gap analysis: a framework for comparing public sector...

Gap Analysis: A Framework for Comparing Public Sector Accounting and Auditing to International Standards Gap Analysis Diagnostic Tool is a Framework for comparing national public sector accounting and auditing standards to international standards. The main objective of this assessment is to help implement more effective Public Financial Management (PFM) in countries through better quality accounting and public audit processes and to provide greater stimulus for more cost effective outcomes of government spending. This framework was conceived, developed and piloted by the South Asia Regional Financial Management (SARFM) Unit. SARFM has completed the gap analysis for all the countries in South Asia region. Later, the accounting part of the diagnostic was tried out in Azerbaijan with slight additions/modifications. These versions have now been converged to a single framework document incorporating the lessons from the pilots and roll out studies. More specific objectives of the Gap Analysis diagnostic tool are:

• to provide the country's accounting and audit authorities and other interested stakeholders with a common well-founded knowledge as to where local practices stand against the internationally developed norms of financial reporting and auditing;

• to assess prevailing variances;

• to chart paths for improving the accordance with international standards; and

• to provide a continuing basis for measuring improvements. For conducting this assessment, a set of diagnostic questionnaires have been developed to be consistent with the context of the PEFA Framework. These can be used to gather substantial insight into country performance with regard to the PFM indicators relating to external auditing and financial statement reporting. For further information, contact P.K. Subramanian ([email protected]), tel. +1-202-473-7168 or Sanjay Vani ([email protected]), tel. +1-202-458-4885.

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PUBLIC SECTOR ACCOUNTING A COMPARISON TO INTERNATIONAL STANDARDS

GUIDELINE FOR THE USE OF THE DIAGNOSTIC TOOLS Background to the Accounting Diagnostic Framework Many countries have been facing up to the problems of improving the capacities of their national accounting institutions to improve the state of public financial management and reporting. Meanwhile some developed countries have been moving to resource accounting (accounting for assets controlled and liabilities incurred by governments and government entities) based on accrual accounting and output and outcome oriented budgeting systems. Country institutions face substantial capacity problems but in many cases, programs of reform and capacity strengthening initiated by the countries themselves and those supported by the external financiers are generally continuing to produce useful results. Acceleration of these reforms is needed for many countries to absorb modern Public Financial Management (PFM)1

methods, so that, every one places greater reliance on more use of countries’ own financial systems.

Using a generally accepted set of benchmarks would aid the consistency of the development efforts and support regional reviews and cooperation in improving accounting and auditing performance. The development of the PFM Performance Measurement Framework2 by the Public Expenditure and Financial Accountability (PEFA)3 Program has opened the way for a more detailed diagnostic framework to be used that is based on the accounting standards of the International Federation of Accountants (IFAC). This approach provides valuable inputs to the details supporting the PFM indicators. The PFM performance measurement framework4

includes the following accounting performance indicators (PI):

• PI 10. Public access to key fiscal information. • PI 22. Timeliness and regularity of accounts reconciliation. • PI 23. Availability of information on resources received by delivery units. • PI 24. Quality and timeliness of in-year budget reports. • PI 25. Quality and timeliness of annual financial statements.

The International Public Sector Accounting Standards (IPSAS) are designed to apply to the general purpose financial statements of public sector entities. Public sector entities include national governments, regional governments, local governments and their dependent entities. Government Business Enterprises have to apply the International Financial Reporting Standards (IFRS).

1 Public financial management (PFM) includes all phases of the budget cycle, including the preparation of the budget, expenditure and revenue management, internal control and audit, procurement, monitoring and reporting arrangements, and external audit. 2 The PFM Performance Measurement Framework has been developed as a contribution to the collective efforts of many stakeholders to assess and develop essential PFM systems, by providing a common pool of information for measurement and monitoring of PFM performance progress, and a common platform for dialogue. 3 Public Expenditure and Financial Accountability (PEFA) Program is a partnership among the World Bank, the European Commission, the UK's Department for International Development, the Swiss State Secretariat for Economic Affairs, the French Ministry of Foreign Affairs, the Royal Norwegian Ministry of Foreign Affairs, the International Monetary Fund and the Strategic Partnership with Africa. A Steering Committee, comprising members of these agencies, is managing the Program. A Secretariat has been set up and is located in the World Bank in Washington, DC. 4 • PFM Performance Measurement Framework, PEFA Secretariat May 2006 – www.pefa.org

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Controllers General of Accounts (CGAs)5

or their equivalent are in a good position to develop and use this diagnostic framework for comparison of accounting standards at national, regional, and local levels. The diagnostic framework will be able to identify the gaps between countries’ own official standards and international standards and the degree to which the standards are complied with in practice. The information will provide a sound basis on which each country can go forward in improving PFM so that PFM goals including service delivery to the public are improved.

Objective of the Diagnostic The outcome intended for the exercise is quicker implementation of more effective PFM through better quality accounting and public reporting processes in countries and to provide greater stimulus for more cost effective outcomes of government spending. The specific objectives of the diagnostic are: (a) to provide each country and other interested stakeholders with a common well-based knowledge as to where the countries stand against the internationally developed norms of financial reporting and audit; (b) to assess the prevailing variances; (c) to assist in charting paths for improved compliance with international standards; and (d) provide a basis for measuring interim compliance. Examples of areas where there are substantial issues (based on various diagnostics carried out by the World Bank, other donors and the countries themselves) are:

• Financial reports could be improved to increase their utility –countries are generally in need of improved annual financial reporting to a level where general purpose financial reports are prepared in compliance with international standards and made available to the legislature and the citizens in good time. The reports also need to support and reflect management’s need for detailed information for decision making.

• Need to adopt professional codes of ethics – Often, low staff salaries and an inadequate

degree of technical professionalism combined with poor systems of internal control in the government sector have made it difficult to ensure that government expenditures and service delivery accord with good work practices and are not adversely influenced by corrupt practices. The Codes of Ethics established by INTOSAI and IFAC are a useful basis for government accountants to use in enforcing appropriate behaviors through an adequate system for managing government expenditures and revenue collections.

• Need for transparent and effective benchmarking to assist reform - There is a need for a

more effective benchmark of progress in strengthening institutional arrangements for accounting that the Ministries of Finance and CGAs themselves see as acceptable and relevant to their circumstances if an active program of self improvement is likely to take root. The framework for assessing progress also has to have a capacity to recognize the relative difficulties and obstacles that need to be addressed to make progress. It needs to be able to support a program of change for the Ministry of Finance and CGA that also addresses the changes needed in other parts of the PFM accountability framework for the accounting improvement to be effective. The framework of PFM indicators will provide a reference point for these links to be identified and programmed for integrated reform.

Purposes of Applying International Standards 5 The term “Controller General of Accounts (CGA)” has been used to denote the official responsible for maintaining the national accounts. The title differs from country to country.

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Improve government accounting and reporting and increased public access to information - Government accounting information is inadequate. The financial statements of many countries generally do not accord with relevant international accounting standards. Methodical and well-resourced steps are likely to be needed to meet the IPSAS cash accounting standard and then to identify the steps needed to move gradually to the accrual accounting favored by the IPSAS Standards. IFAC’s IPSAS-Board has developed a set of accounting standards that are considered to be appropriate for government use. The CGAs need training and other support to be equipped with the skills and capacity to support government agencies in meeting the requirements of the accounting standards. Application of the financial reporting standard will enable preparation of financial statements against which the audit can be undertaken – this will clarify and support the audit role. Application of the standards will also support the transparency, understandability and easy public access to information that are also crucial to good PFM and responses to identified deficiencies through the application of better practices. Improve internal controls over PFM and budget management - The standards of public financial management and internal control in the countries of the region need to improve to support efficient expenditure and revenue management. The CGAs need to be adequately supported to develop and oversee effective systems of internal control and internal audit throughout the public sector. Fraud and corruption need to be addressed systematically through formal financial management routines. The Ministries of Finance need to ensure the effectiveness of complementary PFM practices such as fraud control plans and management control through reporting on the management assertions required and the financial reporting rules. Use of the Assessment Questionnaires These guidelines describe the usage of the questionnaires which are used for the gathering and analysis of information necessary for a Gap Analysis Report. The tools are devised in a very similar way to the ones which are used in the process of preparation of Reports on the Observance of Standards and Codes (ROSC). The guidelines define how to use the following diagnostics, when they should be used, and what should be observed:

I Assessment of the Public Sector Accounting Environment II Assessment of Cash Basis Public Sector Accounting Standards III Assessment of Accrual Basis Public Sector Accounting Standards IV Assessment of Actual Accounting Practices V Assessment of Financial Reporting for State Owned Enterprises VI Assessment of the value to be added of adopting the various underlying concepts and

specific standards that comprise the International Public Sector Accounting Standards (IPSAS).

The tools are based on the assumption that improvements of accounting and reporting are likely to be implemented on a step-by-step basis. The main threshold levels “cash basis”, which is also reflected by the cash basis IPSAS, and “full accrual”, which is reflected by the suite of accrual IPSAS, can be observed in some instances, but most countries around the globe are more likely to be somewhere in between. Therefore an analysis only based on the two main levels would be very rough and give only limited guidance for further improvement, as the gaps identified would be very large in most instances.

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The Diagnostic Tools are qualitative questionnaires, which are supposed to be used in interviews conducted by the preparers of the report. The preparers of the report should have a good knowledge of public sector accounting and reporting, both on a cash and accrual basis, including closely related issues such as budgeting, budget execution and government financial statistics. As the questionnaires make explicit reference to the International Public Sector Accounting Standards (IPSAS) a good knowledge of these standards is an advantage, although its main principles are reproduced throughout the questionnaire. The use of local consultant(s), with a sound knowledge both of the local situation as well as the international standards, is strongly recommended. The main interview participants are senior representatives of the organization responsible for public sector financial accounting and reporting in the country examined. In many but clearly not all instances this is the Ministry of Finance or the Treasury. In federal countries, it is very likely that different organizations are responsible at the different levels of government. In a federal setting the resources required for the interviews are substantially higher than in more centralized countries, because it is necessary to cover different systems at the same time. However, also in more centralized countries interview participants outside the organization responsible should be considered, too. These interviews are intended to help identify the actual implementation of the guidance provided by the organization responsible. However, the Diagnostic Tool takes an exploratory, entirely qualitative approach and does not include representative sampling or other quantitative techniques. Accounting Diagnostic Tool Part 1 Assessment of the Public Sector Accounting Environment This part covers the general public sector accounting environment that focuses on the statutory framework, professional education, and code of ethics for the accounting profession which underpins the quality of accounting practices. While the questionnaire is designed to assess the major gaps existing between national and International Public Sector Accounting Standards, it may not justly cover the many detailed differences that may exist between the two. The questionnaire about the Assessment of the Public Sector Accounting Environment contains sections about general themes:

I Statutory Framework II Academic Education, Professional Education, Training III Setting Accounting Standards IV Monitoring and Enforcement V Quality and Availability of Financial Reporting VI Information Technology VII Public Sector

The aim of using this Diagnostic Tool is to analyze and evaluate the current situation in a country in general as well as in the accounting profession. By answering this questionnaire a wide overview of the researched country will be given and it is important that the questions are answered not only by yes/no answers but rather also with a full descriptive answer. Accounting Diagnostic Tool Part 2 Assessment of Cash basis Accounting Standards This part of the review assesses the comparability of any national accounting standards (cash basis) that are used with International Public Sector Accounting Standards (IPSASs); and the

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degree of actual compliance with the applicable standards. The assessment also focuses on the institutional arrangements that underpin the quality of accounting practices. Accounting Diagnostic Tool Part 3 Assessment of Accrual basis Accounting Standards This questionnaire assesses the national standards (accrual basis) in direct comparison with the IPSAS. This part of the review is conducted on a standard by standard basis, following the order in which the IPSAS have been pronounced. Diagnostic Tool II helps to identify the current public accounting situation in respect of the IPSAS. The analysis of this comparison helps to identify possible gaps and shows where public sector accounting is at a high standard already. There are basically three levels of achievement:

(i) No achievement whatsoever; (ii) National standards/regulation observed, but no compliance with IPSAS; (iii) IPSAS or national standards based on IPSAS observed.

The sections of the Diagnostic Tool are independent of each other and can be tested separately. As improvements in public sector accounting and reporting are likely to be achieved step by step, it is possible to find very different situations in the various sections. A country may, for instance, account for property in full compliance with IPSAS, but use an entirely different approach perhaps in the field of provisions. Each section starts with (i) if the specific IPSAS has been adopted as a national standard, (ii) if there are any plans to change the national standards in respect of presentation of financial statements in the near future and (iii) if there is a current regulation which addresses this issue. If the answers to questions (i) and (iii) are ‘No’, the further questions in this area do not have to be answered and the next section can be tested. Accounting Diagnostic Tool Part 4 Assessment of Actual Accounting Practices This questionnaire is designed to assess the actual accounting practices and evaluate them against the standard or rule they refer to. As those standards or rules may vary between various jurisdictions or even between various entities within one jurisdiction, a three pronged approach has been suggested. There is no separate purpose-built questionnaire for this tool. Instead, Diagnostic Tool Part 2 (cash basis IPSAS), Diagnostic Tool Part 3 (accrual basis IPSAS) or Diagnostic Tool Part 5 (IFRS/IAS) should be used for this assessment, as the questions are the same. This assessment should include organizations other than the one responsible for public sector financial accounting and reporting, even in highly centralized countries. It should also include an analysis of audited financial reports, as they may fall short from internationally accepted best practices in some cases. Accounting Diagnostic Tool Part 5 Assessment of Financial Reporting for State Owned Enterprises This part of the review enables specific attention to be given to the accounting standards and practices in state owned enterprises. It is to be used when state owned enterprises are included in the scope of the diagnostic work. This is a matter to be decided in planning the scope of the overall assessment.

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The purpose of this questionnaire is to provide information about the differences between National Standards, and the International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS) approved by the International Accounting Standards Board. The questionnaire contains the following sections:

I Framework for the Preparation and Presentation of Financial Statements II Differences between National Standards and each of the International Financial

Reporting Standards or International Accounting Standards The questionnaire is to be used separately for entities that are required to use different National Standards or in practice apply the same National Standards differently (for example, as is often the case with banks, insurance entities and other financial institutions). It may also need to deal separately with legal entity and consolidated financial statements. Accounting Diagnostic Tool Part 6 Assessment of value to be added by adopting the specific standards that comprise IPSAS (or IFRS) to the extent that they are not already incorporated into the national standards This part of the review assesses the potential value to be added by an adoption of the International Public Sector Accounting Standards (IPSASs) in comparison to the National Public Sector Accounting Standards in place. The assessment identifies potential value added directly in the field of accounting, but also in respect of reputation and training of local financial management staff. While the questionnaire is designed to assess the major gaps existing between national and International Public Sector Accounting Standards, it may not fully cover the many detailed differences that may exist between the two. The questionnaire includes the following three sections:

I Relevant Gaps in Accounting between IPSAS’ and national standards – Value Added due to Accounting Effects

II Value Added due to Reputation Effects III Value Added due to Training Effects

This questionnaire is qualitative and subjective. In order, to avoid entirely personal views, making reference to other countries in similar situations or to other sectors of the economy is helpful. However, the analysis should also include obstacles or downsides, in order to avoid false expectations. Gap Analysis Report The results obtained in interviews, meetings and from available documents, laws etc. are to be used for the preparation of the Gap Analysis Report. This report includes the relevant information which was obtained from the four Diagnostic Tools. However, the content of this REPORT is structured differently from the questionnaires. The following composition was chosen:

I Introduction

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II Institutional Framework III Accounting Standards as Designed IV Accounting Standards as Practiced V Value added Opportunities VI Recommendations

The report concentrates on the more relevant issues while summarizing the less relevant ones. It is intended to provide the user with a comprehensive picture of the issue, and should not just present the questionnaire-style preliminary results. The report should begin with an executive summary. The draft report should be discussed with the main interview participants, especially with senior representatives from the organization responsible for accounting and reporting, i.e. the Ministry of Finance/Treasury, and can benefit from a workshop on the main issues. This discussion is likely to identify substantial changes for the report, and should therefore take place well before the deadline for the final report. The feedback should be incorporated, as long as it is in accordance with the findings of the preparer. The report should be between 25 and 40 pages long.

Guideline using the Diagnostic Tools Page 1

PUBLIC SECTOR AUDITING A COMPARISON TO INTERNATIONAL STANDARDS

GUIDELINE FOR THE USE OF THE DIAGNOSTIC TOOLS

Background to the Auditing Diagnostic Framework Many countries have been working on improving the capacities of their national auditing institutions to assist with improving the state of public financial management. Country institutions face substantial capacity problems but in many cases, programs of reform and capacity strengthening initiated by the countries themselves are generally continuing to produce useful results. Acceleration of these reforms assists countries to absorb modern Public Financial Management (PFM)1

methods so that greater reliance can be placed on use of countries’ financial systems. Improvement of institutional arrangements for the Supreme Audit Institutions (SAIs) has been a continuing but slow feature of this reform. Part of the problem with increasing the speed of country implementation has been a lack of ability to focus clearly on the real progress that has been made, and greater clarity about performance improvement would assist effective monitoring.

The International Standards for SAIs (ISSAI)2

were adopted in November 2007 as a comprehensive framework of auditing standards by the International Organization of Supreme Audit Institutions (INTOSAI). This internationally accepted set of standards provides a strong benchmark to ensure consistency in SAI improvement efforts and to support consistency in regional and international cooperation to improve auditing performance. The ISSAI benchmarks provide a good reference point for relevant stakeholders to develop confidence in SAI capability. This auditing diagnostic framework is based on the ISSAI.

The PFM Performance Measurement Framework3 developed by the Public Expenditure and Financial Accountability (PEFA)4

Program includes public sector audit PFM indicators that can be incorporated into this auditing diagnostic framework so that the REPA can be helpful in the context of the overall PFM performance indicator framework.

Through their strong involvement with INTOSAI, Auditors General (AGs)5

1 Public financial management (PFM) includes all phases of the budget cycle, including the preparation of the budget, expenditure and revenue management, internal control and audit, procurement, monitoring and reporting arrangements, and external audit.

and Boards of Audit are in a good position to use this diagnostic framework for assessment of their own auditing standards and practices at national, regional, and local levels. The diagnostic framework can be used to identify the gaps between countries’ own official standards and accepted international standards, and the degree to which the standards are complied with in practice. The information will provide a sound basis on which each country can go forward in improving PFM.

2 The International Standards of Supreme Audit Institutions, ISSAI, are issued by the International Organization of Supreme Audit Institutions, INTOSAI. For more information visit www.issai.org 3 The PFM Performance Measurement Framework has been developed as a contribution to the collective efforts of many stakeholders to assess and develop essential PFM systems, by providing a common pool of information for measurement and monitoring of PFM performance progress, and a common platform for dialogue. 4 Public Expenditure and Financial Accountability (PEFA) Program is a partnership among the World Bank, the European Commission, the UK's Department for International Development, the Swiss State Secretariat for Economic Affairs, the French Ministry of Foreign Affairs, the Royal Norwegian Ministry of Foreign Affairs, the International Monetary Fund and the Strategic Partnership with Africa. A Steering Committee, comprising members of these agencies, is managing the Program. A Secretariat has been set up and is located in the World Bank in Washington, DC. 5 The term “Auditor General (AG)” has been used to denote the Head of the Supreme Audit Institution. The actual title varies across countries.


