning and target setting on performance
Achievement of the purposes intended in the most cost-effective way
Reporting of non-financial information on performance
No 47 (Belgium)
‘The Court of auditors performs ex-post reviews of the sound administration of public resources; it ensures they were used in compliance with the principles of economy, effectiveness and efficiency’
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INTOSAI Professional Standards Committee
Proces-requirements
Outcome- requirements
Reporting- requirements
Financial Processes of registration and internal controls
(Recording in accounts which reflects the financial result)
Reporting of historical financial information
Compliance Procedures for the processing of cases and internal controls
The public funds are obtained and used in accordance with law and propriety
(Statements on compliance)
Performance Strategies, planning and target setting on performance
Achievement of the purposes intended in the most cost-effective way
Reporting of non-financial information on performance
No 8 (Ireland)
(i) whether the receipts and expenditure recorded in the account are supported by substantiating documentation, (ii) whether the amounts expended have been applied by the Department concerned for the purposes for which the appropriation made by the Oireachtas was intended
(iii) whether the transactions recorded in the account conform with the authority under which
they purport to have been carried out.’
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INTOSAI Professional Standards Committee
Proces-requirements
Outcome- requirements
Reporting- requirements
Financial Processes of registration and internal controls
(Recording in accounts which reflects the financial result)
Reporting of historical financial information
Compliance Procedures for the processing of cases and internal controls
The public funds are obtained and used in accordance with law and propriety
(Statements on compliance)
Performance Strategies, planning and target setting on performance
Achievement of the purposes intended in the most cost-effective way
Reporting of non-financial information on performance
No 9 (Ireland)
Records of stocks or stores of any kind (including stocks of securities or stamps:
(i) whether any record is accurate, and
(ii) whether the systems, procedures and practices (including the system of stock-taking) employed by the Department concerned for controlling the stocks or stores to which the record relates are adequate and whether the manner in which the systems, procedures and practices are employed and applied is adequate.
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INTOSAI Professional Standards Committee
Proces-requirements
Outcome- requirements
Reporting- requirements
Financial Processes of registration and internal controls
(Recording in accounts which reflects the financial result)
Reporting of historical financial information
Compliance Procedures for the processing of cases and internal controls
The public funds are obtained and used in accordance with law and propriety
(Statements on compliance)
Performance Strategies, planning and target setting on performance
Achievement of the purposes intended in the most cost-effective way
Reporting of non-financial information on performance
’Regularity audits’
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INTOSAI Professional Standards Committee
Proces-requirements
Outcome- requirements
Reporting- requirements
Financial Processes of registration and internal controls
(Recording in accounts which reflects the financial result)
Reporting of historical financial information
Compliance Procedures for the processing of cases and internal controls
The public funds are obtained and used in accordance with law and propriety
(Statements on compliance)
Performance Strategies, planning and target setting on performance
Achievement of the purposes intended in the most cost-effective way
Reporting of non-financial information on performance
’Legality’
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INTOSAI Professional Standards Committee
Scope of the ISSAIs: Public auditing
A public auditing assignment is defined as:
The tasks which are to be performed by the auditor according to an
auditing mandate in order to reach a conclusion supported by sufficient
appropriate evidence on whether public authorities and other publicly
funded entities have observed the requirements that follow from their
responsibility for the management of public funds.
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INTOSAI Professional Standards Committee
Tentative definitions
Financial auditing is a branch of public auditing where the audit criteria are requirements serving the purpose of ensuring reliable recording and reporting of historical financial information on the use of public funds. Performance auditing is a branch of public auditing where the audit criteria are requirements serving the purpose of ensuring that public funds are obtained and used economically, efficiently and effectively. Compliance auditing is a branch of public auditing where the audit criteria are requirements serving the purpose of ensuring that public funds are obtained and used in accordance with law and propriety.
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INTOSAI Professional Standards Committee
Tentative definitions
A public auditing assignment may combine auditing objectives from all three branches of public auditing.
Financial auditing may concern process and reporting requirements.
Performance and compliance auditing may concern outcome requirements as well as process and reporting requirements.
