External Audit: Role of GAO
and the Supreme Audit
Institution Community
External Audit in Public Financial Management
Financial Management Sector Board of the World Bank
Helen Hsing
US General Accounting Office
March 2, 2004
INTOSAI
International Organization of Supreme Audit
Institutions
185 member national audit offices
dedicated to improving public sector
– Governance
– Public accountability
– Transparency
INTOSAI
Committees
Accounting
(USA)
Internal Control
(Belgium)
Auditing
(Sweden)
Privatization
(UK)
IT
(India)
Program Evaluation
(France)
Environment
(Canada)
Public Debt
(Mexico)
The Evolving Role of the SAIs
• Governments and public expectations of governments are
changing:
– Increasing investor demand for transparency
– Global interconnectivity
– Transnational security threats
– Rapidly evolving available technology
– Readily available information
– Aging populations
– Rising health care costs and budget challenges
– Public demand for performance results
Essentials for SAI Success
•
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Clear Mandates
Independence
Capacity
Accountability and Integrity
Knowledge Sharing
Adherence to International Standards
Types of Audits
Mandated and Performed
• Financial
120
100
• Compliance or
legislative
80
60
40
• Performance
20
0
Mandated Performed
• Other
Financial
Compliance
Performance
Other
SAI: Obstacles to Independence
70
60
50
40
Very great
Somewhat
Little/no extent
30
20
10
0
Legal
Political
Lack of
Resources
Auditee
Effective capacity building
depends on
Communication
Cooperation
Partnerships
Continuity
Trust
GAO’s Mission
• To support the Congress in meeting its
constitutional responsibilities
• To help improve the performance and ensure the
accountability of the federal government for the
benefit of the American people
According to the Budget and Accounting Act of
1921:
• “. . .to investigate, at the seat of government or
elsewhere, all matters relating to the receipt,
disbursement, and application of government
funds.”
GAO’s Core Values
• Accountability
Help the Congress oversee federal programs,
policies, and operations to ensure accountability
to the American people.
• Integrity
Ensure that our work is professional, objective,
fact-based, nonpartisan, nonideological, fair, and
balanced.
• Reliability
Provide high-quality, timely, accurate, useful, clear
and candid information.
How Does GAO Carry Out Its
Mission?
• Oversight Activities
– Determining whether government entities are
• carrying out their assigned tasks,
• spending funds for intended purposes, and
• complying with laws and regulations
• Insight Activities
– Determining which programs and policies work and
which don’t
– Sharing best practices and benchmarking information
horizontally across government and vertically through
different levels of government
How Does GAO Carry Out Its
Mission?
• Foresight Activities
– Identifying key trends and emerging challenges before
they reach crisis proportions
– Examples:
•
•
•
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•
•
challenges of an aging population
changing security threats
demands of the information age
complexities of globalization
evolving governance structures
long-range fiscal challenges.
How Does GAO Carry Out Its
Mission?
• Audits of agency operations
• Evaluations of government policies and
programs
• Investigations of alleged illegal and improper
activities
• Issuance of legal decisions and opinions
• Establishing Professional Standards
– Government Auditing Standards--the “yellow book”
– Internal Control Standards
– Accounting standards--participation in Federal
Accounting Standards Advisory Board
GAO’s Independence
• Headed by Comptroller General
– Joint selection/appointment process of the
Congress and the President
– 15 year term of office
– Can only be removed by impeachment
• Reports to the Congress
• Budget determined by Congress
– FY 2002 budget is $424.3 million
GAO’s Independence (cont.)
• Access to all government documents
guaranteed by law
• Separate personnel system
– Staff are career civil servants, not
political appointees
What Did GAO Accomplish in FY
2003?
