Author Topic: Transformation from External Control to External Audit - what works well  (Read 339 times)

Richard Maggs

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The fundamental shift for most SAIs in transition countries has been the move from external  financial control to external audit. i suggest that in most cases this has been a painful and long drawn out process. I am also worried that after many years this may still not be working well.

Looking back at one country after four years of development, planning training and technical support the emerging signs are that the first year of implementation of audit on the 2009 accounts will be far from successful. I was involved in designing the transition but others have taken this forward in a different way than I had originally envisaged. I am not saying that my approach was right. Simply that there are clearly different transition models to explore.

The model I had proposed was that an initial step would have been the introduction of elements of the audit process to the traditional external control work.The institution would first introduce the concepts of risk based planning, documentation of findings and some form of statements of assurance relating to the controls compliance work carried out. At the same time the entity could gave been encouraged to identify forward looking recommendations in relation to it's compliance findings. In effect the institution would be addressing one of the assertions of an audit - the regularity assertion but in a more modern audit based manner. it would not claim to be doing audit work but it would be learning some of the key elements of the audit process. the next step in the transformation would have been the addition of new audit assertions - completeness, accuracy, existence which, when the legal framework provided for external audit would have provided a smaller distance to travel.

THe model actually applied was to develop new standards and supporting manuals and then to carry out a number if pilot audits prior to the implementation date. The pilots were carried out alongside traditional controls work and in some cases the findings from the pilots were presented as part of the annual report. Given limited resources it is easy to imagine that the pilots we used as much to gather traditional controls findings as to test out methodology. Despite considerable training and the pilot audit work the full implementation of the new audit process is raising some fundamental issues about the audit process.

I am not claiming that my planned approach would have achieved better results but I would be interested to hear from others how hay have or are planning to effect this transition and in particular what has worked well.           

atseacliff

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I like the approach you've outlined which seems proportionate and patient.... and which fits in well with the platform approach. My experience is that SAIs tend to leap to their so-called thematic audits and want to apply performance audit techniques.   Of course focusing on efficiency and effectiveness of expenditure is an important issue but improving bread and butter risk based audit techniques would probably be a better focus for control focused agencies in transition economies. Not perhaps what they like to hear; however.

On the subject of models I'd be interested in hearing practitioners experience of using capacity (or maturity) models for some research I currently engaged in on PFM diagnostics. An INTOSAI paper (attached) identifies three different assessment tools:

1. SAI Capability Model - developed for AFROSAI-E by the Swedish National Audit Office.
2. SAI Maturity Model - developed by the UK NAO.
3. Accountability Organization Maturity Model.

Reading the document the models seem very similar and I'm left wondering why three different models have evolved and what the strengths and weaknesses of each are. Any inputs or suggested contacts would be appreciated. 

Richard Maggs

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The SAI Maturity model was something we developed at the NAO as part of the first twinning project with the Romanian SAI (I was the Project Director at the time and a guy called Steve Frost was the RTA and came up with the idea). It actually draws heavily on the excellence model (ISO?) which is possibly the source for some of the others quoted. The main benefit is having a list of potential questions from which to delve into the actual issues facing the SAI and my recollection is that it was a useful tool to use in a focus group setting. I haven't looked at this is a while and you post will encourage me to do so. Thanks. Richard

atseacliff

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Richard - Thanks for that. On the questions I posed in the original post - I would have assumed that any maturity model should be flexible enough to handle different historical traditions and institutional arrangements.  I was unable to find much on the internet regarding these models and their application so if others have further documentation and experience on their application I would be interested if they could share. 

atseacliff

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Interesting follow-ups with the INTOSAI Development Initiative (IDI) regarding methodologies for conducting a capacity building needs assessment. They have developed their own tool which was published last year and is available in hard copy for INTOSAI member bodies. 

The methodology for conducting the Capacity Needs Assessment can be used by individual SAIs to enable them to identify areas of an SAI’s operations that need to be strengthened, and the reasons for those gaps. The Assessment also provides the basis for designing appropriate interventions to address the gaps through a Strategic Development Plan (SDP). At its core the toolkit focuses on benchmarking activities to seven domains aligned, where ever possible to INTOSAI standards (cross referenced for each domain).  The 7 domains cover
(1) Independence and legal framework,
(2) human resources,
(3) Audit methodology and standards,
(4) leadership and internal governance,
(5) administrative support,
(6) external stakeholder relations and
(7) Results (service delivery). 

Having spent a little time reviewing the model it appears to have a lot going for it and seems to offer the most comprehensive and generic model for conducting a capacity needs assessment as a lead in to the development of an SDP. 
« Last Edit: June 18, 2010, 11:40:08 GMT by Napodano »

 

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