The process, outcome and reporting requirements may follow from a direct responsibility or supervisory responsibility for the management of public funds.
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INTOSAI Professional Standards Committee
Tentative definitions
As stated in the Lima Declaration a traditional task of Supreme Audit Institutions is to audit the legality and regularity of financial management and of accounting. (Cf. ISSAI 1/Section 4).
Legality and regularity audits are specific ways to organize the auditing activities of a SAI. Auditing objectives of a financial, compliance or performance auditing nature may also be performed in other combinations.
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INTOSAI Professional Standards Committee
Tentative definitions
As stated in the Lima Declaration a traditional task of Supreme Audit Institutions is to audit the legality and regularity of financial management and of accounting. (Cf. ISSAI 1/Section 4).
Legality and regularity audits are specific ways to organize the auditing activities of a SAI. Auditing objectives of a financial, compliance or performance auditing nature may also be performed in other combinations.
Legality auditAuditing objectives are the outcome requirements that the use of funds is in compliance with the applicable law
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INTOSAI Professional Standards Committee
Tentative definitions
As stated in the Lima Declaration a traditional task of Supreme Audit Institutions is to audit the legality and regularity of financial management and of accounting. (Cf. ISSAI 1/Section 4).
Legality and regularity audits are specific ways to organize the auditing activities of a SAI. Auditing objectives of a financial, compliance or performance auditing nature may also be performed in other combinations.
Legality auditAuditing objectives are the outcome requirements that the use of funds is in compliance with the applicable law
Regularity audit Auditing objectives are:- Requirements to report historical financial information (reporting requirements)- Process requirements concerning the systems for accounting and registration and internal controls, and- Outcome requirements concerning the compliance with law and propriety of the transactions reflected in the reported historical financial information
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INTOSAI Professional Standards Committee
Proposed directions
The fundamental auditing principles should:
• Provide a brief statement of the most important general recommendations contained in the over 800 pages of implementation guidelines on financial, performance and compliance auditing.
• “Regularity” and “legality” audits should be treated as one particular way to organizing the audits (but not be especially recommended over other ways to organize financial and compliance auditing)
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INTOSAI Professional Standards Committee
Agenda
• How can we best use level 3 (ISSAI 100-999)?
• How can we solve the main inconsistencies in the concepts and definitions?
• How can we ensure that the ISSAIs are useful for all SAIs?
• How do we move forward after todays discussion?
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INTOSAI Professional Standards Committee
SAI’s different functions
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INTOSAI Professional Standards Committee
Different public auditing assignments
• Express a statement of assurance
• Provide assessments
• Conduct inquiries
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INTOSAI Professional Standards Committee
The public auditing role of SAIs
Executive/Administrative
function
Budgetary/legislativefunction
SAI
Publicly funded organisations, activities or policy programs
Instructions and/or supervision
Audits
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INTOSAI Professional Standards Committee
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INTOSAI Professional Standards Committee
No 15 (Norway) By auditing accounts, the Office of the Auditor General shall monitor whether the financial statements give a correct picture of the financial activity, including:
a)confirm that the financial statements are free of material errors and omissions, and
b) monitor whether the dispositions reflected in the financial statements are in accordance with the decisions and intentions of the Storting and the current regulations and whether they are acceptable in the light of the norms and standards for financial management in the central government.
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INTOSAI Professional Standards Committee
Entities Consolidated
No 2 (Sweden)The audit shall be conducted in accordance with good auditing standards and be intended to assess whether the accounts and the underlying accounting are reliable and the accounting records true and fair.