Objective of the Diagnostic The general outcome intended to be achieved by using the diagnostic framework is a report that ensures quicker implementation of more effective PFM through better quality public sector audit processes that in turn provide greater stimulus for more cost effective outcomes of government spending. The specific objectives of the REPA are: (a) to provide the SAI and other interested stakeholders with a common well-based knowledge as to where the country stands against the internationally developed norms of government audit; (b) to assess the prevailing variances; (c) to assist in charting paths for improved compliance with international standards; and (d) provide a basis for measuring interim improvements. Examples of areas where there have been substantial issues (based on various diagnostics carried out by the World Bank, other donors and the countries themselves) are:

• Financial reports could be improved to increase their utility – countries are generally in need of improved annual financial reporting to a level where audited general purpose financial reports are prepared in compliance with international standards and made available to the legislature and the citizens in good time. The reports also need to support and reflect management’s need for detailed information for decision making.

• Independence of audit needs to be enhanced – commonly, SAIs have had a direct

responsibility for providing the accounting and pre-audit functions at various levels of government, and this has diverted them from the primary SAI role of providing independent attestation to legislatures on the performance of the financial management system and the adequacy of financial reporting. The need for systematic complementary reforms can best be met under the agreed INTOSAI framework for institutional arrangements that are acceptable to host governments and the relevant bodies. The consultation between the interested parties can be improved through assessment against the relevant complementary PEFA PFM indicators for the institutions that are interacting or overlapping. The performance of SAIs can be affected by inadequacies in their institutional powers; resourcing arrangements; AG security, tenure and qualifications; access to information; and rights to report to the legislature and to report publicly. The INTOSAI ISSAI standards deal extensively in these issues.

• Need to adopt and enforce professional codes of ethics – for some SAIs, low staff salaries

and an inadequate degree of technical professionalism combined with poor systems of internal control in the government sector have made it difficult to ensure that auditors accord with good work practices and are not adversely influenced by corrupt practices. The Codes of Ethics and their enforcement regimens that have been established by INTOSAI and IFAC are a useful basis for SAIs to use in managing appropriate auditor behavior through the SAI’s internal systems for managing and supervising audits.

• Need for transparent and effective benchmarking to assist reform - there is a need for a

more effective benchmark of progress in strengthening institutional arrangements for audit that the SAIs themselves see as acceptable and relevant to their circumstances if an active program of self improvement is likely to take root. The framework for assessing progress also has to have a capacity to recognize the relative difficulties and obstacles that need to be addressed to make progress. It needs to be able to support a program of change for the SAI that also addresses the changes needed in other parts of the PFM


accountability framework for the SAI improvement to be effective. The framework of PEFA PFM indicators provides the reference point for these links to be identified and programmed for integrated reform. An important example is that there is little point to improving the SAI’s output of audit reports if the reports and their recommendations are not transmitted to the legislature, made public, and acted upon.

Purposes of Applying International Standards Improve government accounting and reporting and increased public access to information - government accounting information is inadequate in many countries. Their annual financial statements and audit certifications often do not accord with relevant international accounting standards so that their reliability and sufficiency are suspect. The SAIs need training and other support to be equipped with the skills and resourcing needed to conduct the certification and other audits and report to the legislature in a way that meets international practices established by INTOSAI. Application of internationally financial reporting standards will enable preparation of financial statements against which the audit can be undertaken confidently. Application of international standards will also support the transparency, understandability and easy public access to information that are also crucial to good PFM and responses to identified deficiencies through the application of better practices. Improve internal controls over PFM and budget management - the standards of public financial management and internal control in many countries need to improve to support efficient expenditure and revenue management. SAIs play a major role in scrutiny and improvement. The SAIs need to be equipped to audit regularity issues both from a performance perspective and from a compliance perspective to report in ways that lead to systemic improvement. Programs for improvement of public expenditure management and revenue collection need to be supported rather than constrained by audit activities which may become counter productive or ineffective by concentrating on the more trivial or occasional transgressions rather than system deficiencies. Fraud and corruption need to be addressed systematically through audit as well as through formal internal financial management routines which SAIs should scrutinize. The international standards provide benchmarks for the scope, conduct and performance of audit functions and the involvement of SAIs in routine reporting including reports on complementary PFM practices such as fraud control plans, the adequacy of the management assertions, and financial reporting rules. Improve quality of audit – in most cases, the legislative standards applied to the qualifications of auditors for commercial companies audit are more specific and at a more advanced level than those applied to government auditors. Private sector auditors are often used for State owned business enterprises and the legislative and greater public scrutiny opportunity afforded by the use of public sector auditors is denied. In some cases, public sector recruitment practices do not favor recruitment of technical specialists and auditor competence becomes a key concern as well as excess costs of unrelated training. Interchange of personnel between the public and private sectors of the accounting and auditing profession is frequently at a low level. The standards need to provide benchmarks for skills and competency requirements including ethics and discipline provisions. Improve legislative scrutiny and corrective action - The standards of legislative scrutiny are often insufficient to provide a guarantee of good PFM in government agencies. The SAI needs to have the capacity to provide the legislature with the reports and the hearings support to carry out the scrutiny and follow up processes sufficiently well to ensure that deficiencies are rectified and malpractice disciplined. The standards should provide benchmarks for the development, reporting, and follow-up of audit findings and recommendations.


The SAR PFM performance measurement framework6

includes the following performance indicators (PI) relevant to auditing:

• PI 10. Public access to key fiscal information. • PI 25. Quality and timeliness of annual financial statements. • PI 26. The scope, nature and follow-up of external audit. • PI 28. Legislative scrutiny of external audit reports.

Use of the Assessment Questionnaires These guidelines describe the usage of the three assessment questionnaires which are used for the gathering and analysis of the information necessary for a Gap Analysis Report. The tools are devised in a very similar way to those that are used for preparing Reports on the Observance of Standards and Codes (ROSC). The guidelines define how to use the following diagnostics, when they should be used, and what should be observed:

Part I Assessment of the public sector auditing environment. Part II Assessment of auditing standards and practices. Part III Assessment of the in-country value-added by adopting the various elements of the International Standards for Supreme Audit Institutions (ISSAI).

The tools enable improvements in auditing and review to be implemented on a step-by-step basis by adopting and implementing the practices embodied in the international auditing standards to the extent that national resources and conditions allow. The overall goal is certification and assessment of the annual accounts and the systems of financial controls in accordance with the auditing methodologies set out in the ISSAI framework of standards:

• Level 1: Founding Principles – Lima Declaration. • Level 2: Prerequisites for the Functioning of Supreme Audit Institutions. • Level 3: INTOSAI Auditing Standards. • Level 4: Auditing Guidelines.

These standards can be observed by countries in full in some instances but the accounting systems of many countries can make it difficult for some of the standards to be readily applied, especially where statistical sampling methods are advantageous to the audit testing processes. In these cases a lesser standard of auditing and review is attainable until accounting systems are improved - usually through some automation of record keeping and compilation. The Diagnostic Tools are qualitative questionnaires that are intended to be used in interviews conducted by the preparers of the report. The preparers of the report should have a good knowledge of public sector audit and review practices, including closely related issues such as legislative scrutiny. As the questionnaires make explicit reference to the ISSAI and the International Standards on Auditing (ISA) a good knowledge of these standards is an advantage, and the main principles of these standards are reproduced throughout the questionnaires. The use

6 PFM Performance Measurement Framework, PEFA Secretariat May 2006 – www.pefa.org


of local well-qualified consultant(s), who are members of the national professional accountancy body and have a sound knowledge both of the local public sector situation as well as the international standards, is strongly recommended. The main interview participants are senior representatives of the organization responsible for public sector financial auditing in the country examined. This is the Supreme Audit Institution. The Diagnostic Tools takes an exploratory, entirely qualitative approach and do not include representative sampling or other quantitative techniques. Audit Diagnostic Tool I Assessment of the Public Sector Auditing Environment Part I of the review assesses the potential value added that an adoption of the higher levels of the ISSAI framework would provide in comparison to the current institutional arrangements for national public sector auditing. The assessment identifies potential value added directly in the field of auditing and the preparation of audit reports. While the questionnaire is designed to assess the major gaps existing between national and international standards, it may not fully cover the many detailed differences that may exist between the two. The questionnaire about the Assessment of the Public Sector Auditing Environment contains eight sections covering the following:

I Statutory framework II Academic education, professional education, and training III Setting auditing standards IV Accountability for the SAI V Independence provided by the legislation VI Information technology VII Code of ethics VIII Country data

The aim is to develop a strong understanding of the public sector audit arrangements in the country and it is important that the questions are answered not only by yes/no answers but rather also with a full descriptive answer. Audit Diagnostic Tool II Assessment of Auditing Standards Part II of the review assesses the comparability of any written or adopted National Public Sector Auditing Standards (NPAS) with each of the ISSAI Audit Guidelines for financial audit. It also assesses the degree of actual compliance of the implementation of these national standards with the detail of the applicable ISSAI standards. The report preparer uses the results to assess the institutional arrangements that underpin the quality of auditing practices. Where ISSAI standards are still in exposure draft or not yet drafted the relevant International Standard for Auditing is used in the questionnaire for the comparison. The report preparer uses the analysis of this overall comparison to identify possible gaps. There are basically three levels of achievement:

(i) No achievement whatsoever; (ii) National standards/regulation observed, but poor compliance with ISSAI; (iii) ISSAI (or national standards substantially based on ISSAI) substantially observed.


This Diagnostic Tool contains sections which refer to the current ISSAI. The sections are independent of each other and can be tested separately. As improvements in public sector auditing and review are likely to be achieved step by step, it is possible to find very different situations in the various sections. Each section starts with a summary setting out (a) if the specific ISSAI has been adopted as a national standard, (b) a brief assessment (based on the answers to the details as per (c) following) of the potential value added that adoption of the ISSAI would provide in comparison to the National Public Sector Auditing Standards (or audit practices in the absence of any particular written standards), and (c) an explanation of any differences between the national standard and the ISSAI. The main part of each section contains the main requirements of the ISSAI assessment and identifies whether audit practices in the country conform to the requirements. The answers to these requirements are to be used by the report preparer to identify the value added that can be gained by closer adherence to the ISSAI. These assessments are summarized at item (b) and further developed by the report preparer in Audit Diagnostic Tool III. This questionnaire is designed to assess the actual auditing practices and evaluate them against the standard that governs their implementation with a view to identifying where the international standards can add value to the audit processes. Audit Diagnostic Tool III Assessment of Value Added by Adopting the ISSAI Part III of the review uses the results of Parts I and II to summarize the potential value added an adoption of the ISSAI would provide in comparison to the National Public Sector Auditing Standards and/or practices applied in the country. The assessment identifies potential value added directly in the field of auditing. This diagnostic tool relies heavily on the expertise and judgement of the report preparer to form views as to the value added that can be gained by changing practices. The questionnaire includes the following three sections:

I Relevant gaps in auditing between ISSAI’s and NPSAS’s – value added due to auditing effects

II Value added due to reputation effects III Value added due to training effects

This Part includes questions for each ISSAI on the most significant requirements of the ISSAI but this is not intended to constrain the preparers of the Report. Part III is intended to be qualitative and subjective so that the perceptions that the preparers of the report gain from their survey can be translated into the best path for the country to improve its audit performance through adopting the ISSAI.. In order to avoid entirely personal views making reference to other countries in similar situations can prove to be helpful. The analysis should also include obstacles or downsides, in order to avoid false expectations and to provide realism in the projected value added. Diagnostic Report All results obtained in interviews, meetings and from available documents, laws etc. are to be used for the preparation of the Gap Analysis Report. This report is based on relevant information which was obtained through the questionnaires in the Diagnostic Tools. However, the content of this REPA is structured differently from the questionnaires as follows:


I Introduction II Institutional Framework III Auditing Standards as Designed IV Auditing Standards as Practiced V In-country Value added Opportunities VI Recommendations

The report concentrates on the more relevant issues while summarizing the less relevant ones. It is intended to provide the user with a comprehensive picture of the issue, and should not just present the questionnaire-style preliminary results. The report should begin with an executive summary. The draft report should be discussed with the main interview participants, especially with senior representatives from the organization responsible for accounting and reporting, i.e. the Supreme Audit Institution, and can benefit from a workshop on the main issues. This discussion is likely to identify substantial changes for the draft report, and should therefore take place well before the deadline for the final report. The feedback should be incorporated, as long as it is in accordance with the findings of the preparer. The report should be between 25 and 40 pages in the case of federal countries. Where audit practices differ between regions it may need to be more extensive than in a more centralized environment.

The World Bank

Public Sector Accounting: A Comparison to International Standards

Assessment of the Public Sector Accounting Environment

DIAGNOSTIC TOOL – PART 1

April, 2009

CONTENTS

Foreword ................................................................................................................................ 1I Statutory Framework .......................................................................................................... 2II Academic Education, Professional Education, Training .................................................... 4III Setting Accounting Standards ........................................................................................... 7IV Monitoring and Enforcement ............................................................................................ 9V Quality and Availability of Financial Reporting ................................................................ 9VI Information Technology ................................................................................................. 10

FOREWORD

As part of its public sector financial management reform program, the World Bank has developed a framework for assessing the variance between national and international standards in public sector accounting. This toolkit is developed for use in different countries to promote improvements in public sector financial management. This part of the review assesses the comparability of the International Public Sector Accounting Standards (IPSASs) in comparison to the National Public Sector Accounting Standards of the respective country. The assessment also covers the Public Sector accounting environment that focuses on the statutory framework, professional education, and code of ethics for the accounting profession which underpins the quality of accounting practices.

While the questionnaire is designed to assess the major gaps existing between national and International Public Sector Accounting Standards, it may not justly cover the many detailed differences that may exist between the two and that may have a material impact on financial statements.

Preparers may use the Comments box to highlight specific differences that are not covered in the tool in the questionnaire. The Diagnostic Tool Part 1 should be used in conjunction with the IPSAS 2008 Bound Volume containing all International Public Accounting Standards as of January 2008.

References to specific Standards are placed in brackets at the end of each question.

Note on Terminology Used in this Questionnaire

“Standard” refers to any applicable International Public Sector Accounting Standard issued by the International Public Sector Accounting Standards Board of IFAC.

I STATUTORY FRAMEWORK I.1. Overview over the Statutory Framework

Questions 1(a) What “legal tradition” best describes the country’s legal system (i.e. common law, written law, other)?

Answer:

1(b) Are there any fundamental principles which differ between administrative law and legislation imposed on the private sector (i.e. requirement of explicit authorization of any action taken by the government in formal piece of legislation)?

Answer:

1(c) Are there any consequences of such a legal tradition on the accounting and reporting environment? If yes, please describe.

Answer:

I.2. Public Sector Accounting Law

Questions 2(a) What is (are) the Accounting Law(s) or Act(s) which is relevant for public sector entities? What is its enacting body, enactment date and the latest amendment date? With your response to the questionnaire, please attach a copy of the Law(s) or Act(s) in the country’s official language and in English (if available).

Answer:

2(b) If there is more than one Law or Act, what are the delimitations between the various laws or acts? (i.e. indicate which ones are relevant for which level of government or for which kind of legal entity)

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2(c) Is the law also applicable to Government Business Enterprises (GBEs)? GBEs are government owned entities with the objective of selling goods or services at a profit or full cost recovery. If not, what law is applicable to GBEs.

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2(d) What are the main provisions of the Law?

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2(e) Is the presentation of government budgets covered by the same Law? If not, please name the Law or Act which is relevant for government budgets?

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2(f) Does the Law require a specific basis of accounting, either cash or accrual? If applicable, distinguish among the various kinds of entities.

Answer:

2(g) Does the Law (or the various Laws according to answer 2d) require a different basis of accounting for budgets and for financial reporting (i.e. cash basis for budgets, accrual basis for financial reporting)? If applicable, distinguish among the various kinds of entities.

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2(h) Does the Law require compliance with International Public Sector Accounting Standards (IPSAS)? If applicable, distinguish among the various kinds of entities and between separate and consolidated financial statements.

Answer:

2(i) Does the Law allow compliance with IPSAS, even if compliance is not mandated? If applicable, distinguish among the various kinds of entities and between separate and consolidated financial statements.

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2(j) Have the provisions of the law facilitated or constrained the development of an enabling environment for strong accounting practices?

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2(k) Are all the legal requirements implemented in practice?

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2(l) Are there any practical problems in implementing the Law? If yes, how can they be overcome?

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2(m) Does the law relating to GBEs allow or require compliance with International Accounting Standards/International Financial Reporting Standards (IAS/IFRS)?

Answer:

II ACADEMIC EDUCATION, PROFESSIONAL EDUCATION, TRAINING II.1 ACADEMIC PROGRAMS

Questions 3(a) What kind of degree programs in accounting or in related areas are operational in the country? (i.e. Bachelor Science in Accounting, Master of Financial Management etc.)

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3(b) Are there any degree programs addressing public sector accounting issues in a substantial magnitude?

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3(c) Are there any non-degree programs provided by academic institutions in accounting or in related areas? (i.e. Certificate in Accounting and Auditing)

Answer:

3(d) Are there any non-degree programs provided by academic institutions addressing public sector accounting issues in a substantial magnitude? (i.e. Certificate in Public Sector Accounting)

Answer:

3(e) Please provide a rough estimate of the number of students/participants graduating from/finishing the above mentioned programs (items 3(a) through 3(d)).

Table:

3(f) Do the curriculums of the academic institutions extend to internationally recognized standards of accounting (i.e. IFRS, IPSAS)? If yes, please describe briefly how this is done. Is particular emphasis given on technical practical application of such standards?

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3(g) Are (some of) the programs internationally accredited, either by professional or academic accreditation bodies (ACCA, CPA Australia)? If yes, which kind of accreditation is in place?

Answer:

3(h) Are there minimum academic requirements for an individual seeking to begin a study/training program leading to membership in a professional accounting or auditing body? If yes, what are those requirements?

Answer:

3(i) Are there minimum academic requirements for government employees in specific positions related to accounting/auditing/financial management or above certain hierarchy levels? If yes, what are those requirements?

Answer:

II.2 PROFESSIONAL EDUCATION

Questions

4(a) Is there a professional license required for certain positions/professions in the field of accounting/auditing/financial management? Please describe briefly?

Answer:

4(b) Are there professional education requirements for an individual to obtain a professional license as an accountant/auditor or similar professions?

Answer:

4(c) Is the system of professional education/professional licenses the same in the private and public sector? If no, please highlight the differences.

Answer:

4(d) Do the entry requirements of the professional education programs comply with IFAC International Education Standards (IES 1): “at least equivalent to that required for admission into a recognized university degree program or its equivalent”? Please specify if requirements for public sector are different from their private sector counterparts.

Answer:

4(e) Do the syllabi of the professional education programs cover all areas required by IFAC International Education Standards (IES 2): “accounting, finance and related knowledge”, “organizational and business knowledge” and “information technology and competences” as defined in the standard? Please specify if requirements for public sector are different from their private sector counterparts.

Table:

4(f) Do the entry requirements of the professional education programs comply with IFAC International Education Standards (IES 5): 3 years, with not more than 12 months credited from graduate degree programs towards it? Please specify if requirements for public sector are different from their private sector counterparts.

Answer:

4(g) Is there a professional examination requirement in compliance with IFAC International Education Standards (IES 6): recorded form, reliability and validity, coverage of the syllabus, made at the end of pre-qualification program, in responsibility of professional body or regulatory authority? Please specify if requirements for public sector are different from their private sector counterparts.

Answer:

4(h) Is there a professional education/examination program which is in co-operation with international providers of such programs (i.e. CIPFA or similar)? Does it lead to the internationally recognized professional qualifications?

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II.3 CONTINUING EDUCATION

Questions 5(a) Is continuing education for professionally qualified individuals (i.e. CPAs) required and promoted by their (public sector) employers?

Answer:

5(b) Is continuing education for individuals working in the field of public sector accounting/public financial management required and promoted by their employers?

