SADCOPAC – MALAWI TRAINING

AG INDEPENDENCE AND AUDIT

DISCRETIONEFFECTIVE PUBLIC ACCOUNTS COMMITTEE

19 DECEMBER 2012BY JEFF KAUARIA

Independence of SAI and Audit Discretion

The issue of independence is quite different from other SAI’s requirements in that it is determined by factors external to the SAI, such as the legal framework established for the SAI’s work

Independence of the SAI and Audit Discretion

SAIs are established by Parliaments/National Assembly, though they initiate their own audits they should be protected from political interference.

The Independence of the Auditor-General is very vital if the report produced by the SAI is to be objective and credible.

Most SAI’s independence is vested in the constitution and the enabling acts.

Independence of the SAI and Audit Discretion

Adequate degree of independence from both the legislature and the executive authorities is very key.

Ultimately, audit tasks rest with the SAI and there is no restriction on content or timing of reports.

Strategic Imperatives of AFROSAI-E

1. Independence2. IT infrastructure, IT auditing and electronic working papers3. Human resource management4. Quality assurance5. Performance auditing6. Communication and relationships

ICBF DOMAINS-(AFROSAE-E)

1. Independence and legal framework2. Organization and management3. Human resources4. Audit methodology and standards5. Communication

ISSAI 1, Lima Declaration

Section 17 of the Lima DeclarationThe reports of the SAI: ‘... shall present the facts and their

assessment in an objective, clear manner and [are] limited to essentials.

The wording of the reports shall be precise and easy to understand.

The SAI shall give due consideration to the points of view of the audited organizations on its findings’.

ISSAI 10,Mexico Declaration

SAI should have freedom to: Report the results of their regularity or performance audit work and Report to parliament at least once a year. Determine the content and timing of reportsDecide on audit topics / special investigationsPublish or disseminate reportsSubmit reports to parliament or to a PAC for follow-up.

Standards of INTOSAI

INTOSAI (International Organization of Supreme Audit Institutions)

InternationalStandards ofSupreme AuditInstitutions

The ISSAI hierarchy

Level Subject ISSAI No

1: Founding Principles

Lima Declaration 1

2: Prerequisites for functioning of SAIs

Independence Transparency and Accountability Ethics, Quality

10-40

3: Fundamental Auditing Principles

General-, Field-, and Reporting Standards

100-400

4: Auditing Guidelines

Financial Audit Guidelines Compliance Audit Guidelines

1000-2999 4000-4999

Key Independence Characteristics

1. The existence of an appropriate and effective constitutional/statutory/legal framework and of de facto application provisions of this framework. 2. The independence of SAI heads and members (of collegial institutions), including security of tenure and legal immunity in the normal discharge of their duties.

Key Independence Characteristics

3. A sufficiently broad mandate and full discretion in the discharge of SAI functions. 4. Unrestricted access to information. 5. The right and obligation to report on the SAI’s work. 6. The freedom to decide the content and timing of audit reports and to publish and disseminate them.

Key Independence Characteristics

7. The existence of effective follow-up mechanisms on SAI recommendations. 8. Financial and managerial/ administrative autonomy and the availability of appropriate human, material, and monetary resources

I THANK YOU!!