• GAO testified before Congress 189 times
• GAO’s work led to $35.4 billion in direct
financial benefits
• In response to GAO’s work, agencies took
over 1043 actions to improve government
operations or services
• GAO made 2175 recommendations
– 82 percent of recommendations made in 1999
were implemented by 2003
GAO Initiatives to Build Capacity within
SAI Community
• Auditor Fellowship Program
• Short-term in-country missions
GAO
Short-term In-country Missions
• Ukraine Chamber of Accounts:
- agriculture audit program
• Indonesia Supreme Audit Board:
- banking regulation audits
• Guyana Office of the Auditor General:
- new audit legislation
GAO International Auditor
Fellowship Program (IAFP)
Mission
To strengthen SAIs’ ability to fulfill their missions and to
enhance accountability and governance worldwide
Program Objectives
•
Enhance institutional capacity and individual
•
Foster continuous learning and knowledge
sharing.
•
Strengthen institutional relationships and
professional networks.
skills.
IAFP Components
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Classroom training
OJT and mentoring
Field placements
Follow up assessment and support
Professional/cultural networking
Selection of SAIs and Fellows
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Developing countries/transitional governments
Auditor General support and commitment
Broad regional representation
Mid-senior level officials
Mid-career
• Creating a critical mass
Invited Fellowship Program Candidates 2004
AFROSAI
CAROSAI
ASOSAI
Botswana
Burundi
Ethiopia
Kenya
Malawi
Sierra Leone
Tanzania
Zambia
Barbados
Belize
Guyana
St. Vincent & the Grenadines
OLACEFS
Bangladesh
Bhutan
Cambodia (2)
India
Indonesia (2)
Nepal
Sri Lanka
Brazil
Mexico
Venezuela
ARABOSAI
EUROSAI
Albania
Cyprus
Hungary
Romania (2)
SPASAI
None
Oman
Yemen
Fellows Program At-a-Glance
• Program initiated in 1979
• 15-20 Fellows per year
– 337 graduates from 94 countries
• 15+ graduates are now Ministers, Auditors
General, Deputy Auditors General
IAFP:
Enhancing Institutional
Capacity
•Comprehensive learning program that includes
• classroom instruction
• practical applications
• intergovernmental field experience
• strategy paper and change implementation
• interface with auditees, legislators, media
IAFP Course Curricula
Performance Auditing
•Approach and methodology selection
•Evidence documentation
•Interviewing skills
•Audit documentation
•Critical thinking
•Internal controls
•Statistical sampling
•Fraud awareness
IAPF Course Curricula
Information Technology
• IT auditing methodology
• Data communications
Training Transfer and Knowledge Sharing
• Assessing, delivering and evaluating training
• Knowledge management
Strategies for managing change
• Introducing organizational change
Organizational structure and management
IAPF Areas of Focus
Strategy papers for on-the-job application:
• Zambia: Develop and introduce methods
for documenting and referencing audit work
• Trinidad & Tobago: Introducing a design
matrix for planning and conducting audits
Fellowship Program Strategy Paper
Topics
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Internal Control & Auditing Standards
Audit Evidence & Analytical Procedures
Performance Auditing in Healthcare
Application of Statistical Techniques in Performance Audits
Preparing Training Manuals of Information Technology Auditing
Methodology
Parliament – SAI relations
Role and work of economists
Strengthen training capacity
Standardization of audit management process
Environmental auditing
Change
How will you
• introduce change?
• deal with opposition?
• overcome obstacles?
• minimize negative
influences?
• deal with political and
cultural issues?
Opportunities
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Identify countries for strategic partnerships
Fellowship advisory board
Fellowship Curriculum Update
Translation of course materials & manuals
Fellowship Follow-up in country
CFAAs
Knowledge Sharing
– Web-based communication tool?
IAFP: Measures of Success
•Individual course evaluation
•Participant assessment of content and instruction
•IAFP overall evaluation
•Focus groups
•Evaluation instrument being revised by Applied
Research & Methodology team
•Post-IAFP assessment
•Auditor General and participant feedback
Opportunities & Challenges
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Strategic partnerships with donors
Long term technical assistance to sustain capacity
Translation of course materials & manuals
Knowledge sharing
– Web-based communication tool?
– Distance learning options?
• Coalition building
– Within the SAI
– Intergovernmental - within country
• Donor and SAI coordination