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5(c) Is there a systematic approach to continuing education programs?

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5(d) Are (some of the) continuing education programs evaluated or accredited by an independent body?

Answer:

II.4 LABOUR MARKET IN THE FIELD OF PUBLIC SECTOR ACCOUNTING

Questions 6(a) Is there a separate market segment for public sector accounting or are public sector accountants recruited from the same market as their private sector counterparts?

Answer:

6(b) How would you describe market conditions? (i.e. excess demand for professionally qualified individuals, excess supply from some specific programs)

Answer:

III SETTING ACCOUNTING STANDARDS III.1 ACCOUNTING STANDARDS

Questions 7(a) Are there national accounting standards for public sector entities? If so, who is responsible for issuing those standards?

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7(b) Are the national accounting standards identical for public sector entities and for the private companies?

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7(c) What is the source of legal authority of the national standards? Is the legal authority limited?

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7(d) Is there a due process before new or revised standards are issued?

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7(e) Do the national accounting standards for public sector entities require the presentation of “general purpose financial statements” that achieve fair presentation?

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7(f) Is there any arrangement for issuance of practical implementation or interpretation guidelines? If yes, how is this arrangement accomplished?

Answer:

7(g) Have efforts been made to make national accounting standards comparable with the IPSASs?

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7(h) Highlight the main differences between national accounting standards and IPSAS?

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7(i) Are Government Business Enterprises (GBEs) following private or public sector standards?

Answer:

III.2 STANDARD SETTING BODY

Questions 8(a) Is/are there national standard setting body/ies in the field of accounting? Please name all and show the differences between their missions and legal authority? Clearly identify those which are relevant for the public sector.

Answer:

8(b) Describe the governance of those standard setting bodies which are relevant for the public sector. This should include a description of the structure and responsibilities of boards and

committees.

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8(c) What is the composition of the standard setting entities within the standard setting body? Who is nominating the individuals members of this entity? What is their qualification?

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8(d) Are the individuals responsible for standard setting tasks independent or acting as representatives on behalf of some other organizations? What is the proportion of independent members? Is independence defined in respect of preparers only or also in respect of the profession?

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8(e) Are there rules how to handle conflict of interest issues within a standard setting body or entity? (i.e. is there a requirement of abstention or suspension in specified situations?)

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8(f) Are there rules to limit the power and influence of individuals or parts of the constituency? Are there quota rules to limit the number of members from the same background? Is the term of members limited with limited possibilities of extension?

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8(g) Are there any arrangement to provide for sufficient reflection of the public interest? (i.e. is there a public interest oversight board or are there public members?)

Answer:

III.3 CODE OF ETHICS

Questions 9(a) Are public sector accountants/auditors required to adhere to a code of ethics? If yes, is the code legally enforceable? Who developed the code and when? Are there any substantial differences between the public and the private sector?

Answer:

9(b) Highlight the main differences between the national code of ethics and the revised July 2006 version of the IFAC Code of Ethics for Professional Accountants?

Answer:

IV MONITORING AND ENFORCEMENT

Questions 10(a) Is/Are there any institution/s monitoring the adoption of accounting standards and laws in the public sector? If yes, please name them. Is the capacity limited to monitoring or do these institutions have any power to enforce compliance with the standards and laws?

Answer:

10(b) Are the institutions independent from the preparers of financial statements?

Answer:

10(c) Is part of this role for public sector entities exercised by the auditors? If yes, please describe the role of the auditors in respect of monitoring and enforcement?

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10(d) Is part of this role for public sector entities exercised by institutions of the capital market, i.e. Securities Exchange? Is this limited to public sector entities issuing securities, i.e. government bonds?

Answer:

10(e) Are there any industry specific regulatory authorities for public sector entities, which are monitoring and/or enforcing accounting standards?

Answer:

V QUALITY AND AVAILABILITY OF FINANCIAL REPORTING

Questions 11(a) If IPSASs are not mandated in this country, are public sector entities allowed to publish financial reports adopting IPSAS? If yes, are they required to publish two separate sets of financial statements, one according to national standards/laws and another one adopting IPSAS?

Answer:

11(b) What are reporting deadlines for public sector entities? Are these deadlines honored by the reporting entities?

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11(c) Are financial reports publicly available? Is availability restricted somehow? Are the financial reports made available as paper copies and/or on the internet? Is there any administrative fee or price charged to those requiring a hard copy or downloading it from the internet?

Answer:

VI INFORMATION TECHNOLOGY

Questions 12(a) Provide a brief description of the IT systems in the field of accounting (hardware, software, databases) which are currently in use by the government. If necessary show differences between various units and/or levels of government.

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12(b) Is the software in use designed to cater for the needs of accrual accounting?

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12(c) If the software/databases are internationally know products (i.e. SAP, Oracle or similar), which modules/parts are implemented (i.e. FI, CO, etc.)?

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12(d) Based on a very broad and general assessment, is there a possibility for re-configuration/modification of the IT-system, if IPSAS or IPSAS-based national standards are to be adopted? Or is it rather necessary to the replace the IT-system altogether?

Answer:

VII. PUBLIC SECTOR Number Comment Levels of government Organizational entities on intermediate (e.g. provincial) level

Organizational entities on local (e.g. municipality) level

Large scale Government Business Enterprise

Name/Industry

The World Bank

Public Sector Auditing A Comparison to International Standards

Assessment of Auditing Standards

AUDIT DIAGNOSTIC TOOL - PART 2

April, 2009

CONTENTS

Foreword ................................................................................................................................................ 1General Information ............................................................................................................................... 2I. ISSAI 1210 Exposure Draft – Agreeing the Terms of Audit Engagements ....................................... 4II. ISSAI 1220 Quality Control for Audits of Historical Financial Information ................................... 6III. ISSAI 1230 Audit Documentation ................................................................................................... 8IV. ISSAI 1240 Exposure Draft - The Auditor's Responsibility Relating to Fraud in an Audit of Financial Statements ............................................................................................................................ 10V. ISSAI 1250 Exposure Draft - Considerations of Laws and Regulations in an Audit of Financial Statements ............................................................................................................................................ 12VI. ISSAI 1260 Communication of Audit Matters with those Charged with Governance .................. 15VII. ISSAI 1300 Planning an Audit of Financial Statements .............................................................. 17VIII. ISSAI 1315 Identifying and Assessing the Risks of Material Misstatements Through Understanding the Entity and its Environment .................................................................................... 20IX. ISSAI 1320 Exposure Draft - Materiality in Planning and Performing an Audit .......................... 23X. ISSAI 1330 The Auditor’s Responses to Assessed Risks ............................................................... 25XI. ISSAI 1450 Evaluation of Misstatements Identified during the Audit .......................................... 28XII. ISSAI 1500 Considering the Relevance and Reliability of Audit Evidence ................................ 30XIII. ISSAI 1530 Exposure Draft Due 2009 - Audit Sampling and Other Means of Testing ............. 32XIV. ISSAI 1550 Exposure Draft - Related Parties ............................................................................. 34XV. ISSAI 1700 Due 2009 - Reporting on Financial Statements (ISA 700) ...................................... 36XVI. ISSAI 4100 Exposure Draft – Compliance Audit for Financial Statements .............................. 39

FOREWORD

As part of its public sector financial management reform program, the World Bank has developed a framework for assessing the variance between national and international standards in public sector auditing. This toolkit is developed for use in different countries to promote improvements in public sector auditing. This part of the review assesses the comparability of national auditing standards with the International Standards of Supreme Audit Institutions (ISSAI), auditing guidelines and the degree of actual compliance with the applicable national standards. The INTOSAI Professional Standards Committee has adopted a hierarchical four level framework of ISSAI standards:

Level 1 Founding Principles – Lima Declaration Level 2: Prerequisites for the Functioning of Supreme Audit Institutions Level 3 INTOSAI Auditing Standards Level 4: Auditing Guidelines. The standards have been progressively promulgated since January 2007 and some

of the standards have yet to be completed. It is likely that many SAIs will not yet have adopted all of the Level 4 guidelines developed to date. They are likely to have adopted the higher level standards, especially the Level 3 INTOSAI Auditing Standards, and developed in-house their own detailed audit manuals of procedures to implement these higher level standards. The status of Level 4 Auditing Guidelines as of December 2008 was:

Guidelines on financial audit – 9 endorsed by INTOSAI, 11 exposed as draft, 19 planned for 2010

Guidelines on compliance audit – 3 exposed as draft Guidelines on performance audit – 1 endorsed by INTOSAI, 1 planned for 2010. When each ISSAI Level 4 guideline is prepared by INTOSAI the text of the

corresponding International Standards for Auditing (ISA) standard is incorporated into the ISSAI. Where Level 4 guidelines are not yet endorsed or released in exposure draft for important standards, this diagnostic uses the relevant ISA.

This Diagnostic Tool Part 2 should be used in conjunction with the ISSAI published on the INTOSAI website (www.issai.org) and the IFAC IAASB 2008 Handbook of International Auditing, Assurance, and Ethics Pronouncements as of January 1, 2008.

References to specific Standards are placed in brackets at the end of each question. Note on Terminology Used in this Questionnaire

“Standard” refers to any applicable standards and implementation guidelines on financial audit and compliance audit issued as part of the ISSAI by of INTOSAI; any International Standard on Auditing (ISA) issued by the International Auditing and Assurance Standards Board of IFAC; and any International Education Guidelines (IEG) issued by IFAC.

http://www.issai.org/�

GENERAL INFORMATION Country:

Date of Preparation:

Individual(s) Responsible for Preparation:

Organizational Affiliation(s):

Address:

Telephone Number:

Fax Number:

E-mail Address:

1. Please identify the government entities which have to conduct audits of the financial reports or operations of government entities.

2. Is there an official list of the differences between national auditing standards and ISSAI or ISA? If yes, please attach it to the diagnostic tool and indicate who prepared it. Please note that the existence of such a list does not alleviate the need to complete the diagnostic tool.

3. What bodies are responsible for establishing the national private sector and public sector

auditing standards? Please describe the bodies and to whom they report.

I. ISSAI 1210 EXPOSURE DRAFT – AGREEING THE TERMS OF AUDIT ENGAGEMENTS Please refer to the whole text of ISSAI 1210. I.1 Adoption of the ISSAI

Questions Yes No 1(a) Has the Exposure Draft Agreeing the Terms of Audit Engagements been

adopted as a national standard?

Has ISSAI 1210 Agreeing the Terms of Audit Engagements been adopted as a national standard?

Comments:

1(b) If the answer to the above is NO what value would be added by adopting the standard?

Comments:

1(c) If a national standard has been adopted that differs from the international standard please set out the differences and provide a copy of the national standard.

Comments:

I.2 Establishing the Pre-conditions for the Audit Please refer to the whole text of ISSAI 1210

Questions Yes No 2(a) When establishing whether necessary preconditions for an audit are present, the financial reporting framework may often be prescribed by law and regulation. If public sector auditors determine that the framework prescribed by law and regulation is not acceptable they apply the requirements of paragraphs 6, 19 and 20 of ISA 210, and also consider informing the legislature or influencing standard setting by professional or regulatory organizations. The SAI could inform the legislature about its work program (ISSAI 1210 P5)

Comments:

2(b) The terms of an audit engagement in the public sector are normally mandated and therefore not subject to agreement with management, but the requirements in the standard are useful in establishing a common, formal understanding of the respective roles and responsibilities of management and the auditor. Since the public sector auditor is normally engaged by and reports to the legislature, agreements often need to be reached with both the legislature and management. Is there an engagement letter, and what discussions occur with management prior to the audit? (ISSAI 1210 P7)

Comments:

I.3 Assess the Gap

Comment Please assess the differences between the audit practices and the international standard. If there is a national standard that differs from the international standard please assess to what extent, if any, the practice tends to differ from the “strict” wording of the national auditing standard(s)/regulation(s) addressing the requirements of this standard? Add a brief explanation about the reason(s) for any divergence.

Comments:

II. ISSAI 1220 QUALITY CONTROL FOR AUDITS OF HISTORICAL FINANCIAL INFORMATION Please refer to the whole text of ISSAI 1220. II.1 Adoption of the ISSAI

Questions Yes No 1(a) Has ISSAI 1220 Quality Control for Audits of Historical Financial

Information been adopted as a national standard?

Comments:


Comments:


Comments:

II.2 Quality Control Programs Please refer to the whole text of ISSAI 1220

Questions Yes No 2(a) Does the SAI have the quality control and assurance programs in place to ensure audit performance and results? (ISA 220 and ISSAI 1220 establish standards and provide guidance on quality control relating to the policies and procedures regarding audit work generally, and procedures regarding the work delegated to assistants on an individual audit. The standard requires that applicable quality control policies and procedures should be implemented on individual audits by the person delegated by the Auditor General to perform the audit.) Please provide a copy of any written quality control and assurance procedures.

Comments:

2(b) Do the quality control procedures cover the responsibility of the audit manager for:

• Assignment: the audit team has the appropriate capabilities, competence and

time to perform the audit. • Supervision: covering the following functions during the audit: (a) monitor

the progress of the audit, (b) become informed of and address significant accounting and auditing issues, and (c) resolve any differences of professional judgment between personnel and consider the level of consultation that is appropriate.

• Review: more experienced team members and the audit manager review work performed by less experienced team members?

• Reporting: before the auditor’s report is issued, the audit manager, through review of the audit documentation and discussion with the engagement team, should be satisfied that sufficient appropriate audit evidence has been obtained to support the conclusions reached (IFAC ISA 220.21-220.29)

Comments:

II.3 Supervision of Auditors Please refer to the whole text of ISSAI 1220

Questions Yes No 3(a) Is there a process to record that work at each level and audit phase is properly supervised; and documented work is reviewed by a senior audit member? (INTOSAI Auditing Standards 3.0.3).

Comments:

3(b) Does the process of supervision ensure that working papers contain evidence adequately supporting all conclusions, recommendations and opinions? (INTOSAI Auditing Standards 3.0.3d)

Comments:

3(c) Does the supervision ensure that the audit report includes the audit conclusions, recommendations and opinions? (INTOSAI Auditing Standards 3.0.3f).

Comments:

3(d) Does the review process ensure that all evaluations and conclusions are soundly based and are supported by competent, relevant and reasonable audit evidence as the foundation for the final audit opinion or report? (INTOSAI Auditing Standards 3.2.4a)

Comments:

II.4 Assess the Gap


Comments:

III. ISSAI 1230 AUDIT DOCUMENTATION Please refer to the whole text of ISSAI 1230. III.1 Adoption of the ISSAI

Questions Yes No 1(a) Has ISSAI 1230 Audit Documentation been adopted as a national

standard?

Comments:


Comments:


Comments:

III.2 Procedures Please refer to the whole text of ISSAI 1230

Questions Yes No 2(a) Does the SAI have procedures for the confidentiality, safe custody, integrity, accessibility and retrieval of documentation covering the record of audit procedures performed, relevant audit evidence obtained, and conclusions the auditor reached? (ISSAI 1230 P6) Please describe the regulations and provide a copy of the relevant manual of procedures.

Comments:

2(b) Are there arrangements to ensure that the auditor obtains competent, relevant and reasonable evidence to support the auditor's judgment and conclusions regarding the organization, program, activity or function under audit? (INTOSAI Auditing Standards 3.5.1)

Comments:

2(c) In a Court of Accounts environment are procedures sufficient to support the requirements of the rules of evidence? (ISSAI 1230 P15)

Comments:

2(d) Are documentation procedures adequate to enable another auditor to understand and report to a scrutiny review on the significant matters arising from the audit including lack of compliance, violations of contract provisions, unauthorized expenditures, improper execution of the budget? (ISSAI 1230 P3)

Comments:

2(e) Are there adequate procedures to ensure timely completion of the assembly of the audit file and working papers? (ISSAI 1230 P4)

Comments:

III.3 Assess the Gap


Comments:

IV. ISSAI 1240 EXPOSURE DRAFT - THE AUDITOR'S RESPONSIBILITY RELATING TO FRAUD IN AN AUDIT OF FINANCIAL STATEMENTS Please refer to the whole text of ISSAI 1240. IV.1 Adoption of the ISSAI

Questions Yes No 1(a) Has ISSAI 1240 The Auditor's Responsibility Relating to Fraud in an

Audit of Financial Statements been adopted as a national standard?

Comments:


Comments:


Comments:

IV.2 Management Representations Please refer to the whole text of ISSAI 1240

Questions Yes No 2(a) ISA 240 establishes standards and provides guidance on the auditor's responsibility to consider fraud and error in an audit of financial statements. Does the auditor make inquiries of management, and others within the entity as appropriate including Internal Audit, to determine whether they have knowledge of any actual, suspected or alleged fraud affecting the entity? (ISA 240.18 – ISA 240.19)

Comments:

2(b) Does the auditor obtain written representations from management that: (a) It acknowledges its responsibility for the design, implementation and maintenance of internal control to prevent and detect fraud; (b) It has disclosed to the auditor the results of its assessment of the risk that the financial statements may be materially misstated as a result of fraud; (c) It has disclosed to the auditor its knowledge of fraud or suspected fraud affecting the entity; and (d) It has disclosed to the auditor its knowledge of any allegations of fraud, or suspected fraud, affecting the entity’s financial statements communicated by employees, former employees, analysts, regulators or others?

Comments:

IV.3 Assessment of Fraud Risk Factors Please refer to the whole text of ISSAI 1240

Questions Yes No 3(a) Does the audit procedure include a documented assessment of fraud risk factors as set out in the ISSAI 1240? (ISSAI 1240 Appendix 1)

Comments:

3(b) Does the audit procedure include a documented examination of processes such as procurement and personnel expenses that are prone to high fraud risk factors as set out in the ISSAI 1240? (ISSAI 1240 Appendix 2)

Comments:

IV.4 Assess the Gap


Comments:

V. ISSAI 1250 EXPOSURE DRAFT - CONSIDERATIONS OF LAWS AND REGULATIONS IN AN AUDIT OF FINANCIAL STATEMENTS Please refer to the whole text of ISSAI 1250. V.1 Adoption of the ISSAI

Questions Yes No 1(a) Has ISSAI 1250 Considerations of Laws and Regulations in an Audit of

Financial Statements been adopted as a national standard?

Comments:


Comments:


Comments:

V.2 Compliance with Laws Please refer to the whole text of ISSAI 1250

Questions Yes No 2(a) In conducting specific regularity and financial statements attest audits, are tests made of compliance with applicable laws and regulations? (INTOSAI Auditing Standards 3.4.1) ISA 250 and ISSAI 1250 establish standards and provide guidance on the auditor's responsibility to consider laws and regulations during an audit of financial statements. Please explain the process used in financial statement audits and in regularity or compliance audits to assess compliance with laws.

Comments:

2(b) For an audit of financial statements does the auditor obtain a general understanding of the legal and regulatory framework applicable to the entity and the industry and how the entity is complying with that framework? (ISA 250.15)

Comments:

2(c) Does the auditor report all identified instances of non-compliance with laws and regulations or only those that are material? What criteria are used to assess materiality? (ISSAI 1250 P9)

Comments:

2(d) Can the auditor direct the entity to correct or make recoveries where instances of non-compliance are found? (ISSAI 1250 P9)

Comments:

V.3 Testing Procedures Please refer to the whole text of ISSAI 1250

Questions Yes No 3(a) Please describe the main testing procedures used during the audit of financial statements to help identify instances of non compliance with those laws and regulations where noncompliance should be considered when preparing financial statements. (ISA 250.18-250.19)

Comments:

V.4 Evaluating the System of Controls Please refer to the whole text of ISSAI 1250

Questions Yes No 4(a) Generally, management is responsible for establishing an effective system of internal controls to ensure compliance with laws and regulations. In designing steps and procedures to test or assess compliance during the audit of financial statements, the auditor evaluates the entity's internal controls and assesses the risk that the control structure might not prevent or detect non-compliance. Please describe the audit processes used. Are these evaluations used to report to management on defects in the system of internal controls and are recommendations made on the steps that should be taken to improve the system? (ISA 250.17)

Comments:

4(b) During the audit of financial statements does the auditor obtain written representations that management has disclosed to the auditor all known actual or possible noncompliance with laws and regulations whose effects should be considered when preparing financial statements? (ISA 250.23)

Comments:

4(c) Please describe the processes used in a compliance or regularity audit to make sure that the State budget and accounts are complete and valid? Does the audit procedure normally result, in the absence of irregularity, in the granting of a "discharge"? If yes, please give a brief description.