The auditor’s report on the annual accounts of the State shall be submitted to the Government and Parliament
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INTOSAI Professional Standards Committee
State accounts
No 40 (France)
The accounts of public administrations shall be lawful and faithful. They shall provide a true and fair view of the result of the management, assets and financial situation of the said public administrations..Assurance statement on the state accounts
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INTOSAI Professional Standards Committee
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INTOSAI Professional Standards Committee
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INTOSAI Professional Standards Committee
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INTOSAI Professional Standards Committee
ISSAI 1000-1999
ISSAI 3000
ISSAI 4000 - 4200
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INTOSAI Professional Standards Committee
Assurance engagements Related Services
Subject: Reasonable Assurance Limited
Assurance
Historical
financial
information
Auditing
(ISAs)
Review
(ISREs)
Related services:
Agreed- Upon procedures and compiling of
financial information
(any other) Other assurance engagements
(ISAEs)
(ISRSs)
The IAASB framework
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INTOSAI Professional Standards Committee
ISSAI 1000-1999
ISSAI 3000
ISSAI 4000 - 4200
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INTOSAI Professional Standards Committee
ISAs ISAs
Other assurance engagements
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INTOSAI Professional Standards Committee
ISA 200:
ISAs are relevant to engagements in the public sector.
The public sector auditor’s responsibilities, however, may [….] encompass a broader scope than an audit of financial statements in accordance with the ISAs.
These additional responsibilities are not dealt with in the ISAs.
They may be dealt with in the pronouncements of the International Organization of Supreme Audit Institutions.
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INTOSAI Professional Standards Committee
‘The Court conducted its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions, in so far as these are applicable in the European Community context’
The European Court of Auditors annual report for 2007:
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INTOSAI Professional Standards Committee
Different claims
• That the SAI performs its duties in accordance with the ISSAIs
• That a set of standards or manuals conforms to the ISSAIs
• That a task of auditing has been carried out in accordance with the ISSAIs
• That a financial auditing task has been carried out in accordance with the ISAs as further elaborated by the ISSAI financial auditing guidelines
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INTOSAI Professional Standards Committee
Proposed directions
The fundamental auditing principles should:
• Ensure the ISSAIs are applicable to the many different kinds of public auditing assignments, which SAIs in the different regions of the world have been given by their legal mandates
• Define how claims of compliance with the ISSAIs should be understood
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INTOSAI Professional Standards Committee
Agenda
• How can we best use level 3 (ISSAI 100-999)?
• How can we solve the main inconsistencies in the concepts and definitions?
• How can we ensure that the ISSAIs are useful for all SAIs?
• How do we move forward after today’s discussion?
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INTOSAI Professional Standards Committee
Caracteristics of an auditing assignment
1. The object
2. The subject (subject matter or subject matter information)
3. The audit criteria
4. The resolve (result to be achieved by the auditor)
5. The reporting
6. The intended users
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INTOSAI Professional Standards Committee
Ways to build on other standards
“Inspiration”: Consider a variety of documents from different sources but draw up an original new text.
“Patchwork”: Merge concepts and text of standards or guidance documents from more than one source in order to arrive at a new text.
“Cover version”: Use the concepts and texts from a single source and elaborate or modify in order to arrive at a new text.
“Commenting”: Refer explicitly to a specific set of documents and elaborate further on these by drafting additional and detailed guidance.
“Gate keeping”: State a few general principles and leave it to another standard setter to provide further standards which are to apply unless they are in conflict with the principles.
“Reference”: State as a principle that any standards supplied by a specific standard setter should apply.
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INTOSAI Professional Standards Committee
Criteria for choice of ”external” standards
• Applicability
• Relevance
• Usefulness
• Languages and user concerns
• Reciprocity
• Wide recognition
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INTOSAI Professional Standards Committee
Proposed directions
The initial assessment - phase 1:
• Gather information from INTOSAI’s regions on the mandates of
SAIs on the following characteristics of the auditing assignments: The object, subject, criteria and resolve of the audit and the reporting to intended users.
• Develop the necessary and appropriate distinctions between different kinds of assignments (e.g. assignments to provide a statement of assurance vs. other assignments).
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INTOSAI Professional Standards Committee
Proposed directionsThe initial assessment - phase 2:
• Consider standards from the relevant national, regional and international sources which may be of relevance to the assignments identified (“the dual approach”).
• The dual approach will not be fully applied to assignments designed to provide assurance statements. Instead, the consideration of other standard setters will from the outset be limited to the standards of IAASB/IFAC.
• The key criteria when considering standards from other standard setters will be: applicability, relevance, usefulness, languages and user concerns, reciprocity and wide recognition.