August 2011
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August 2011
14th PASAI Congress
ISSAI Workshop
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Sarah Lineham
Assistant Secretary-General – PASAI,
Sector Manager NZ OAG
August 2011
Background
ISSAI = International Standard of Supreme Audit Institutions
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ISSAIs are the professional standards governing public sector
auditing
Developed by the INTOSAI Professional Standards Committee
Endorsed at XX INCOSAI in South Africa in 2010
Based on the framework for SAIs and the purpose of public sector
auditing set out in the Lima Declaration of Guidelines on Auditing
Precepts 1977
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August 2011
The ISSAI Framework
Level 1 – Founding Principles
Level 2 – Prerequisites for the Functioning of SAIs
Level 3 – Fundamental Auditing Principles
Level 4 – Auditing Guidelines
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August 2011
Level 2 – Prerequisites for the Functioning of SAIs
ISSAI 10 – Mexico Declaration on SAI independence
ISSAI 11 – Guidelines and Good Practices related to SAI
Independence
ISSAI 20 – Principles of transparency and accountability
ISSAI 21 – Principles of transparency and accountability –
Principles and Good Practices
ISSAI 30 – Code of Ethics
ISSAI 40 – Quality Control for SAIs
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August 2011
ISSAI 10 – Mexico Declaration on Independence
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Based on the Auditing Principles of the Lima Declaration
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Contains eight core principles recognised to be essential
requirements of proper public sector auditing
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Requires SAIs to protect the value of their work by adding
proper safeguards and removing real and perceived barriers to
their independence
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ISSAI 11 provides good practice examples to support the 8
principles of ISSAI 10 shared as a means of increasing and
improving SAI independence
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August 2011
ISSAI 10 – Mexico Declaration on Independence
Summary of the eight core Principles
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An appropriate and effective constitutional/statutory/legal framework
Independence of SAI heads and members
Sufficiently broad mandate and discretion to discharge functions
Unrestricted access to information
The right and obligation to report on work
The freedom to decide content and timing of audit reports and to
publish and disseminate them
7 Existence of effective follow up mechanisms on SAI
recommendations
8 Financial and administrative autonomy and availability of appropriate
resources
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August 2011
ISSAI 10 – Mexico Declaration on Independence
ISSAI 10 Checklist
Legislation spells out the extent of SAI independence
required by ISSAI 10.
If legislative framework does not establish sufficient
independence to meet this standard, have you developed
practices to ensure as much distance as possible is
maintained between the SAI and the Executive.
YES/NO
YES/NO
Legislation specifies conditions of appointment, reappointment, removal and retirement.
YES/NO
Legislation includes immunity from prosecution in relation
to acts in the normal discharge of duties.
YES/NO
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August 2011
ISSAI 10 – Mexico Declaration on Independence
ISSAI 10 Checklist
Your SAI has an approved broad mandate and full
discretion to discharge functions.
Your SAI is not involved or appearing to be
involved in the management of the organisations
you audit.
Do you have systems in place to ensure personnel
do not develop too close a relationship with the
entities they audit such as rotation policies and
personnel independence declaration systems.
Does the SAI complete an annual activity report to
the Legislature that is also made public.
YES/NO
YES/NO
YES/NO
YES/NO
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August 2011
ISSAI 10 – Mexico Declaration on Independence
ISSAI 10 Checklist
Is the importance of independence emphasised to SAI
staff through training courses and other mechanisms that
embed its importance into the organisation’s culture.
YES/NO
Does the SAI have adequate powers to obtain timely,
unfettered, direct and free access to all necessary
documents and information.
YES/NO
There are no restrictions on the reporting of the results of
the SAI’s audit work.
YES/NO
Are the results of audits required by law to be reported at
least once a year.
YES/NO
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August 2011
ISSAI 10 – Mexico Declaration on Independence
ISSAI 10 Checklist
Is the SAI free to decide the content and timing of audit
reports.
YES/NO
Is the SAI free to publish and disseminate their reports
once they have been tabled.
YES/NO
Does the Legislature have a review and follow up system
for audit recommendations.
Does the SAI have a review and follow up system to
ensure audited entities properly address
recommendations.
Does the SAI have the necessary resources and ability to
control its own budget.
YES/NO
YES/NO
YES/NO
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August 2011
ISSAI 20 – Principles of Transparency and
Accountability
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The purpose of ISSAI 20 is to advance principles of transparency
and accountability by leading by example in their own
governance and practices.