Comments:

V.5 Assess the Gap


Comments:

VI. ISSAI 1260 COMMUNICATION OF AUDIT MATTERS WITH THOSE CHARGED WITH GOVERNANCE Please refer to the whole text of ISSAI 1260. VI.1 Adoption of the ISSAI

Questions Yes No 1(a) Has ISSAI 1260 Communication of Audit Matters with those Charged

with Governance been adopted as a national standard?

Comments:


Comments:


Comments:

VI.2 Reporting on the Financial Statements Please refer to the whole text of ISSAI 1260

Questions Yes No 2(a) Does the SAI express an opinion as to whether the financial statements are prepared in all material respects in accordance with the applicable reporting framework? Who is provided with the .opinion and how long after the end of the financial period? What reporting is made to the legislative body and others charged with governance? Who is generally considered to be charged with governance other than those involved in the management of the audited entity? (ISSAI 1260 P4)

Comments:

VI.3 Reporting on Non-compliance Please refer to the whole text of ISSAI 1260

Questions Yes No 3(a) Are reports provided to those charged with governance on other matters such as exceeding budget authorizations, non-compliance with authorities and on the effectiveness of internal control systems? (ISSAI 1260 P5)

Comments:

VI.4 Other Matters to be Reported Please refer to the whole text of ISSAI 1260

Questions Yes No 4(a) Are reports provided to those charged with governance on the planned scope and timing of audits and on the matters set out in ISA 260.14? (ISSAI 1260 P6)

Comments:

VI.5 Assess the Gap


Comments:

VII. ISSAI 1300 PLANNING AN AUDIT OF FINANCIAL STATEMENTS Please refer to the whole text of ISSAI 1300. VII.1 Adoption of the ISSAI

Questions Yes No 1(a) Has ISSAI 1300 Planning an Audit of Financial Statements been adopted

as a national standard?

Comments:


Comments:


Comments:

VII.2 Establishing an Audit Strategy Please refer to the whole text of ISSAI 1300

Questions Yes No 2(a) Does the audit manager document an overall audit strategy that sets the scope, timing, direction, reporting objectives, resources and timetables of the audit? (IFAC ISA 300.6-300.7) Please provide a copy of any audit planning manual of procedures.

Comments:

2(b) Does the audit planning objective require (i) expressing an opinion whether the financial statements have been prepared, in all material respects, in accordance with the applicable financial reporting framework; (ii) reporting whether the public sector auditors found any instances of non-compliance with authorities including budget and accountability and (iii) reporting on the effectiveness of internal control? (ISSAI 1300 P4) Please describe the objectives if they differ from these three objectives.

Comments:

VII.3 Deciding on Resources Please refer to the whole text of ISSAI 1300

Questions Yes No 3(a) Does the planning process consider the availability of auditee personnel and data in arranging and timing the audit? Does the plan include organizing meetings with management and those charged with governance to discuss the

nature, timing and extent of the audit work and reporting? (ISA 300 Appendix)

Comments:

3(b) Does the planning process assign appropriately experienced team members and greater budget to areas where there may be higher risks of material misstatement? (ISA 300 Appendix)

Comments:

3(c) Does the auditor plan the nature, timing and extent of direction and supervision of engagement team members and the review of their work? (ISA 300.10)

Comments:

VII.4 Developing the Audit Plan Please refer to the whole text of ISSAI 1300

Questions Yes No 4(a) Does the auditor document an audit plan describing

(i) the nature, timing and extent of planned risk assessment procedures, as determined under ISSAI 1315, “Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment”, and

(ii) the nature, timing and extent of planned further audit procedures at the assertion level, as determined under ISSAI 1330, “The Auditor’s Responses to Assessed Risks”? (ISA 300.8)

Please describe the required content of the audit plan.

Comments:

4(b) In the Court of Accounts environment, the auditors’ report is often judged and used to determine personal legal implications of those who are responsible for financial acts, including significant matters, control deficiencies, and instances of non-compliance with authorities. Does the auditor plan and perform procedures to identify those responsible for financial acts?(ISSAI 1300 P11)

Comments:

4(c) Does the planning process review the internal audit of the audited entity and its work program? Does the audit testing rely on any of the work of Internal Audit? (ISA 300 Appendix)

Comments:

VII.5 Assess the Gap


Comments:

VIII. ISSAI 1315 IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENTS THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT Please refer to the whole text of ISSAI 1315. VIII.1 Adoption of the ISSAI

Questions Yes No 1(a) Has ISSAI 1315 Identifying and Assessing the Risks of Material

Misstatements Through Understanding the Entity and its Environment been adopted as a national standard?

Comments:


Comments:


Comments:

VIII.2 Assessing Internal Controls Please refer to the whole text of ISSAI 1315

Questions Yes No 2(a) Is there a process to study and evaluate the reliability of internal control in determining the extent and scope of the audit? (INTOSAI Auditing Standards 3.3.1) ISSAI 1315 and 1330 (which include the text of ISA 315 and 330) establish standards and provide guidance on obtaining an understanding of the accounting and internal control systems and on audit risk and its components: inherent risk, control risk and detection risk.

Comments:

2(b) In developing the overall audit plan, does the auditor perform risk assessment procedures to provide a basis for the identification and assessment of risks of material misstatement at the financial statement and assertion levels, and breakdowns in internal controls or compliance with budget or other authorities? Please describe the procedures and specify whether they include examination of other audits, legislative or other reports on the auditee, inquiries of management, analytical procedures, and direct inspection activities in the auditee. (ISSAI 1315 P3 and ISA 315.6)

Comments:

2(c) Does the auditor evaluate whether: (a) Management, with the oversight of those charged with governance, has created and maintained a culture of honesty and ethical behavior; and

(b) The strengths in the control environment elements collectively provide an appropriate foundation for the other components of internal control, and whether those other components are not undermined by control environment weaknesses? Does the auditor obtain an understanding of whether the auditee has a process for: (a) Identifying business risks relevant to financial reporting objectives; (b) Estimating the significance of the risks; (c) Assessing the likelihood of their occurrence; and (d) Deciding about actions to address those risks? Is the auditee required by legislation to undertake a risk assessment process? (ISA 315.15 and ISSAI 1315 P15)

Comments:

2(d) Does the audit obtain an understanding of the information system, including the related business processes, relevant to financial reporting, and communication? (ISA 315.18- ISA 315.19) After obtaining an understanding of the accounting and internal control systems, does the auditor identify those control and monitoring activities that relate to the risks of material misstatement at the assertion level and then design further audit procedures responsive to the assessed risks? (ISA 315.20 – ISA315.23)

Comments:

2(e) Does the audit document in the audit working papers: (a) conclusions reached about risks of material misstatement at the financial statement level and at the assertion level; (b) the understanding obtained of the entity’s accounting and internal control systems; (c) the assessment of control risk? (ISA 315.33)

Comments:

2(f) Does the audit evaluate and report whether the audit work performed has identified a material weakness in the design, implementation or maintenance of internal control? (ISA 315.31- ISA 315.32)

Comments:

2(g) Does the audit include assessment of internal control issues? (ISSAI 1315 P14)

Comments:

VIII.3 Assessing Risks of Material Misstatement Please refer to the whole text of ISSAI 1315

Questions Yes No 3(a) Does the audit assess and document the specific public sector risks listed

in Appendix 1 of ISSAI 1315? (ISSAI 1315 App 1)

Comments:

3(b) Does the audit consider and document the effects of decisions initiated outside the entity because of political processes? (ISSAI 1315 P12)

Comments:

VIII.4 Assess the Gap


Comments:

IX. ISSAI 1320 EXPOSURE DRAFT - MATERIALITY IN PLANNING AND PERFORMING AN AUDIT Please refer to the whole text of ISSAI 1320. IX.1 Adoption of the ISSAI

Questions Yes No 1(a) Has ISSAI 1320 Materiality in Planning and Performing an Audit been


Comments:


Comments:


Comments:

IX.2 Determining Materiality Levels Please refer to the whole text of ISSAI 1320

Questions Yes No 2(a) Materiality has aspects related to size and nature of misstatements. Does the planning process document appropriate materiality levels, including: ○ Setting materiality for planning purposes. ○ Setting and communicating materiality for auditors of components. ○ Reconsidering materiality as audit procedures are performed during the

course of the audit? (ISSAI 1320 P8, ISA 320.9 and ISA 300 Appendix)

Comments:

2(b) The objectives of the audit may include additional audit and reporting responsibilities, for example, relating to reporting whether the auditor found any instances of non-compliance with authorities including budget and accountability and/or reporting on the effectiveness of internal control. Even in cases where there are no such additional reporting objectives, there may be general public expectations in regard to public sector auditors’ reporting of non-compliance with authorities or reporting on the effectiveness of internal control. Does the SAI keep such expectations in mind when determining materiality and what procedures are used to do this? (ISSAI 1320 P3)

Comments:

IX .3 Special Considerations in Determining Materiality Please refer to the whole text of ISSAI 1320

Questions Yes No 3(a) Where the audit objectives include reporting on instances of non-compliance with authorities or for reporting on the effectiveness of controls, are materiality levels set

(i) for each type of control deviation, and

(ii) for each type of non-compliance?

Is the materiality set in terms of percentage of transactions or monetary amounts?

Does the audit take into account the legislators’ and regulators’ expectations as regards cost-effectiveness of controls and non-compliance? (ISSAI 1320 P6)

Comments:

3(b) Are certain audit procedures performed, regardless of materiality such as audit procedures designed to detect misstatements that could be significant solely because of their nature?

Please give some examples. Examples of such procedures might be tests of ministerial salaries regulated by statute and sensitive payments such as travel and hospitality of senior staff members. (ISSAI 1320 P7)

Comments:

IX.4 Assess the Gap


Comments:

X. ISSAI 1330 THE AUDITOR’S RESPONSES TO ASSESSED RISKS Please refer to the whole text of ISSAI 1330. X.1 Adoption of the ISSAI

Questions Yes No 1(a) Has ISSAI 1330 The Auditor’s Responses to Assessed Risks been


Comments:


Comments:


Comments:

X.2 Audit Procedures based on Assessed Risks Please refer to the whole text of ISSAI 1330

Questions Yes No 2(a) The objective of the auditor is to obtain sufficient appropriate audit evidence about the assessed risks of material misstatement, through designing and implementing appropriate responses to those risks as determined using procedures in accordance with ISSAI 1315 “Identifying and Assessing Risks of Material Misstatement Through Understanding the Entity and Its Environment”. Does the auditor design and implement overall responses to address the assessed risks of material misstatement at the financial statement level? (ISA 330 P5)

Comments:

2(b) Does the auditor design and perform further audit procedures whose nature, timing, and extent are based on, and are responsive to, the assessed risks of material misstatement at the assertion level? (ISA 330 P6-7)

Comments:

2(c) When planning the timing of further audit procedures as described in paragraph 6 of ISA 330 (Redrafted), does the auditor take into account that tests of compliance with laws and regulations may be carried out during the year while tests of budget execution normally are completed at year-end? (ISA 330 P5)

Comments:

X.3 Tests of Controls based on Assessed Risks Please refer to the whole text of ISSAI 1330

Questions Yes No 3(a) Does the auditor perform tests of controls to obtain sufficient appropriate audit evidence that the controls were operating effectively at relevant times during the period under audit? (ISSAI 1330 P6-9)

Comments:

3(b) Irrespective of the assessed risks of material misstatement, does the auditor design and perform substantive procedures for each material class of transactions, account balance, and disclosure? (ISA 330.20 – ISA 330.25) Does the auditor document that the financial statements agree or reconcile with the underlying accounting records? (ISA330.29) When the auditor can not obtain sufficient appropriate audit evidence as to a material financial statement assertion or conformance with authorities, does the auditor express a qualified opinion or a disclaimer of opinion? (ISA 330.28 and ISSAI 1330 P10)

Comments:

X.4 Evaluating the Sufficiency and Appropriateness of Audit Evidence Please refer to the whole text of ISSAI 1330

Questions Yes No 3(a) Does the auditor make management aware in writing, as soon as practical and at an appropriate level of responsibility, of material weaknesses in the design or operation of the accounting and internal control systems, which have come to the auditor's attention? (ISA 330.19)

Comments:

3(b) The auditor’s judgment as to what constitutes sufficient appropriate audit evidence is influenced by such factors as the following: • Significance of the potential misstatement in the assertion and the likelihood of its having a material effect, individually or aggregated with other potential misstatements, on the financial statements. • Effectiveness of management’s responses and controls to address the risks. • Experience gained during previous audits with respect to similar potential misstatements. • Results of audit procedures performed, including whether such audit procedures identified specific instances of fraud or error. • Source and reliability of the available information. • Persuasiveness of the audit evidence. • Understanding of the entity and its environment, including the entity’s internal control. Does the auditor consider the above issues to decide whether to express a qualified opinion or disclaimer if the auditor is unable to obtain sufficient appropriate audit evidence?

Comments:

3(c) In a Court of Accounts environment, the auditors’ report is often judged and used to determine personal legal implications of those responsible for financial acts, including significant matters, control deficiencies and instances of non-compliance with authorities. In other environments it can be relevant to identify similar factors to assist with rectification. When evaluating the sufficiency and appropriateness of audit evidence, does the auditor perform procedures to identify those responsible for financial acts and for compliance with legal requirements? (ISSAI 1330P11)

Comments:

X.5 Assess the Gap


Comments:

XI. ISSAI 1450 EVALUATION OF MISSTATEMENTS IDENTIFIED DURING THE AUDIT Please refer to the whole text of ISSAI 1450. XI.1 Adoption of the ISSAI

Questions Yes No 1(a) Has ISSAI 1450 Evaluation of Misstatements Identified during the Audit

been adopted as a national standard?

Comments:


Comments:


Comments:

XI.2 Accumulation of Identified Misstatements Please refer to the whole text of ISSAI 1450

Questions Yes No 2(a) In expressing an opinion whether the financial statements have been prepared, in all material respects, in accordance with the applicable financial reporting framework, does the auditor accumulate misstatements identified during the audit, other than those that are clearly trivial, distinguishing between factual misstatements, judgmental misstatements and projected misstatements? (ISA 450 5)

Comments:

2(b) In the case of additional objectives relating to reporting whether the auditor found any instances of non-compliance with authorities including budget and accountability and/or reporting on the effectiveness of internal control, public sector auditors may also accumulate instances of non-compliance with authorities and may classify them as factual, judgmental or projected. Generally, public sector auditors do not define instances of non-compliance with authorities or control deviations that are clearly trivial, as all such instances or deviations are normally accumulated and evaluated. Does the auditor follow this practice? (ISSAI 1450 P6)

Comments:

XI.3 Evaluating the Effect of Uncorrected Misstatements Please refer to the whole text of ISSAI 1450

Questions Yes No 3(a) Does the auditor separately evaluate financial statement misstatements, instances of non-compliance with authorities and control deviations? (ISSAI 1450 P10)

Comments:

3(b) Does the auditor document: (a) The amount below which misstatements would be regarded as clearly trivial; (b) All misstatements accumulated during the audit, distinguishing between factual misstatements, judgmental misstatements and projected misstatements, and whether they have been corrected by management; and (c) The auditor’s conclusion as to whether uncorrected misstatements, individually or in aggregate, cause the financial statements as a whole to be materially misstated, and the basis for that conclusion? (ISA 450 20)

Comments:

XI .4 Correction of Misstatements Please refer to the whole text of ISSAI 1450

Questions Yes No 4(a) Does the auditor order the entity to correct any instance of non-compliance with authorities?

Comments:

4(b) Does the auditor communicate all misstatements accumulated during the audit to the appropriate level of management on a timely basis and request management to correct them?

Comments:

XI.5 Assess the Gap


Comments:

XII. ISSAI 1500 CONSIDERING THE RELEVANCE AND RELIABILITY OF AUDIT EVIDENCE Please refer to the whole text of ISSAI 1500. XII.1 Adoption of the ISSAI

Questions Yes No 1(a) Has ISSAI 1500 Considering the Relevance and Reliability of Audit

Evidence been adopted as a national standard?

Comments:


Comments:


Comments:

XII.2 Information to be used as Evidence Please refer to the whole text of ISSAI 1500

Questions Yes No 2(a) When obtaining audit evidence from tests of control does the auditor have procedures to assess the relevance and reliability of the information to be used as audit evidence, including the adequacy of the accuracy and completeness of the information and its degree of detail? (ISA 500.12)

Comments:

2(b) When obtaining audit evidence from substantive procedures, does the auditor consider the sufficiency and appropriateness of audit evidence from such procedures together with any evidence from tests of control to support financial statement assertions?

Comments:

XII.3 Selecting Items for Testing to Obtain Audit Evidence Please refer to the whole text of ISSAI 1500

Questions Yes No 3(a) When designing tests of controls and tests of details, does the auditor have procedures for determining the means of selecting items for testing that are effective in meeting the purpose of the audit procedure. The means available to the auditor are: (a) Selecting all items (100% examination); (b) Selecting specific items; and

(c) Audit sampling? (ISA 500.13)

Comments:

3(b) Does the audit of tangible assets include physical examination of the assets? (ISA 500.28)

Comments:

3(c) When long-term investments are material to the financial statements, does the auditor obtain sufficient appropriate audit evidence regarding their valuation and disclosure?

Comments:

3(d) In what circumstances is it usual for the audit procedure to obtain confirmations?

Comments:

XII.4 Evidence relating to Grants Please refer to the whole text of ISSAI 1500

Questions Yes No 4(a) Public sector entities will usually have established internal controls designed to secure the regularity of transactions. However, where the audited entity is responsible for giving grants or other financial assistance to other parties, it is often the case that the regularity of the transaction will depend on the other parties satisfying the criteria and meeting the terms for receiving assistance. Does the auditor obtain evidence on the entity's exercise of its responsibilities to satisfy itself about the transactions of these other parties?

Comments:

XII.5 Assess the Gap


Comments:

XIII. ISSAI 1530 EXPOSURE DRAFT DUE 2009 - AUDIT SAMPLING AND OTHER MEANS OF TESTING Please refer to the whole text of ISSAI 1530 when available and ISA 530 until then. XIII.1 Adoption of the ISSAI

Questions Yes No 1(a) Pending the preparation of ISSAI 1530 Audit Sampling and Other Means

of Testing, has ISA 530 Audit Sampling and Other Means of Testing during the Audit been adopted as a national standard?

Comments:


Comments:


Comments:

XIII.2 Tests of Controls Please refer to the whole text of ISSAI 1530 when available and ISA 530 until then

Questions Yes No 2(a) Do the audit procedures specify the use of audit sampling for tests of controls when application of the control leaves audit evidence of performance that can be used for attribute sampling? (ISA 530.16).

Comments:

2(b) Do the audit procedures require the auditor to identify the characteristics or attributes that indicate performance of a control, as well as possible deviation conditions which indicate departures from adequate performance? (ISA 530.15)

Comments:

XIII.3 Tests of Account Balances Please refer to the whole text of ISSAI 1530 when available and ISA 530 until then

Questions Yes No 3(a) Are audit sampling and other means of selecting items for testing and gathering audit evidence used to verify assertions about a financial statement amount (for example, the existence of accounts receivable)? Are audit sampling and other means of selecting items for testing and gathering audit evidence used to make an independent estimate of some amount (for example, the value of obsolete inventories)? (ISA 530.17)

Comments:

3(b) Are monetary errors found in the sample projected to the population, and the effect of the projected error compared with established tolerable error? (ISA 530.51)

Comments:

XIII .4 Evaluating the Sample Results Please refer to the whole text of ISSAI 1530 when available and ISA 530 until then

Questions Yes No 4(a) Does the auditor evaluate the sample results to determine whether the assessment of the relevant characteristic of the population is confirmed or needs to be revised? (ISA 530.54)

Comments:

XIII.5 Assess the Gap


Comments:

XIV. ISSAI 1550 EXPOSURE DRAFT - RELATED PARTIES Please refer to the whole text of ISSAI 1550. XIV.1 Adoption of the ISSAI

Questions Yes No 1(a) Has ISSAI 1550 Related Parties been adopted as a national standard?

Comments:


Comments:


Comments:

XIV.2 Risk Assessment Procedures Please refer to the whole text of ISSAI 1550

Questions Yes No 2(a) The nature of related party relationships and transactions may, in some circumstances, give rise to higher risks of material misstatement of the financial statements than transactions with unrelated parties. Entities that are under common control by a government are considered related when they engage in significant transactions or share resources to a significant extent with one another. Also there may be many, smaller apparently 'insignificant' transactions taking place which may be deemed irregular. Does the auditor have procedures to identify cases where related party issues need to be considered? (ISSAI 1550 P6)

Comments:

2(b) Do the auditors obtain evidence that significant transactions with related parties outside the entity’s normal course of business are appropriately authorized and approved? (ISSAI 1550 P13)

Comments:

2(c) Do the auditors have procedures to check whether regulations related to procurement require that contracts with third parties, including related parties, are subject to competitive tendering or some other form of ‘market testing’ to demonstrate ‘value for money’? (ISSAI 1550 P14)

Comments:

XIV.3 Assess the Gap


Comments:

XV. ISSAI 1700 DUE 2009 - REPORTING ON FINANCIAL STATEMENTS (ISA 700) Please refer to the whole text of ISSAI 1700 when available and ISA 700 until then. XV.1 Adoption of the ISSAI

Questions Yes No 1(a) Pending the preparation of ISSAI 1700 Reporting on Financial

Statements, has ISA 1700 Reporting on Financial Statements been adopted as a national standard?

Comments:


Comments:


Comments:

XV.2 Preparation of the Audit Opinion Please refer to the whole text of ISSAI 1700 when available and ISA 700 until then

Questions Yes No 2(a) At the end of each audit does the auditor prepare a clear written opinion, setting out the findings in an appropriate form? (INTOSAI Auditing Standards 4.0.3) ISA 700 establishes standards and provides guidance on the form and content of the auditor's report issued as a result of an audit performed by an independent auditor of the financial statements of an entity.

Comments:

2(b) Does the opinion paragraph contain a reference to the financial reporting framework used to prepare the financial statements including identifying the country of origin of the financial reporting framework when the framework used is not International Accounting Standards? (ISA 700.17)

Comments:

XV.3 Content of the Opinion Paragraph Please refer to the whole text of ISSAI 1700 when available and ISA 700 until then

Questions Yes No 3(a) Does the opinion include all of the elements required by the ISA: (a) Title; (b) Addressee; (c) Introductory paragraph;

(d) Management’s responsibility for the financial statements; (e) Auditor’s responsibility; (f) Auditor’s opinion; (g) Other reporting responsibilities; (h) Auditor’s signature; (i) Date of the auditor’s report; and (j) Auditor’s address. (ISA 700.65)

Comments:

3(b) Does the opinion paragraph contain an expression of opinion on the financial statements stating the auditor’s opinion as to whether the financial statements give a true and fair view (or are presented fairly) in all material respects? Please provide an example of the text used for an unqualified auditor’s report. (ISA 700.39)

Comments:

3(c) Does the state that the auditor believes that the audit evidence the auditor has obtained is sufficient and appropriate to provide a basis for the auditor’s opinion? (ISA 700.38)

Comments:

3(d) In some jurisdictions, the auditor may have additional responsibilities to report on other matters that are supplementary to the auditor’s responsibility to express an opinion on the financial statements. For example, the auditor may be asked to express an opinion on the adequacy of accounting records or internal controls. Does an additional opinion paragraph contain any such additional matters? (ISA 700.46)

Comments:

XV.4 Provision of Detailed Audit Report Please refer to the whole text of ISSAI 1700 when available and ISA 700 until then

Questions Yes No 4(a) Does the SAI provide a detailed report amplifying the opinion in circumstances in which it has been unable to give an unqualified opinion? Are reports made where weaknesses exist in systems of financial control or accounting? (INTOSAI Auditing Standards 4.0.16)

Comments:

XV.5 Assess the Gap


Comments:

XVI. ISSAI 4100 EXPOSURE DRAFT – COMPLIANCE AUDIT FOR FINANCIAL STATEMENTS Please refer to the whole text of ISSAI 4100. XVI.1 Adoption of the ISSAI

Questions Yes No 1(a) Has ISSAI 4100 Exposure Draft Compliance Audit for Financial

Statements been adopted as a national standard?

Comments:


Comments:


Comments:

XVI.2 Scope and Objective of Compliance Audit Please refer to the whole text of ISSAI 4100.

Questions Yes No 2(a) Compliance audit has a broader scope than ISSAI 1250 ‘The Auditor's Responsibilities Relating to Laws and Regulations in an Audit of Financial Statements’, whose objective is for the auditor to obtain sufficient appropriate audit evidence that the financial statements are not materially misstated due to non-compliance with laws and regulations, and to respond appropriately to identified or suspected non-compliance with laws and regulations. When a separate opinion on compliance is required does the auditor conduct more extensive testing of compliance with laws and regulations to enable a compliance opinion to be formed? (ISSAI 4100 P9)

Comments:

2(b) Depending on the mandate and constitutional role of the SAI, the overall objective of compliance audit is to enable public sector auditors to report to the legislature and/or other bodies as appropriate, on whether the activities, financial transactions and information reflected in the financial statements are, in all material respects, in compliance with the authorities which govern them; and, for SAIs representing the Court of Accounts system, to communicate judgments on such matters to the appropriate bodies. Does the SAI use this objective? (ISSAI 4100 P16) Please describe the compliance audit objective used.

Comments:

XVI.3 Development of the Audit Criteria Please refer to the whole text of ISSAI 4100.

Questions Yes No 3(a) In developing criteria for the audit does the auditor consider: (a) particular provisions of budgetary laws or resolutions governing the use of approved appropriations; (b) particular provisions of budgetary laws or resolutions governing financial transactions, funds and balances; (c principles for the conduct of public sector officials; (d) principles for sound public sector financial management? (ISSAI 4100 P 24)

Comments:

3(b) the audit criteria available to the audited entity? (ISSAI 4100 P 26)

Comments:

XVI.4 Development of the Audit Criteria and Plan Please refer to the whole text of ISSAI 4100.

Questions Yes No 4(a) In developing the audit plan does the auditor examine: (a) the legal, regulatory and appropriations framework that provides the authorities that govern transactions; (b) management's assessment of applicable laws and regulations that need to be observed through the internal controls; (c) significant contracts or grant agreements; and (d) establish the audit procedures for the compliance audit criteria that are developed to determine whether in all material respects the activities, transactions and information comply with the authorities? (ISSAI 4100 P 29)

Comments:

XVI.5 Materiality and Risk Assessment in Developing the Audit Opinion Please refer to the whole text of ISSAI 4100.

Questions Yes No 5(a) In planning compliance audit, public sector auditors may often set lower materiality levels than would be the case for an audit of financial statements depending on the public accountability of the auditee, legal and regulatory requirements, the visibility and sensitivity of programs, public expectations. Are materiality levels set for testing whether compliance is adequate in relation to assessed risks; and is statistical sampling used to form an opinion?

(ISSAI 4100 P 34-46)

Comments:

5(b) The audit is to obtain sufficient appropriate audit evidence to conclude with reasonable assurance and express an opinion on whether the activities, financial transactions and operations comply with the authorities which govern them 'in all material respects'. Due to the inherent limitations of an audit, public sector auditors cannot be expected to detect all occurrences of non-compliance through the audit work and what represents a material compliance deviation is a matter of judgment. Is this approached used by the SAI and is there formal guidance on how these judgments are to be applied? (ISSAI 4100 P 48-51)

Comments:

5(c) When the opinion on compliance is incorporated in the auditor's report on the financial statements is the compliance opinion clearly set apart from the opinion on the financial statements? (ISSAI 4100 P 34-46)

Comments:

XVI.6 Assess the Gap


Comments:

The World Bank

Public sector Accounting: A Comparison to International Standards

Assessment of Cash Basis Public Sector Accounting Standards


April, 2009

CONTENTS

I. Foreword ......................................................................................................................................... 2

II. Framework for the Preparation and Presentation of Financial Statements .................................... 4

III. The Preparation and Presentation of Financial Statements on the Cash Basis ............................. 4

I. FOREWORD

As part of its public sector financial management reform program, the World Bank has developed a framework for assessing the variance between national and international standards in public sector accounting. This toolkit is developed for use in different countries to promote improvements in public sector financial management. This part of the review assesses the comparability of International Public Sector Accounting Standards [IPSASs) in comparison to the National Public Sector Accounting Standards of the respective country and the degree of actual compliance with the applicable national standards.

While the questionnaire is designed to assess the major gaps existing between national and International Public Sector Accounting Standards, it may not justly cover the many detailed differences that may exist between the two and that may have a material impact on financial statements.





1. Please list the categories of government entities, which have to prepare and publish legal entity and/or consolidated financial statements in accordance with national accounting standards, which were compared to IPSAS in this diagnostic tool.

2. Is there an official list of the differences between national accounting standards and IPSAS? If yes, please attach it to the diagnostic tool and indicate whom prepared it. Please note that the existence of such a list does not alleviate the need to complete the diagnostic tool.

II. FRAMEWORK FOR THE PREPARATION AND PRESENTATION OF FINANCIAL STATEMENTS Please refer to the whole text of the IPSAS Cash Basis Standard

Questions Yes No 1(a) Has the Government adopted a national accounting framework on which

the national standards are based.

Comments:

1(b) In the national framework or standards:

i. Cash Basis – Are financial statements prepared on the cash basis?

ii. Other Basis – Are financial statements prepared on a basis other than cash, e.g. modified accrual or full accrual?

Comments:

1(c) Assess the impact of any differences between national standards and IPSASs on the relevance and reliability of the financial statements for external reporting.

Response/Comments:

III. THE PREPARATION AND PRESENTATION OF FINANCIAL STATEMENTS ON THE CASH BASIS Please refer to the whole text of the IPSAS Cash Basis standard. Part 1: Requirements Presentation and Disclosure Requirements

Questions Yes No 2(a) Do national accounting standards require a set of financial statements

which include the following components:

(i) Statement of cash receipts and payments

(ii) Accounting policies and explanatory notes

(iii) Approved budget and a comparison of budget and actual amounts (IPSAS 1.3.4)

Comments:

2(b) Is there a minimum requirement in respect of information to be presented in the Statement of Cash Receipts and Payments? (1.3.12 -1.3.14)

Comments:

2(c) Do national accounting standards require disclosing payments made by third parties on behalf of the entity? (IPSAS 1.3.24)

Comments:

2(d) Do national accounting standards require to disclose in the notes information about the basis of preparation of the financial statement and the specific accounting policies selected and applied for significant transactions and other events? (IPSAS 1.3.30)

Comments:

2(e) Do the notes provide additional information which is not presented on the face of the financial statements but is necessary for a fair presentation of the entity’s cash receipts, cash payments and cash balances? (IPSAS 1.3.30)

Comments:

2(f) Are the notes to the financial statements presented in a systematic manner? (IPSAS 1.3.31)

Comments:

2(g) Is there a requirement that general purpose financial statements present information that is:

(i)

(ii)

Understandable

(iii)

Relevant to the decision-making and accountability needs of users; and

a.

Reliable in that it:

b.

Represents faithfully the cash receipts, cash payments and cash balances of the entity and the other information disclosed;

c.

Is neutral, that is, free from bias; and

Is complete in all material respects.

(IPSAS 1.3.32)

Comments:

General Consideration

Questions Yes No 3(a) Are the financial statements presented annually? (IPSAS 1.4.1)

Comments:

3(b) Are the financial statements presented within 6 months of the reporting date? (IPSAS 1.4.4)?

Comments:

3(c) Do national accounting standards require disclosing the date the financial

statements were authorized for issue and who gave that authorization? (IPSAS 1.4.5)

Comments:

(i)

3(d) Is there a requirement to disclose the following information:

(ii)

Domicile and legal form

(iii)

Description of the nature

(iv)

Reference to the relevant legislation

The name of the controlling entity and the ultimate controlling entity (IPSAS 1.4.7)

Comments:

3(e) Do national standards require disclosing any restrictions on cash balances and access to borrowings? (IPSAS 1.4.9)

Comments:

3(f) Are the presentation and classification of items in the financial statements retained from one period to the next unless

(i) A significant change in the nature of the operations of the entity or a review of its financial statements presentation demonstrates that the change will result in a more appropriate presentation of events or transactions; or

(ii) A change in presentation is required by an IPSAS (IPSAS 1.4.13)

Comments:

3(g) Is there a requirement to disclose information in respect of the previous period for all numerical information in the financial statements? (IPSAS 1.4.16)

Comments:

3(h) Is it possible to identify and distinguish Financial statements clearly from other information in the same published document? (IPSAS 1.61)

Comments:

3(j) Is each component of the financial statements clearly identified (entity, reporting date, currency)? (IPSAS 1.4.23)

Comments:

Correction of Errors

Questions Yes No

4(a) Is there a requirement to adjust amounts of errors that relate to prior periods? (IPSAS 1.5.1)

Comments:

(i) The nature of the error

4(b) Do national standards require disclosing in the notes to the financial statements the following: (IPSAS 1.5.2.)

(ii) The amount of the correction; and

(iii) The fact that comparative information has been restated or that it is impracticable to do so.

Comments:

Consolidated Financial Statements

Questions Yes No 5(a) Do the national standards follow the concept of the economic entity,

meaning a group of entities comprising the reporting entity and one or more controlled entities? (IPSAS 1.6.2 - 1.6.4)

Comments:

5(b) Do the national standards require the elimination of balances or transactions between the consolidated entities? (IPSAS 1.6.16)

Comments:

5(c) Do the national standards state a maximum difference between the reporting dates of the reporting entity and the consolidated entities? If yes, please indicate the maximum difference in months. (IPSAS 1.6.16)

Comments:

5(d) If there is difference in reporting dates, do the national standards require adjusts for significant transactions in the meantime? (IPSAS 1.6.16)

Comments:

5(e) Do the national standards require uniform accounting policies to be used within the group of consolidated entities? (IPSAS 1.6.16)

Comments:

5(f) Do national standards require disclosing the following:

(i) A listing of significant controlled entities including the name and the jurisdiction in which the controlled entity operates (when it is different from that of the controlling entity); and

(ii) The reasons for not consolidating a controlled entity. (IPSAS 1.6.20)

Comments:

Foreign Currency

Questions Yes No 6(a) Are there requirements about the treatment of foreign currency cash

receipts, payments and balances?

(IPSAS 6.49)

Comments:

Presentation of Budget Information in Financial Statements

Questions Yes No 7(a) Do national accounting rules require the presentation of a comparison

between budget and actual amounts? (IPSAS 1.9.8)

Comments:

7(b) Is there a comparison between the originally approved budget and the actual amounts? Does it show subsequent adjustments to budget? (IPSAS 1.9.8 and 1.9.23)

Comments:

7(c) Is there a comparison made on a comparable basis, i.e. the same accounting basis, the same classification, the same scope of entities and the same period of time? Is there reconciliation if there are any differences in the basis? (IPSAS 1.9.8 and 1.9.41)

Comments:

7(d) Is a note disclosure about the basis of budgeting and accounting required? (IPSAS 1.9.33, 1.9.37, 1.9.39)

Comments:

7(e) Not for compliance evaluation, but in order to gather some more information:

(i) Is the budget comparison presented in a separate statement or in a column approach? (Both are acceptable under IPSAS 1.9).

(ii) Is the budget a single-year or a multi-year budget? (Both are acceptable under IPSAS 1.9, although multi-year budgets should be attributed to each year for comparison purposes).

Comments:

Recipients of External Assistance

Questions Yes No 8(a) Is there a requirement to disclose separately on the face of the Statement

of Cash Receipts and Payments, total external assistance received in cash during the period. (IPSAS 1.10.8)

Comments:

8(b) Do national accounting rules require the separate disclosure of total external assistance paid by third parties during the period to directly settle obligations of the entity or purchase goods and services on behalf of the entity, showing separately

(i) Total payments made by third parties which are part of the economic entity to which the reporting entity belongs; and

(ii) Total payments made by third parties which are not part of the economic entity to which the reporting entity belongs? (IPSAS 1.10.9)

Comments:

8(c) Is there a requirement of disclosing separately the significant classes of providers of assistance either on the face of the Statement of Cash Receipts and Payments or in the notes to the financial statements. (IPSAS 1.10.10)

Comments:

8(d) If external assistance is received in the form of loans and grants are there requirements to disclose the total received amount? (IPSAS 1.10.11)

Comments:

8(e) Do national accounting rules require disclosing in the notes to the financial statements the balance of undrawn external assistance loans and grants which are specified in a binding agreement and available at reporting date to fund future operations? (IPSAS 1.10.18)

Comments:

8(f) Is there a requirement to disclose in the notes, significant terms and conditions that determine, or affect access to, the amount of the undrawn assistance? (IPSAS 1.10.18)

Comments:

8(g) Do national accounting rules require disclosing in the notes, the value of external assistance received in the form of goods or services and the basis on which that value is determined? (IPSAS 1.10.21)

Comments:

8(h) Do the national standards require disclosing the amount of external assistance debt rescheduled or cancelled during the period? (IPSAS 1.10.23)

Comments:

8(i) Do national accounting rules require disclosing in the notes significant terms and conditions of external assistance loan or grant agreements or guarantees that have not been complied during the period? (IPSAS 1.10.25)

Comments:

Part 2: Encouraged Additional Disclosure This part of the Standard is not mandatory. It sets out encouraged additional disclosures for reporting under the cash basis. However, non-compliance does NOT create a compliance gap.