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Contains nine principles recognised to be essential requirements
of proper public sector auditing.
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A major challenge facing SAIs is to promote better understanding
of their roles in society, to achieve this work practices, activities
and products should be transparent, communicated openly and
visible in the public arena.
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ISSAI 21 provides good practice examples to support the nine
principles of ISSAI 20 shared as a means of leading SAIs
towards the goal of transparency and accountability.
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August 2011
ISSAI 20 – Principles of Transparency and
Accountability
Summary of the nine Principles
1 SAIs perform their duties under a legal framework that provides for
accountability and transparency
2 The mandate, responsibilities, mission and strategy of the SAI are made
public
3 SAIs adopt audit standards, processes and methods that are objective and
transparent
4 SAIs apply a high standard of integrity and ethics for staff at all levels
5 Principles of accountability and transparency are also applied for outsourced
activity
6 SAIs manage their operations economically, efficiently, effectively and in
accordance with laws and regulations and reports publicly
7 SAIs report publicly on the results of their audits and on conclusions
regarding overall government activities
8 SAIs communicate timely and widely on their activities
9 SAIs make use of external and independent advice to enhance their quality
and credibility
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August 2011
ISSAI 20 – Principles of Transparency and
Accountability
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ISSAI 20 Checklist
Does the legislation and regulation guiding your SAI include
terms on which you can be held responsible and
accountable.
YES/NO
Does the SAI make publicly available the legislation under
which it operates, such as on your website.
YES/NO
Does the SAI make publicly available details of mandate,
responsibilities, mission and current strategy.
YES/NO
Has the SAI adopted audit standards, processes and
methods that align to INTOSAI standards.
Does the SAI routinely communicate the scope of audit
activities, the basis of their risk assessment and planning
processes, audit objectives, methodologies, and findings to
audit entities.
YES/NO
YES/NO
August 2011
ISSAI 20 – Principles of Transparency and
Accountability
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ISSAI 20 Checklist
Does the SAI provide audit findings and recommendations
to the entity for comment and discussion.
YES/NO
Does the SAI have effective follow up mechanisms to
assess action taken in response to recommendations
including entity explanation of corrective actions.
YES/NO
Does the SAI have an appropriate system of quality
assurance over audit activities, is this system subject to
periodic independent review.
YES/NO
Are the results of periodic independent practice reviews
published.
YES/NO
Does the SAI have processes in place to maintain alignment
of audit methodologies and internal auditing guidance with
YES/NO
INTOSAI standards.
August 2011
ISSAI 20 – Principles of Transparency and
Accountability
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ISSAI 20 Checklist
Does the SAI have ethical codes, policies and practices in
place.
YES/NO
Does the SAI have a system in place to monitor and
document potential conflicts of interest between staff and
audited entities.
YES/NO
If the SAI outsources any work does it have contracting rules
to ensure principles of accountability and transparency are
maintained.
YES/NO
Does the SAI have sound internal management practices in
place, including internal controls over its financial
management and operations.
YES/NO
Are your SAI financial statements audited in a timely manner, YES/NO
do you measure and report on SAI operational efficiency and
effectiveness.
August 2011
ISSAI 20 – Principles of Transparency and
Accountability
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ISSAI 20 Checklist
Does the SAI make public their conclusions and results from
audits.
YES/NO
Does the SAI maintain a strong relationship with relevant
parliamentary committees, such as through regular formal
and informal meetings with chairs.
YES/NO
Does the SAI have a process to communicate openly with
the media and other interested parties on their operations
and audit results.
YES/NO
Are SAI reports available on SAI website.
YES/NO
Does the SAI use external experts to provide independent
expert advice on technical matters, for reviews of its
operations/peer reviews.
YES/NO
August 2011
ISSAI 30 – Code of Ethics
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The Code of Ethics is a comprehensive statement of the values
and principles that should guide the daily work of auditors.
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The Lima Declaration of Guidelines on Auditing Precepts is the
foundation of the Code of Ethics.
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Each SAI must develop its own Code of Ethics which best fits its
environment.
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Contains five chapters covering the key concepts of fundamental
importance for ethical behaviour.
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August 2011
ISSAI 30 – Code of Ethics
Summary of the five Chapters of the Code of Ethics
1 Trust, confidence and Credibility
2 Integrity
3 Independence, Objectivity and Impartiality, including political
neutrality and conflicts of interest
4 Professional Secrecy
5 Competence, including Professional Development
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August 2011
ISSAI 30 – Code of Ethics
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ISSAI 30 Checklist
Has the SAI adopted a Code of Ethics.