Questions Yes No 9(a) Do national accounting rules require disclosing significant doubt upon the

entity’s ability to continue as a going concern? (IPSAS 2.1.3)

Comments:

9(b) Is there a requirement to separately disclose the nature and amount of each extraordinary item? (IPSAS 2.1.6)

Comments:

9(c) Is there a requirement to disclose in the notes, the amount and nature of cash flows and cash balances resulting from transactions administered by an entity as an agent on behalf of others where those amounts are outside the control of the entity? (IPSAS 2.1.15)

Comments:

9(d) Do national accounting rules require to disclose:

(i) an analysis of total cash payments and payments by third parties using a classification based on either the nature of the payments or their function within the entity, as appropriate; and

(ii) Proceeds from borrowings. In addition, the amount of borrowings may be further classified into type and source. (IPSAS 2.1.23)

Comments:

9(e) Does the national standard require to disclose information about related party relationships and certain transactions with related parties? (IPSAS

2.1.31. / IPSAS 20 “Related Party Disclosure”)

Comments:

9(f) Are there requirements to disclose in the notes to the financial statements:

(i) Information about the assets and liabilities of an entity; and

(ii) If an entity does not make publicly available its approved budget, a comparison with budgets. (IPSAS 2.1.33)

Comments:

9(g) Is there a requirement to include in the financial statements a cross reference to reports which include information about service achievements? (IPSAS 2.1.37)

Comments:

9(h) If entities adopt multi-period budgets is there a requirement to disclose additional information about the relationship between budget and actual amounts during the period? (IPSAS 2.1.38)

Comments:

9(i) Consolidated Financial Statements - Do national accounting rules require to disclose in the notes information such as:

(i) the proportion of ownership interest in controlled entities

(ii) the name of any controlled entity

(iii) the name of any entity in which an ownership interest of more than 50% is held but which is not a controlled entity

(iv) a description of the method used to account for controlled entities

(v) the reasons if a controlling entity does not present a consolidated statement of cash receipts and payments (IPSAS 2.1.41-2.1.42)

Comments:

9(j) Is there a requirement to present separately the aggregate cash flows arising from acquisitions and from disposals of controlled entities or other operating units? (IPSAS 2.1.44-2.1.45)

Comments:

9(k) Does the national standard require to disclose information about joint ventures? (IPSAS 2.1.49)

Comments:

9(l) Does the national standard include any specification concerning hyperinflation? (IPSAS 2.1.53-2.1.54)

Comments:

9(m) Is there a requirement to disclose:

(i) The purposes for which external assistance was received during the reporting, showing separately amounts provided by way of loans and grants; and

(ii) The purposes for which external assistance payments were made during the reporting period. (IPSAS 2.1.66)

Comments:

9(n) Do national accounting rules require identifying in notes to the financial statements each provider of external assistance during the period and the amount provided, excluding any undrawn amounts? (IPSAS 2.1.70)

Comments:

9(o) In respect of external assistance, is there a requirement to disclose:

(i) Each provider of loan assistance and grant assistance and the amount provided by each;

(ii) The purposes for which the undrawn loan assistance and undrawn grant asstistance may be used;

(iii) The currency in which the undrawn assistance is held or will be made available, and

(iv) Changes in the amount of undrawn loan assistance and undrawn grant assistance during the period. (IPSAS 2.1.72)

Comments:

9(p) Does the national standard require to disclose in notes to the financial statements the terms and conditions of external assistance agreements that determine or affect access to, or limit the use of, external assistance? (IPSAS 2.1.76)

Comments:

9(q) Is there a requirement to disclose in the notes:

(i) The outstanding balance of any external assistance loans for which principal and/or interest payments have been guranteed by third parties, any terms and conditions related to those loans, and any additional terms and conditions arising from the guarantee; and

(ii) The amount and terms and conditions of external assistance loans and grants for which performance of related terms and conditions have been guaranteed by third parties, and any additional terms and conditions arising from the guarantee. (IPSAS 2.1.80)

Comments:

9(r) Does the national standard require to disclose in the notes significant terms and conditions associated with external assistance loans, grants or

guarantees that have been complied with, together with the consequence of the non compliance? (IPSAS 2.1.83)

Comments:

9(s) Do national accounting rules require disclosing in the notes a summary of the repayment terms and conditions of outstanding external assistance debt and in which currency are the future dept service payments reported? (IPSAS 2.1.86)

Comments:

The World Bank


Assessment of Accrual Basis Public Sector Accounting Standards


April, 2009

CONTENTS

Foreword ............................................................................................................................................. 1

Framework for the Preparation and Presentation of ........................................................................... 2

Financial Statements ........................................................................................................................... 2

I. Presentation of Financial Statements on the Accrual Basis ............................................................ 2

II. Cash flow statements ..................................................................................................................... 8

III. Accounting Policies, Changes in Accounting Estimates and Errors .......................................... 11

IV. The effects of changes in foreign exchange rates ....................................................................... 14

V. Borrowing Costs .......................................................................................................................... 17

VI. Consolidated and Separate Financial Statements ....................................................................... 19

VII. Investments in Associates ......................................................................................................... 21

VIII. Interests in Joint Ventures ........................................................................................................ 23

IX. Revenue from Exchange Transactions ....................................................................................... 25

X. Financial Reporting in Hyperinflationary Economies ................................................................. 28

XI. Construction Contracts ............................................................................................................... 29

XII. Inventories ................................................................................................................................. 33

XIII. Leases ....................................................................................................................................... 35

XIV. Events after the Reporting Date ............................................................................................... 39

XV. Financial Instruments: Disclosure and Presentation ................................................................ 41

XVI. Investment Property ................................................................................................................. 44

XVII. Property, Plant and Equipment ............................................................................................... 50

XVIII. Segment Reporting ................................................................................................................ 54

XIX. Provisions, Contingent Liabilities and Contingent Assets ....................................................... 57

XX. Related Party Disclosures ......................................................................................................... 62

XXI. Impairment of Non-Cash Generating Assets ........................................................................... 64

XXII. Disclosure of Financial Information about the General Government Sector ......................... 66

XXIII. Revenue from Non-Exchange Transactions (Taxes and Transfers) ...................................... 68

XXIV. Presentation of Budget Information in Financial Statements ............................................... 70

XXV. Employee Benefits ................................................................................................................. 72

XXVI. Impairment of Cash Generating Assets ................................................................................ 75

FOREWORD

As part of its public sector financial management reform program, the World Bank has developed a framework for assessing the variance between national and international standards in public sector accounting. This toolkit is developed for use in different countries to promote improvements in public sector financial management. This part of the review assesses the comparability of International Public Sector Accounting Standards (IPSASs) in comparison to the National Public Sector Accounting Standards of the respective country and the degree of actual compliance with the applicable national standards. There are basically three levels of achievement:

(i) No achievement whatsoever; (ii) National standards/regulation observed, but no compliance with IPSAS; (iii) IPSAS or national standards based on IPSAS observed

This questionnaire assesses the national standards in direct comparison with the IPSAS. Whatever purpose the questionnaire is used for, the assessment is conducted on a standard by standard basis, following the order in which the IPSAS have been pronounced.





FRAMEWORK FOR THE PREPARATION AND PRESENTATION OF FINANCIAL STATEMENTS (a) Please list the categories of government entities which have to prepare and publish legal

entity and/or consolidated financial statements in accordance with national accounting standards.

1.1. (b) Is there an official list of the differences between national accounting standards and

IPSAS? If yes, please attach it to the diagnostic tool and indicate who prepared it. Please note that the existence of such a list does not alleviate the need to complete the diagnostic tool.

1.2.

Questions Yes No 1(a) Has the Government adopted a national financial accounting and

reporting framework on which the national standards are based?

Comments:

1(b) In the national framework or standards:

i. Accrual Basis – Are financial statements prepared on accrual basis? (IPSAS 1.2)

ii. Other Basis – Are financial statements prepared on a basis other than accrual basis?

Comments:

1(c) Assess the impact of any differences between national standards and IPSASs on the relevance and reliability of the financial statements for external reporting.

Response/Comments:

I. PRESENTATION OF FINANCIAL STATEMENTS ON THE ACCRUAL BASIS Please refer to the whole text of the IPSAS 1

Questions Yes No 1(a) Has IPSAS 1 Presentation of Financial Statements been adopted as a

national standard?

Comments:

1(b) Are there any plans to change the national standards in respect of presentation of financial statements in near future?

Comments:

1(c) Is there a current regulation which addresses this issue? (i.e. not referring to IPSAS)

If yes, please give a brief description:

I.2 Financial Statements Please refer to the whole text of the IPSAS 1.

Questions Yes No 2(a) Does the financial statements provide information about the financial

position, performance and cash flows of an entity? (IPSAS 1.15)

Comments:

2(b) Are the responsibilities for the preparation and presentation of financial statements defined? (IPSAS 1.19-20)

Comments:

2(c) Does the set of financial statements include the following components: (a) Statement of financial position; (b) Statement of financial performance; (c) Statement of changes in net assets/equity (d) Cash flow statement; and

(e) Comparison of budget and actual amounts (f) Accounting policies and notes to the financial statements? (IPSAS 1.21)

Comments:

I.3 Overall Considerations Please refer to the whole text of the IPSAS 1.

Questions Yes No 3(a) Fair Presentation and Compliance with International Public Sector

Accounting Standards – Do Financial Statements present fairly the financial position, financial performance and cash flows of an entity? (IPSAS 1.27)

Comments:

3(b) Going concern – Is an assessment of an entity’s ability to continue as a going concern be made when preparing financial statements? (IPSAS 1.38)

Comments:

3(c) Consistency of Presentation – Are the presentation and classification of items in the financial statements retained from one period to the next unless (a) A significant change in the nature of the operations of the entity or a review of its financial statements presentation demonstrates that the change will result in a more appropriate presentation of events or transactions; or (b) A change in presentation is required by an IPSAS (IPSAS 1.42)

Comments:

3(d) Materiality and Aggregation – Are items that are material by virtue of their nature presented separately in the financial statements? (IPSAS 1.45)

Comments:

3(e) Offsetting – Are assets and liabilities offset? (IPSAS 1.48)

Comments:

3(f) Comparative information – Is comparative information disclosed in respect of the previous period for all numerical information in the financial statements? (IPSAS 1.53)

Comments:

I.4 Structure and Content Please refer to the whole text of the IPSAS 1.

Questions Yes No 4(a) Identification of Financial Statements – Is it possible to identify and

distinguish Financial statements clearly from other information in the same published document? (IPSAS 1.61)

Comments:

4(b) Is each component of the financial statements clearly identified (entity, reporting date, currency)? (IPSAS 1.63)

Comments:

4(c) Reporting Period – Are the financial statements presented annually? (IPSAS 1.66)?

Comments:

4(c) Timeliness – Are the financial statements presented within 6 months of the reporting date? (IPSAS 1.69)?

Comments:

4(d) The current/non-current distinction – Do current and non-current assets and current and non-current liabilities have to be presented as separate classifications on the face of the statement of financial statement of financial position? (IPSAS 1.70)

Comments:

4(e) Current Assets – Is an asset classified as a current asset when it (a) is expected to be realized in, or is held for sale or consumption in, the normal course of the entity’s operating cycle; or (b) is held primarily for trading purposes; or (c) for realization within 12 months; or (d) is cash or cash equivalent asset? (IPSAS 1.76)

Comments:

4(f) Current Liabilities – Is a liability classified as a current liability when it: (a) is expected to be settled in the normal course of the entity’s operating cycle; or (b) is held primarily for trading purposes; or (c) is due to be settled within twelve months of the reporting date; or (d) the entity may not defer the settlement for more than 12 months? (IPSAS 1.80)

Comments:

4(g) Information to be presented on the face of the Statement of Financial

Position – Is there minimum requirement in respect of which line items have to be presented on the face of the Statement of Financial Position? (1.88)

Comments:

4(h) Information to be presented either on the face of the Statement of Financial Position or in the Notes – Does an entity disclose either on the face of the statement of financial position or in the notes to the statement of financial position further sub-classifications of the line items presented, classified in a manner appropriate to the entity’s operations? (IPSAS 1.93)

I.5 Statement of Financial Performance / Statement of Changes in Net Assets/Equity / Notes Please refer to the whole text of the IPSAS 1.

Questions Yes No 5(a) Information to be Presented on the Face of the Statement of Financial

Performance – Is there minimum requirement in respect of which line items have to be presented on the face of the Statement of Financial Performance? (IPSAS 1.102)

Comments:

5(b) Information to be Presented either on the Face of the Statement of Financial Performance or in the Notes – Does an entity present, either on the face of the statement of financial performance or in the notes to the statement of financial performance, a sub-classification of total revenue, classified in a manner appropriate to the entity’s operations? (IPSAS 1.108)

Comments:

5(c) Does an entity present a Statement of Changes in Net Assets/Equity ? If so, does the Statement show on the face of the Statement:

(i)surplus or deficit

(ii) each item of revenue and expense for the period

(iii) total revenue and expense for the period

(iv) effects of changes in accounting policies, corrections and errors in accordance with IPSAS 3? (IPSAS 1.118)

Comments:

5(d) Structure – Are the notes to the financial statements presented in a systematic manner? (IPSAS 1.127-128)

Comments:

5(e) Disclosure of Accounting Policies – Does the accounting policies section

of the notes to the financial statements describe (a) the measurement basis (bases) used (b) the extent to which the entity has applied transitional provisions (c) other accounting policies that are relevant to an understanding of the financial statements? (IPSAS 1.132)

Comments:

II. CASH FLOW STATEMENTS Please refer to the whole text of the IPSAS 2

Questions Yes No 1(a) Has IPSAS 2 Cash Flow Statements been adopted as a national standard?

Comments:

1(b) Are there any plans to change the national standards in respect of cash flow statements in near future?

Comments:



II.2 Presentation of a Cash Flow Statement Please refer to the whole text of the IPSAS 2

Questions Yes No 2(a) Does the cash flow statement report cash flows during the period

classified by operating, investing and financing activities? (IPSAS 2.18)

Comments:

2(b) Does an entity report cash flows from operating activities using the direct method? (IPSAS 2.27)

Comments:

2(c) Does an entity report cash flows from operating activities using the indirect method? (IPSAS 2.27)

Comments:

II.3 Reporting Cash Flows Please refer to the whole text of the IPSAS 2

Questions Yes No 3(a) Does an entity report separately major classes of gross cash receipts and

gross cash payments arising from investing and financing activities? (IPSAS 2.31)

Comments:

3(b) Does cash flows arising from the following (see paragraph 2.32) operating, investing or financing are reported on a net basis? (IPSAS 2.32)

Comments:

3(c) Are cash flows arising from transactions in a foreign currency recorded in an entity’s reporting currency by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the cash flow? (IPSAS 2.36)

Comments:

3(d) Are cash flows which are received and paid from interest and dividends disclosed separately? (IPSAS 2.40)

Comments:

3(e) Are cash flows arising form taxes on net surplus disclosed separately and classified as cash flows from operating activities unless they can specifically identified with financing and investing activities? (IPSAS 2. 44)

Comments:

II.4 Components Please refer to the whole text of the IPSAS 2

Questions Yes No 4(a) Are the aggregate cash flows arising form acquisitions and from disposals

of controlled entities or other operating units presented separately and classified as investing activities? (IPSAS 2.51)

Comments:

4(b) Are investing and financing transactions which do not require the use of cash or cash equivalents excluded from a cash flow statement

?

(IPSAS 2.56)

Comments:

4(c) Are entities required to disclose the components of cash and cash equivalents and present a reconciliation of the amounts in its cash flow statement with the equivalent items reported in the statement of financial position? (IPSAS 2.58)

Comments:

4(d) Are entities required to disclose, together with a commentary by management in the notes to the financial statements, the amount of significant cash and cash equivalent balances held by the entity that are not available for use by the economic entity. (IPSAS 2.61)

Comments:

III. ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS Please refer to the whole text of the IPSAS 3

Questions Yes No 1(a) Has IPSAS 3 Accounting Policies, Changes in Accounting Estimates and

Errors been adopted as a national standard?

Comments:

1(b) Are there any plans to change the national standards in respect of accounting policies, changes in accounting estimates and errors?

Comments:



III.2 Accounting Policies/Estimates/Errors Please refer to the whole text of the IPSAS 3

Questions Yes No 2(a) Selection and Application of Accounting Policies – Do national

accounting standards require a transaction to apply the appropriate IPSAS standards and guidance? (IPSAS 3.9)

Comments:

2(b) In the absence of an IPSAS for a specific transaction, does management use its judgment consistent with IPSAS 3.12 - 15 in developing and applying an accounting policy? (IPSAS 3.12))

Comments:

2(c) Change in Accounting Policy – Do national accounting standards follow the criteria for changes in accounting policies as set forth in IPSAS 3.17 – 3.30? (IPSAS 3.17 – 3.30)

Comments:

2(d) Is a change in accounting policy only possible if required by an accounting standard setting body, or if the change will result in more relevant or reliable information about the financial position, financial performance or cash flows of the entity? (IPSAS 3.17)

Comments:

2(e) Is a change in accounting policy which is made on the adoption of an International Public Sector Accounting Standard accounted for in accordance with the specific transitional provisions, if any, in that

International Public Sector Accounting Standard? (IPSAS 3.24)

Comments:

2(f) Is a change in accounting policy applied retrospectively unless the amount

of any resulting adjustment that relates to prior periods is not reasonably determinable? (IPSAS 3.28)

Comments:

2(g) Is the effect of a change in an accounting estimate included in the determination of net surplus or deficit in: (a) The period of the change, if the change affects the period only; or (b) The period of the change and future periods, if the change affects both? (IPSAS 3.41)

Comments:

2(h) Is the nature and amount of a change in an accounting estimate that has an effect in the current period or which is expected to have an effect in future periods disclosed? (IPSAS 3.44)

Comments:

2(i) Are material prior period errors corrected retrospectively in the first set of financial statements after their discovery by:

(a) restating the comparative amounts for prior period(s) presented in which the error occurred; or

(b) if the error occurred before the earliest prior period presented, restating the opening balances of assets, liabilities and net assets/equity for the earliest period presented? (IPSAS 3.47)

Comments:

2(j) Does an entity disclose prior period errors consistent with the IPSAS disclosure requirements? (IPSAS 3.54)

Comments:

IV. THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES Please refer to the whole text of the IPSAS 4

Questions Yes No 1(a) Has IPSAS 4 The Effects of Changes in Foreign Exchange Rates been


Comments:

1(b) Are there any plans to change the national standards in respect of the effects of changes in foreign exchange rates in near future?

Comments:



IV.2 Transactions Please refer to the whole text of the IPSAS 4

Questions Yes No 2(a) Initial Recognition – Is a foreign currency transaction recorded, on initial

recognition in the functional currency, by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the transaction? (IPSAS 4.24)

Comments:

2(b) Reporting at Subsequent Reporting Dates – At each reporting date: (a) Are foreign currency monetary items reported using the closing rate; (b) Are non-monetary items which are carried in terms of historical cost denominated in a foreign currency reported using the exchange rate at the date of the transaction; and (c) Are non-monetary items which are carried at fair value denominated in a foreign currency reported using the exchange rates that existed when the values were determined? (IPSAS 4.27)

Comments:

2(c) Recognition of Exchange Differences – Are settlement of monetary items at rates different than at initial recognition recognized in surplus or deficit? (IPSAS 4.32)

Comments:

2(d) Change in Functional Currency – When there is a change in functional currency, does the entity apply the translation procedures applicable at the new functional currency prospectively from the date of change?(IPSAS

4.40)

Comments:

IV.3 Use of presentation currency other than functional currency Please refer to the whole text of IPSAS 4

Questions Yes No 3(a) If the entity chooses to present financial statements in another currency

than the entity’s functional currency, the positions are translated as follows unless in a hyperinflationary economy: - Assets and liabilities (including comparatives) are translated at the closing rate at the date of the financial statement - Revenues and expenses (including comparatives) are translated at the exchange rates at the date of the transaction - Resulting differences shall be recognized as a separate component of the net assets/equity (IPSAS 4.44)

Comments:

3(b) In a hyperinflationary economy, is there a requirement to restate the financial statements first according to IPSAS 10 before translating to another currency? (IPSAS 4.48)

Comments:

II.4 Foreign Operations / Disclosure Please refer to the whole text of the IPSAS 4

Questions Yes No 4(a) Are the financial statements of a foreign operation that is part of the

operations of the reporting entity translated using the standards and procedures in paragraphs 43 to 49 and 51 - 56 so that the transactions of the foreign operation can be included in the financial statements of the reporting entity by consolidation, proportional consolidation or the equity method? (IPSAS 4.50)

Comments:

4(b) Disposal of a Foreign Entity – On the disposal of a foreign entity, is the cumulative amount of the exchange differences which have been deferred in a separate component of net asset/equity relating to that foreign operations recognized in surplus or deficit when the gain or loss on disposal is recognized? (IPSAS 4.57)

Comments:

4(c) Are there disclosure requirements about foreign exchange transactions equivalent to IPSAS 4, i.e. requiring the disclosure of exchange rate differences recognized in surplus/deficit and net assets/equity? (IPSAS

4.60 to 4.61)

Comments:

4(d) Are there disclosure requirements about other than functional currencies equivalent to IPSAS 4, i.e. on the translation between the presenting and functional currency? (IPSAS 4.62 to 4.66)

Comments:

V. BORROWING COSTS Please refer to the whole text of the IPSAS 5

Questions Yes No 1(a) Has IPSAS 5 Borrowing Costs been adopted as a national standard?