YES/NO
Is the SAI confident that all staff are acquainted with the
adopted Code of Ethics and are held accountable for acting
accordingly.
YES/NO
Does the SAI have systems in place to act on breaches of
the Code of Ethics.
YES/NO
Has training on the behaviours and cultures required by the
Code of Ethics been provided to all staff within the past year.
YES/NO
Do SAI staff understand the importance of independence and YES/NO
impartiality, not only in fact, but also in appearance.
August 2011
ISSAI 30 – Code of Ethics
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ISSAI 30 Checklist
Are all staff of the SAI maintaining both actual and perceived
political neutrality.
YES/NO
Does the SAI have a system to monitor the receipt of gifts and
gratuities.
YES/NO
Does the SAI have a system to manage any relationships between
staff and audited entities.
YES/NO
Have staff been trained on the importance of protecting the
confidentiality of information obtained in the auditing process.
YES/NO
Do SAI staff have a good understanding of the legal,
constitutional, legal and institutional principles and standards
governing the operations of all audited entities.
YES/NO
Are all SAI staff meeting the continuous obligation to update and
YES/NO
improve the skills required to discharge their professional
responsibilities.
August 2011
ISSAI 40 – Quality Control for SAIs
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ISSAI 40 is designed to assist SAIs to establish and maintain an
appropriate system of quality control which covers all their work
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For a system of quality control to be effective it must be part of a
SAI’s strategy, culture and policy and procedures, so that quality
is built into all the work the SAI does
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Based on the key principles of the International Standard on
Quality Control ISQC 1 adapted for SAIs as necessary
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Guidelines on quality control at an individual engagement level
are contained in the Level 4 ISSAIs
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ISSAI 40 sets out 6 elements of a quality control system
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August 2011
ISSAI 40 – Quality Control for SAIs
Summary of the six elements of the Quality Control Framework
1 Leadership responsibilities for quality within the SAI
2 Relevant ethical requirements
3 Acceptance and continuance
4 Human resources
5 Performance of audits and other work
6 Monitoring
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August 2011
ISSAI 40 – Quality Control for SAIs
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ISSAI 40 Checklist
Does the SAI have a documented formal system of quality
control that has been communicated to all staff.
YES/NO
Does the SAI have policies and procedures designed to
promote an internal culture that recognises quality is
essential in performing all of its work.
YES/NO
Have you as Head of the SAI taken specific steps to set a
“tone at the top” that emphasises the importance of quality.
YES/NO
Does the SAI have sufficient resources to maintain the
system of quality control within the SAI.
YES/NO
Does the SAI have procedures in place which emphasise
the importance of meeting ethical requirements, are these
requirements being demonstrated by senior staff in
particular.
YES/NO
August 2011
ISSAI 40 – Quality Control for SAIs
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ISSAI 40 Checklist
Does the SAI have systems to consider the risks to quality
which arise from carrying out particular work.
YES/NO
Does the SAI have a system to prioritise work in a way that
takes into account the need to maintain quality.
YES/NO
Does the SAI have procedures for the acceptance and
continuance of discretionary work.
YES/NO
Does the SAI have a regular process that it uses to assess
whether it has sufficient competent and capable staff, with
commitment to ethical principles to carry out its work to
relevant standards.
YES/NO
Is the SAI active in promoting the importance of learning and
training to encourage staff professional development.
YES/NO
August 2011
ISSAI 40 – Quality Control for SAIs
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ISSAI 40 Checklist
Does the SAI have policies and procedures in place that
provide reasonable assurance that work is carried out in
accordance with relevant standards.
Are supervision and review responsibilities clearly
documented.
Are audits completed and documented in a timely manner.
Are documents retained for the periods specified in laws,
regulations, professional standards and guidelines.
Does the SAI have a system to monitor the effectiveness of
the system of quality control.
Has an independent review of the overall system of quality
control been completed recently.
Does the SAI have procedures for dealing with complaints or
allegations about the quality of work performed by the SAI.
YES/NO
YES/NO
YES/NO
YES/NO
YES/NO
YES/NO
YES/NO
August 2011
Time for reflection
What are your SAI’s areas of strength?
How can you share your strengths to assist the development of other
PASAI members?
What are the areas of weakness for your SAI?
What are your priorities for addressing areas of weakness?
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