Comments:

1(b) Are there any plans to change the national standards in respect of borrowing costs in near future?

Comments:



Questions Yes No 2(a) Recognition – Are borrowing costs recognized as an expense in the period

in which they are incurred? (IPSAS 5.14)

Comments:

2(b) Disclosure – Does the financial statements disclose the accounting policy adopted for borrowing costs? (IPSAS 5.16)

Comments:

2(c) Recognition – Are borrowing costs recognized as an expense in the period in which they are incurred, except to the extent that they are capitalized in accordance with paragraph 18? (IPSAS 5.17)

Comments:

2(d) Do national accounting standards require, as the only treatment or as an alternative, the capitalization of borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset? Please specify if it is a requirement or an alternative. (IPSAS 5.18)

Comments:

2(e) Where an entity adopts the allowed alternative treatment, is that treatment applied consistently to all borrowing costs that are directly attributable to the acquisition, construction or production of all qualifying assets of the entity? (IPSAS 5.20)

Comments:

2(f) Borrowing Costs Eligible for Capitalization – To the extent that funds are

borrowed specifically for the purpose of obtaining a qualifying asset, is the amount of borrowing costs eligible for capitalization on that asset determined as the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of those borrowings? (IPSAS 5.23)

Comments:

2(g) Is the capitalization rate the weighted average of the borrowing costs applicable to the borrowings of the entity that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset? Does the amount of borrowing costs capitalized during a period not exceed the amount of borrowing costs incurred during that period? (IPSAS 5.25)

Comments:

2(h) Commencement of Capitalization – Does the capitalization of borrowing costs as part of the cost of a qualifying asset commence when: (a) Outlays for the asset are being incurred; (b) Borrowing costs are being incurred; and (c) Activities that are necessary to prepare the asset for its intended use for sale are in progress? (IPSAS 5.31)

Comments:

2(i) Suspension of Capitalization – Is the capitalization of borrowing costs suspended during extended periods in which active development is interrupted, and expensed? (IPSAS 5.34)

Comments:

2(j) Cessation of Capitalization – Is the capitalization of borrowing costs cease when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete? (IPSAS 5.36-5.39)

Comments:

2(k) Does the financial statement disclose: (a) The accounting policy adopted for borrowing costs; (b) The amount of borrowing costs capitalized during the period; and (c) The capitalization rate used to determine the amount of borrowing costs eligible for capitalization (when it was necessary to apply a capitalization rate to funds borrowed generally). (IPSAS 5.40)

Comments:

VI. CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS Please refer to the whole text of the IPSAS 6

Questions Yes No 1(a) Has IPSAS 6 Consolidated Financial Statements and Accounting for

Controlled entities been adopted as a national standard?

Comments:

1(b) Are there any plans to change the national standards in respect of consolidated financial statements in near future?

Comments:



VI.2 Group of Entities/Scope of Consolidation Please refer to the whole text of the IPSAS 6

Questions Yes No 2(a) Do the national standards follow the concept of the economic entity,

meaning a group of entities comprising the reporting entity and one or more controlled entities? (IPSAS 6.12-6.14)

Comments:

2(b) Do the national standards consider both commercial objectives as well as social policy when defining the group of entities? (IPSAS 6.15-6.42)

Comments:

2(c) Do the national standards define the group of entities to be consolidated (scope of consolidation) based on the control criterion? (IPSAS 6.21)

Comments:

2(d) Do the national standards exclude entities from consolidation if control is intended only temporary or management is actively seeking a buyer? (IPSAS 6.28-6.42)

Comments:

2(e) Is the control criterion in the national standards defined the same way as in IPSAS 6, reflecting power and benefit conditions? (IPSAS 6.39-6.40) If no, please highlight the differences.

Comments:

VI.3 Consolidation Procedures Please refer to the whole text of the IPSAS 6

Questions Yes No 3(a) Do the national standards require a line by line procedure when

consolidating financial statements of other group entities? (IPSAS 6.43)

Comments:

3(b) Do the national standards require the elimination of balances or transactions between the consolidated entities? (IPSAS 6.45)

Comments:

3(c) Do the national standards state a maximum difference between the reporting dates of the reporting entity and the consolidated entities? If yes, please indicate the maximum difference in months. (IPSAS 6.48)

Comments:

3(d) If there is difference in reporting dates, do the national standards require to adjust for significant transactions in the mean time? (IPSAS 6.48)

Comments:

3(e) Do the national accounting standards require uniform accounting policies to be used within the group of consolidated entities? (IPSAS 6.49)

Comments:

3(f) Do the national accounting standards require minority interests to be calculated and presented? If yes, please indicate in which section of the statement of financial position they are presented (liabilities, net assets/equity, separate from both). (IPSAS 6.54)

Comments:

3(g) Is there any guidance how to account for consolidated entities in separate financial statements, if such statements are presented? (IPSAS 6.58-6.60)

Comments:

3(h) Are the disclosures in respect of consolidated entities the same like in IPSAS? (IPSAS 6.62) If no, please provide a list with the differences.

Comments:

VII. INVESTMENTS IN ASSOCIATES Please refer to the whole text of the IPSAS 7 Questions Yes No 1(a) Has IPSAS 7 Investments in Associates been adopted as a national

standard?

Comments:

1(b) Are there any plans to change the national standards in respect of associates in near future?

Comments:



Questions Yes No 2(a) Do national accounting standards define associates the same way as the

IPSAS? Associate is an entity in which the investor has significant influence and which is neither a controlled entity nor a joint venture (IPSAS 7.19)

Comments:

2(b) Do the national accounting standards define equity method the same way as the IPSAS? Equity method is a method of accounting whereby the investment is initially recorded at cost and adjusted thereafter for the post-acquisition change in the investor’s share of surplus or deficit of the investee. (IPSAS 7.7/7.17)

Comments:

2(c) Do the national standards define and describe significant influence the same way as the IPSAS? Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not to control over those policies. (IPSAS 7.7/7.11- 7.16)

Comments:

2(d) Do the national accounting standards require to account in the consolidated financial statements for an investment in an associate under the equity method except when the investment is acquired and held exclusively with a view to its disposal within the next twelve months and that management is actively seeking a buyer, in which case it should be accounted for in accordance with the accounting standard dealing with recognition and measurement of financial instruments? (IPSAS 7.19-20)

Comments:

2( e) Is the investor required to discontinue the use of the equity method from the date that it ceases to have significant influence in an associate? (IPSAS 7.24)

Comments:

2(f) Do the national standards require to account in the separate financial statements for an investment in an associate using either (a) the equity method; or (b) at cost; or (c) as a financial instrument.? (IPSAS 7.41/6.58

)

Comments:

2(g) Are the disclosures in respect of associates the same like in IPSAS? (IPSAS 7.43-7.46) If no, please provide a list with the differences.

Comments:

VIII. INTERESTS IN JOINT VENTURES Please refer to the whole text of the IPSAS 8

Questions Yes No 1(a) Has IPSAS 8 Interests in Joint Ventures been adopted as a national

standard?

Comments:

1(b) Are there any plans to change the national standards in respect of joint ventures in near future?

Comments:



Questions Yes No 2(a) Do national accounting standards define joint ventures the same way as

the IPSAS? Joint venture is a binding arrangement whereby two or more parties are committed to undertake an activity which is subject to joint control (IPSAS 8.6)

Comments:

2(b) Do national accounting standards distinguish between jointly controlled operations, jointly controlled assets and jointly controlled entities? (IPSAS 8.19/8.25 /8.35/8.43)

Comments:

2(c) Do the national accounting standards require in respect of interests in jointly controlled operations to recognize in its separate financial statements: (a) The assets that it controls an the liabilities that it incurs; and (b) The expenses that it incurs and its share of the revenue that it earns

? (IPSAS 8.19)

Comments:

2(d) Do the national accounting standards require in respect of interests in

jointly controlled assets to recognize in its separate financial statements: (a) Its share in the jointly controlled assets, classified according to the nature of assets; and (b) Any liabilities which it has incurred; and (c) Its share of any liabilities it has incurred jointly with the other venturers in relation to the joint venture; and (d) Any revenue form the sale or use of its share of the output of the joint venture, together with its share of any expenses incurred by the joint venturer (e) Any expense which it has incurred in respect of its interest in the joint venture? (IPSAS 8.2

5)

Comments:

2( e) For the consolidated financial statements of the venturer, do the national accounting standards require any of the two formats for proportional consolidation as a benchmark treatment? (IPSAS 8.35) In one format the venturer’s share of a line item is combined with the respective line item of the venturer, in the other format the venturer includes separate line items for its share in joint ventures.

Comments:

2( f) For the consolidated financial statements of the venturer, do the national accounting standards require the equity method as an alternative treatment? (IPSAS 8.43)

Comments:

2( g) Do national accounting standards require an interest in a jointly controlled entity which is acquired and held exclusively with a view to its subsequent disposal within the next twelve months and management is actively seeking a buyer accounted for in accordance with the accounting standard for financial instruments? (IPSAS 7.47)

Comments:

2(h) Do national accounting standards require partial elimination of gains and losses in transactions between the venturer and the joint venture, as described in IPSAS 8.54-8.55?

Comments:

2(i) Do national accounting standards require investors in joint ventures,

which have no joint control but does have significant influence to report its interest in a joint venture in accordance to IPSAS 7? (IPSAS 8.57)

Comments:

2(j) Do national accounting standards require operators of a joint venture to account for its fees in accordance with IPSAS 9 Revenue from Exchange Transactions? (IPSAS 8.59)

Comments:

2(k) Are the disclosures in respect of associates the same like in IPSAS? (IPSAS 8.61-8.64) If no, please provide a list with the differences.

Comments:

IX. REVENUE FROM EXCHANGE TRANSACTIONS Please refer to the whole text of the IPSAS 9

Questions Yes No 1(a) Has IPSAS 9 Revenue from Exchange Transactions been adopted as a

national standard?

Comments:

1(b) Are there any plans to change the national standards in respect of revenue from exchange transactions in near future?

Comments:



Questions Yes No 2(a) Is the revenue measured at the fair value of the consideration received or

receivable? (IPSAS 9.14)

Comments:

2(b) When the outcome of a transaction involving the rendering of services can be estimated reliably, is revenue associated with the transaction recognized by reference to the stage completion of the transaction at the reporting date? (IPSAS 9.19)

Comments:

2(c) According to IPSAS 9 the outcome of a transaction can be estimated reliably when all the following conditions are satisfied. Are these conditions the same in national accounting standards: (a) The amount of revenue can be measured reliably; (b) It is probable that the economic benefits or service potential associated with the transaction will flow to the entity; (c) The stage of completion of the transaction at the reporting date can be measured reliably; and (d) The costs incurred for the transaction and the costs to complete the transaction can be measured reliably? (IPSAS 9.19)

Comments:

2(d) Is the revenue recognized only to the extent of the expenses recognized that are recoverable when the outcome of the transaction involving the rendering of services cannot be estimated reliably? (IPSAS 9.25)

Comments:

2(e) Is revenue from the sale of goods recognized when all the following conditions have been satisfied: (a) The entity has transferred to the purchaser the significant risks and rewards of ownership of the goods; (b) The entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (c) The amount of revenue can be measured reliably; (d) It is probable that the economic benefits or service potential associated with the transaction will flow to the entity; and (e) The costs incurred or to be incurred in respect of the transaction can be measured reliably? (IPSAS 9.28)

Comments:

2(f) Is the revenue arising from the use by others of entity assets yielding interest, royalties and dividends recognized using the accounting treatments set out in paragraph 34 when: (a) It is probable that the economic benefits or service potential associated with the transaction will flow to the entity; and (b) The amount of the revenue can be measured reliably? (IPSAS 9.33)

2(g) Is revenue recognized using the following accounting treatments:

(a) Interest should be recognized on a time proportion basis that takes into account the effective yield on the asset; (b) Royalities is recognized as they are earned in accordance with the substance of the relevant agreement; and (c) Dividends or their equivalents should be recognized when the shareholder’s or the entity’s right to receive payment is established? (IPSAS 9.34)

Comments:

2(h) Does an entity disclose: (a) The accounting policies adopted for the recognition of revenue including the methods adopted to determine the stage of completion of transactions involving the rendering of services; (b) The amount for each significant category of revenue recognized during the period including revenue arising from: (i) The rendering of services; (ii) The sale of goods; (iii) Interest; (iv) Royalties; and (v) Dividends or their equivalents; and (c) The amount of revenue arising from exchanges of goods or services included in each significant category of revenue? (IPSAS 9.39)

Comments:

X. FINANCIAL REPORTING IN HYPERINFLATIONARY ECONOMIES Please refer to the whole text of the IPSAS 10

Questions Yes No 1(a) Has IPSAS 10 Financial Reporting in Hyperinflationary Economies been


Comments:

1(b) Are there any plans to change the national standards in respect of financial reporting in hyperinflationary economies in near future?

Comments:



Questions Yes No 2(a) Does the economic environment in your country indicate a

hyperinflation? (IPSAS 10.4)

Comments:

2(b) Are the financial statements of an entity that reports in the currency of the hyperinflationary economy stated in terms of the measuring unit current at the reporting date? (IPSAS 10.11)

Comments:

2(c) Do national accounting standards require presenting the surplus or deficit on the net monetary positions in the statement of financial performance? (IPSAS 10.12)

Comments:

2(d) When the economy ceases to be hyperinflationary do national accounting standards require treating the amounts expressed in the measuring unit current at the end of the previous reporting period as the basis? (IPSAS 10.36)

Comments:

2(e) Are the following disclosures made: (a) The fact that the financial statements and the corresponding figures for previous periods have been restated for the changes in the general purchasing power of the reporting currency and, as a result, are stated in terms of the measuring unit current at the reporting date; and (b) The identity and level of the price index at the reporting date and the movement in the index during the current and the previous reporting periods? (IPSAS 10.37)

Comments:

XI. CONSTRUCTION CONTRACTS Please refer to the whole text of the IPSAS 11

Questions Yes No 1(a) Has IPSAS 11 Construction Contracts been adopted as a national

standard?

Comments:

1(b) Are there any plans to change the national standards in respect of construction contracts in near future?

Comments:



Questions Yes No 2(a) Do national accounting contracts define a construction contract as a

contract for the construction of a single asset such a bridge, building, dam, pipeline, road, ship or tunnel or also deal with the construction of a number of assets which are closely interrelated or interdependent in terms of their design, technology and function of their ultimate purpose or use? (IPSAS 11.5-11.11)

Comments:

2(b) Is the construction of each asset treated as a separate construction contract when a contract covers a number of assets and when: (a) Separate proposals have been submitted for each asset; (b) Each asset has been subject to separate negotiation and the contractor and customer have been able to accept or reject that part of the contract relating to each asset; and (c) The costs and revenues of each asset can be identified.? (IPSAS 11.13)

Comments:

2(c) Is a group of contracts, whether with a single customer or with several customers, treated as a single construction contract when: (a) The group of contracts is negotiated as a single package; (b) The contracts are so closely interrelated that they are, in effect, part of a single project with an overall margin, if any, and (c) The contracts are performed concurrently or in a continuous sequence? (IPSAS 11.14)

Comments:

2(d) If a contract provides for the construction of an additional asset at the

option of the customer or maybe amended to include the construction of an additional asset, is the construction of the additional asset treated as a separate construction contract when: (a) The asset differs significantly in design, technology or function from the asset or assets covered by the original contract; or (b) The price of the asset is negotiated without regard to the original contract price. (IPSAS 11.15)

It need a separate budget Comments:

2(e) Does the contract revenue comprise: (a) The initial amount of revenue agreed in the contract; and (b) Variations in contract work, claims and incentive payments to the extent that: (i) It is probable that they will result in revenue; and (ii) They are capable of being reliably measured? (IPSAS 11.16)

Comments:

XI.3 Contract Costs / Disclosure Please refer to the whole text of the IPSAS 11

Questions Yes No 3(a) Do contract costs comprise:

(a) Costs that relate directly to the specific contract; (b) Costs that are attributable to contract activity in general and can be allocated to the contract on a systematic an rational basis; and (c) Such other costs as are specifically chargeable to the customer under the terms of the contract? (IPSAS 11.23 11.24)

Comments:

3(b) When the outcome of a construction contract can be estimated reliably, are contract revenue and contract costs associated with the construction recognized as revenue and expenses respectively by reference to the stage of completion of the contract activity at the reporting date? (IPSAS 11.30)

Comments:

3(c) Is it possible to estimate the outcome of a construction contract reliable in the case of a fixed price contract because of the following satisfied conditions: (a) Total contract revenue, if any, can be measured reliably; (b) It is probable that the economic benefits or service potential associated with the contract will flow to the entity; (c) Both the contract costs to complete the contract and the stage of contract completion at the reporting date can be measured reliably; and (d) The contracts costs attributable to the contract can be clearly identified

and measured reliably so that actual contract costs incurred can be compared with prior estimates? (IPSAS 11.31)

Comments:

3(d) Is it possible to estimate the outcome of a construction contract reliable in

the case of a cost plus or cost based contract because of the following conditions are satisfied: (a) It is probable that the economic benefits or service potential associated with the contract will flow to the entity; and (b) The contract costs attributable to the contract, whether or not specifically reimbursable, can be clearly identified and measured reliably? (IPSAS 11.32)

Comments:

3(e) When the outcome of a construction contract cannot be estimated reliably: (a) Is the revenue recognized only to the extent of contract costs incurred that it is probable will be recoverable; and (b) Are contracts costs recognized as an expense in the period in which they are incurred. (IPSAS 11.40)

Comments:

3(f) When it is probable that total contracts costs will exceed total contract revenue, is the expected deficit recognized as an expense immediately? (IPSAS 11.44)

Comments:

3(g) Does an entity disclose: (a) The amount of contract revenue recognized as revenue in the period; (b) The methods used to determine the contract revenue recognized in the period; and (c) The methods used to determine the stage of completion of contracts in progress? (IPSAS 11.50)

Comments:

3(h) Does an entity disclose each of the following for contracts in progress at the reporting date: (a) The aggregate amount of costs incurred and recognized surpluses (less recognized deficits) to date; (b) The amount of advances received; and (c) The amount of retentions? (IPSAS 11.51)

Comments:

3(i) Does the entity present: (a) The gross amount due from customers for contract work as an asset; and (b) The gross amount due to customers for contract work as a liability? (IPSAS 11.53)

Comments:

XII. INVENTORIES Please refer to the whole text of the IPSAS 12

Questions Yes No 1(a) Has IPSAS 12 Inventories been adopted as a national standard?

Comments:

1(b) Are there any plans to change the national standards in respect of inventories in near future?

Comments:



Questions Yes No 2(a) Do national accounting standards define inventories the same way as the

IPSAS? Inventories are assets:

(a) In the form of materials or supplies to be consumed in the production process;

(b) In the form of materials or supplies to be consumed or distributed in rendering services;

(c) Held for sale or distribution in the ordinary course of operations; or

(d) In the process of production for sale and distribution. (IPSAS 12.9)

Comments:

2(b) Do the national accounting standards require inventories to be measured at the lower of cost and current replacement cost where they are held for:

(a) Distribution at no charge or for a nominal charge; or

(b) Consumption in the production process of goods to be distributed at no charge or for a nominal charge? (IPSAS 12.17

)

Comments:

2(c) Do the national accounting standards require inventories to be measured at fair value in those cases where the description in question 2(b)/IPSAS 12.17 does not apply and the goods are acquired through non-exchange transactions? (IPSAS 12.16)

Comments:

2(d) Do the national accounting standards require inventories to be measured at the lower of cost and net realizable value in those cases where the

description in question 2(b) and 2(c)/IPSAS 12.16 to 12. 17 does not apply? (IPSAS 12.15)

Comments:

2(e) Do the national accounting standards include all costs of purchase, conversion and other costs incurred in bringing the inventories to their present location and condition when measuring cost? (IPSAS 12.18)

Comments:

2(f) Do the national accounting standards require the cost of inventories of

items that are not ordinarily interchangeable or segregated for specific projects to be assigned by using specific identification of their individual costs? (IPSAS 12.32)

Comments:

2( g) Do the national accounting standards require the cost of inventories of items other than those described in IPSAS 12.30 to be assigned either using the first-in-first-out (FIFO) or weighted average cost formulas? (IPSAS 12.35)

Comments:

2(h) Do the national accounting standards require to recognize the carrying amount an expense in the period inventories are sold, exchanged or distributed? (IPSAS 12.44

)

Comments:

2(i) Do the national accounting standards require to re cognize write down or losses in the period the write down or loss occurs? The reversal of any write down should be recognized as a reduction of expenses? (IPSAS 12.44)

Comments:

2(j) Do the national accounting standards require the same disclosures as required in IPSAS 12.47?

Comments:

XIII. LEASES Please refer to the whole text of the IPSAS 13.

Questions Yes No

1(a) Has IPSAS 13 Leases been adopted as a national standard?

Comments:

1(b) Are there any plans to change the national standards in respect of leases in near future?

Comments:



Questions Yes No 2(a) Do national accounting standards define lease the same way as the

IPSAS? A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time. (IPSAS 13.8)

Comments:

2(b) Do lesses recognize assets acquired under finance leases as assets and the asscociated lease obligations as liabilities? The assets and liabilities should be recognized at amounts equal at the inception of the lease to the fair value of the leased property or, if lower, at the present value of the minimum lease payments. (IPSAS 13.28)

Comments:

2(c) Do national accounting standards classify a lease as a finance lease if it transfers substantially all the risks and rewards incidental to ownership or is it classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership? (IPSAS 13.34)

Comments:

2(d) Are lease payments apportioned between the finance charge and the reduction of the outstanding liability? The finance charge should be allocated to periods during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. (IPSAS 13.36)

Comments:

2(e) Do lessees make the disclosures as set out in paragraph IPSAS 13.40?

Comments:

2(f) Are lease payments under an operating lease recognized by the lessee as

an expense in the statement of financial performance on a straight line basis over the lease term unless another systematic basis is representative of the time pattern of the user’s benefit? (IPSAS 13.42)

Comments:

2(h) Do lessees make the disclosures as described for operating leases in IPSAS 13.44?

Comments:

2(i) Do lessors recognize lease payments receivable under a finance lease as assets in their statements of financial position? They shall present such assets as receivable at an amount equal to the net investment in the lease. (IPSAS 13.48)

Comments:

2(j) Is the recognition of finance revenue based on a pattern reflecting a constant periodic rate of return on the lessor’s net investment of the finance lease? (IPSAS 13.51)

Comments:

2( k) Do lessors make the disclosures for finance leases as describe in IPSAS 13.60?

Comments:

2( l) Do lessors present assets subject to operating leases in their statements of financial position according to the nature of the assets? (IPSAS 13.62)

Comments:

2( m) Is lease revenue from operating leases recognized as revenue on a straight-line basis over the lease term, unless another systematic basis is more representative of the time pattern in which benefits derived from the leased asset is diminished? (IPSAS 13.63)

Comments:

2( n) Is the depreciation of depreciable leased assets on a basis consistent with the lessor’s normal depreciation policy for similar assets, and is the depreciation charge calculated on the basis set out in IPSAS 17, and any international and/or national accounting standard on intangible assets which has been adopted by the entity? (IPSAS 13.66)

Comments:

2( o) Do lessors make the disclosures for operating leases as described in IPSAS 13.69?

Comments:

2( p) If a sale and leaseback transaction results in a finance lease, is any excess

of sales proceeds over the carrying amount deferred and amortized over the lease term? (IPSAS 13.71)

Comments:

2( q) If a sale and leaseback transaction results in an operating lease, and it is clear that the transaction is established at fair value, is any gain or loss recognized immediately? (IPSAS 13.73)

Comments:

XIV. EVENTS AFTER THE REPORTING DATE Please refer to the whole text of the IPSAS 14

Questions Yes No

1(a) Has IPSAS 14 Events after the Reporting Date been adopted as a national standard?

Comments:

1(b) Are there any plans to change the national standards in respect of events after the reporting date in near future?

Comments:



Questions Yes No

2(a) Does the entity adjust amounts recognized in the financial statements after the reporting date that reflect:

• adjusting events, which provide evidence of conditions that exist at the reporting date or

• non-adjusting events, which are indicative of conditions that arose after the reporting date

(IPSAS 14.5)

Comments:

2(b) If an entity declares a dividend or similar distributions after the reporting date, is it not recognized as a liability at the reporting date? (IPSAS 14.13)

Comments:

2(c) If an entity determines after the reporting date either that there is an intention to liquidate the entity or to cease operating, do national accounting standards require that it will not be reported on a going concern basis? (IPSAS 14.17)

Comments:

2(d) Does the entity disclose the date the financial statements were authorized for issue and who gave that authorization? (IPSAS 14.25)

Comments:

2(e) If another body has the power to amend the financial statements after

issuance, does the entity disclose this fact? (IPSAS 14.25)

Comments:

2( f) If an entity receives information after the reporting date, but before the financial statements are authorized for issue, about conditions that existed at the reporting date, does the entity update disclosures that relate to these conditions, in the light of the new information? (IPSAS 14.27)

Comments:

XV. FINANCIAL INSTRUMENTS: DISCLOSURE AND PRESENTATION Please refer to the whole text of the IPSAS 15.

Questions Yes No 1(a) Has IPSAS 15 Financial Instruments: Disclosure and Presentation been


Comments:

1(b) Are there any plans to change the national standards in respect of financial instruments: disclosure and presentation in near future?

Comments:



Questions Yes No 2(a) Do national accounting standards classify the instrument, or its

component parts, as a liability or as net assets/equity in accordance with the substance of the contractual arrangement on initial recognitions of a financial liability and an equity instrument? (IPSAS 15.22)

Comments:

2(b) Does the financial statement shows the liability and a net assets/equity element separately in accordance with IPSAS 15.22? (IPSAS 15.29)

Comments:

2(c) Are the interest, dividends, loss and gains relation to a financial instrument or a component part, classified as a financial liability reported in the financial performance as expense or revenue? (IPSAS 15.36)

Comments:

• has a legally enforceable right to set off the recognized amounts; and

2(d) The financial asset and liability are they offset and the net amount is it reported in the statement if financial position when an entity:

• Intends either to settle on a net bass, or to realize the asset and settle the liability simultaneously?

(IPSAS 15.39)

Comments:

2(e) Does the entity describe its financial risk management objectives and

policies, including its policy for hedging each major type or forecasted transaction for which hedge accounting is used? (IPSAS 15.50)

Comments:

2(

• Information about the extent and nature of the financial instruments, including significant terms and conditions that may affect the amount, timing and certainty of future cash flows; and

f) Does the entity disclose for each class of financial asset, financial liability and equity instrument, both recognized and unrecognized:

• The accounting policies and methods adopted, including the criteria for recognition and the basis ot measurement applied?

(IPSAS 15.54)

Comments:

2(

• Contractual repricing or maturity dates, whichever dates are earlier; and

g) Does the entity disclose the information about its exposure to interest rat risk for each class of financial asset and financial liability, both recognized and unrecognized, including:

• Effective interest rates, when applicable?

(IPSAS 15.63)

Comments:

2(

• The amount that best represents its maximum credit risk exposure at the reporting date, without taking account of the fair value of any collateral, in the event other parties fail to perform their obligations under financial instruments; and

h) Does the entity disclose the information about its exposures to credit risk for each class of financial asset and financial liability, both recognized and unrecognized, including:

• Significant concentrations of credit risk?

(IPSAS 15.73)

Comments:

2(

When it is not practicable within constraints or timeliness or cost to determine the fair value of a financial asset or financial liability with sufficient reliability, does this fact be disclosed together with information about the principal characteristics of the underlying financial instrument that are pertinent to its fair value? (IPSAS 15.84)

i) Does the entity disclose the information about its fair value for each class of financial asset and financial liability, both recognized and unrecognized?

Comments:

2(

•

j) If the entity carries one or more financial assets at an amount in excess of their fair value, does it disclose:

•

The carrying amount and the fair value or either the individual assets; and

(IPSAS15.95)

The reasons for not reducing the carrying amount, including the nature of the evidence that provides the basis for management’s belief that the carrying amount will be recovered?

Comments:

2(

•

k) When an entity has accounted for a financial instrument as a hedge of risk associated with anticipated future transactions, does it disclose:

•

A description of the anticipated transactions, including the period of time until they are expected to occur;

•

A description of the hedging instruments; and

(IPSAS 15.98)

The amount of any deferred or unrecognized gain or loss and the expected timing of recognition as revenue or expense.

Comments:

XVI. INVESTMENT PROPERTY Please refer to the whole text of the IPSAS 16

Questions Yes No 1(a) Has IPSAS 16 Investment Property been adopted as a national standard?

Comments:

1(b) Are there any plans to change the national standards in respect of investment property in near future?

Comments:



Questions Yes No 2(a) Does the national standard recognize a investment property as an asset

when, and only when:

• It is probable that the future economic benefits or service potential that are associated with the investment property will flow to the entity; and

• The cost or fair value of the investment property can be measured reliably?

(IPSAS 16.20)

Comments:

2(b) The investment property (including the transaction cost) are they measured initially at its cost? (IPSAS 16.26)

Comments:

2(c) If the investment property is acquired through a non-exchange transaction, is it valued at fair value as at the date of acquisition? (IPSAS 16.27)

Comments:

2(d) Is there any of the two options for measurement after recognition IPSAS 16 provides, i.e. either Fair Value or Cost, except for property held by a lessee under an operating lease? (IPSAS 16.39 and 16.43)

Comments:

2(e) If an entity chooses the fair value model after initial recognition does it

measure all of it has investment property at its fair value, except in the cases as it is asked in IPSAS 16.62? (IPSAS 16.42)

Comments:

2( f) If a gain or loss arising from a change in the fair value of investment property, is it included in surplus or deficit for the period in which it arises? (IPSAS 16.44)

Comments:

2( g) Does the fair value of investment property reflect the market conditions at the reporting date? (IPSAS 16.47)

Comments:

2(

•

h) There is a reputable presumption that an entity will be able to determine the fair value of an investment property reliably on a continuing basis, unless::

•

There is clear evidence when an entity first acquires an investment property;

Or when an existing property reliably on a continuing basis

Does it arise when, and only when, comparable market transactions are infrequent and alternative estimates of fair value? If there is no market available does that investment property is valued using the benchmark treatment in IPSAS 17 “Property, Plant and Equipment” and the residual value of the investment property are it be assumed to be zero? (IPSAS 16.62)

Comments:

2( i) Does the entity, if it has previously measured an investment property at faire value, continue to measure the property at fair value until disposal even if comparable market transactions become less frequent or market prices become less readily available? (IPSAS 16.64)

Comments:

2( j) Does the national standard regulate that after initial recognition, an entity that chooses the cost model shall to measure all of its investment property using the benchmark treatment in IPSAS 17 “Property, Plant and Equipment” that is, at cost less any accumulated depreciation and any accumulated impairment loss? (IPSAS 16.65)

Comments:

2(

(a) commencement of owner-occupation, for a transfer from investment property to owner-occupied property;

k) Does the national standard regulate that transfers to, or from, investment property should be made when, and only when, there is a change in use, evidenced by:

(b) commencement of development with a view to sale, for a transfer from investment property to inventories;

(c) end of owner-occupation, for a transfer from owner-occupied property to investment property;

(d) commencement of an operating lease (on a commercial basis) to another party, for a transfer from inventories to investment property; or

(e) end of construction or development, for a transfer from property in the course of construction or development (covered by IPSAS 17 Property, Plant and Equipment) to investment property?

(IPSAS 16.66)

Comments:

2( l) If a entity transfer from investment property carried at fair value to owner-occupied property or investors, the property’s cost for subsequent accounting under IPSAS 17 or IPSAS 12 (like it is asked in part 17 and 12), “Inventories” does it use fair value at the date of change in use? (IPSAS 16.71)

Comments:

2( m) Does the national standard regulate if an owner-occupied property becomes an investment property that will be carried at fair value an entity shall apply, like it is described in the following part of IPSAS 17, up to the date of change in use and it shall treat any difference at that date between the carrying amount of the property under IPSAS 17 and its fair value in the same way as a revaluation under IPSAS 17? (IPSAS 16.72)

Comments:

2( n) If a entity transfer from inventories to investment property that will be carried at fair value, any difference between the fair value of the property at that date and its previous carrying amount does it is recognized in net surplus/deficit for the period? (IPSAS 16.74)

Comments:

2( o) When an entity completes the construction or development of a self-constructed investment property that will be carried at fair value, any difference between the fair value of the property at that date and its previous carrying amount does it be recognized in surplus or deficit?

(IPSAS 16.76)

Comments:

2( p) If an investment property is permanently withdrawn from use and no

future economic benefits or service potential are expected form its disposal, does the investment property will de eliminated form the statement of financial position? (IPSAS 16.77)

Comments:

2( q) Does the national accounting standard regulate gains or losses arising from the retirement or disposal of investment property to determine as the difference between the net disposal proceeds and the carrying amount of the asset and recognize it in surplus or deficit? (IPSAS 16.80)

Comments:

2( r) Are the disclosures required the same as in IPSAS 16.86?

Comments:

2(

(a) additions, disclosing separately those additions resulting from acquisitions and those resulting from capitalized subsequent expenditure;

s) Does in addition to the disclosure required in IPSAS 16.86, an entity that applies the fair value model, disclose a reconciliation of the carrying amount of investment property at the beginning and end of the period showing the following:

(b) additions resulting from acquisitions through entity combinations;

(c) disposals;

(d) net gains or losses from fair value adjustments;

(e) the net exchange differences arising on the translation of the financial statements of a foreign entity;

(f) transfers to and from inventories and owner-occupied property; and

(g) other movements?

(IPSAS 16.87)

Comments:

2(

(a) a description of the investment property;

t) In the exceptional case when an entity measures investment property using the cost model in IPSAS 17, does the national accounting standard, require reconciliation and disclosure of amounts relating to the investment property separately from amounts relation to other investment property? In addition does an entity disclose:

(b) an explanation of why fair value cannot be reliably measured;

(c) if possible, the range of estimates within which fair value is highly likely to lie; and

(d) on disposal of investment property not carried at fair value:

(i) the fact that the entity has disposed of investment property not carried at fair value;

(ii) the carrying amount of that investment property at the time of sale; and

(iii) the amount of gain or loss recognized.

(IPSAS 16.89)

Comments:

2( u) in addition to the disclosure required by IPSAS 16.86, an entity that applies the cost model does it disclose the items required in IPSAS 16.90?

Comments:

XVII. PROPERTY, PLANT AND EQUIPMENT Please refer to the whole text of the IPSAS 17

Questions Yes No 1(a) Has IPSAS 17 Property, Plant and Equipment been adopted as a national

standard?

Comments:

1(b) Are there any plans to change the national standards in respect of property, plant and equipment in near future?

Comments:



Questions Yes No

2(a) Is an item of property, plant and equipment recognized as an asset when: (a) It is probable that future economic benefits or service potential associated with the asset will flow to the entity; and (b) The cost or fair value of the asset to the entity can be measured reliably? (IPSAS 17.14)

Comments:

2(b) Is an item of property, plant and equipment which qualifies for recognition as an asset initially measured at its cost? (IPSAS 17.26)

Comments:

2(c) If an asset is acquired through a non-exchange transaction, is the cost its fair value as the date of acquisition? (IPSAS 17.27)

Comments:

2(d) Has the entity choose either the cost model, paragraph 43, or the revaluation model, paragraph 44, as its accounting policy to an entire class of property, plant and equipment? (IPSAS 17.42)

Comments:

2(e) Subsequent to initial recognition as an asset is an item of property, plant and equipment carried at its cost less any accumulated depreciation and any accumulated impairment losses? (IPSAS 17.43)

Comments:

2(f) Subsequent to initial recognition as an asset, is an item of property, plant and equipment carried at a revalued amount, being its fair value a the date of the revaluation less any subsequent accumulated depreciation and

subsequent accumulated impairment losses? Are revaluations made with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair value at the reporting date? (The accounting treatment for revaluations is set out in paragraph 54 to 56) (IPSAS 17.44)

Comments:

2(g) When an item of property, plant and equipment is revalued, is the entire class of property, plant and equipment to which that asset belongs revalued? (IPSAS 17.51)

Comments:

2(h) When the carrying amount of a class of assets is increased as a result of a revaluation, is the increase credited directly to revaluation surplus? However, is a revaluation increase recognized as revenue to the extent that it reverses a revaluation decrease of the same class of assets previously recognized in surplus or deficit? (IPSAS 17.54)

Comments:

2(i) When the carrying amount of a class of assets is decreased as a result of revaluation, is the decrease recognized in surplus or deficit? However, is a revaluation decrease charged directly against any related revaluation surplus to the extent that the decrease does not exceed the amount held in the revaluation surplus in respect of that same class of assets? (IPSAS 17.55)

Comments:

2(j) Do revaluation increases and decreases relating to individual assets within a class of property, plant and equipment offset against one another within that class but must not be offset in respect of assets in different classes? (IPSAS 17.56)

Comments:

2(k) Is the depreciable amount of an item of property, plant and equipment allocated on a systematic basis over its useful life? Does the depreciation method used reflect the pattern in which the asset’s economic benefits or service potential is consumed by the entity? Is the depreciation charge for each period recognized in surplus or deficit unless it is included in the carrying amount of another asset? (IPSAS 17.64, 66, 76)

Comments:

2(l) Is the useful life of an item of property, plant and equipment reviewed at least annually and, if expectations are significantly different from previous estimates, is the method changed to reflect the changed pattern? (IPSAS 17.77)

Comments:

2(m) If there has been a significant change in the expected pattern of economic

benefits or service potential from those assets, is the method changed to reflect the changed pattern? When such a change in depreciation method is necessary is the change accounted for as a change in accounting estimate in accordance with IPSAS 3? (IPSAS 17.77)

Comments:

2(n) Is an item of property, plant and equipment derecognized on disposal or when no future economic benefits or service potential is expected from its disposal? (IPSAS 17.82)

Comments:

2(o) Are gains or losses arising from the derecognition of an item of property, plant and equipment determined as the difference between the estimated net disposal proceeds and the carrying amount of the asset. For the purposes of display in the financial statements, is the gain or loss included in the statement of financial performance as an item of surplus or deficit? (IPSAS 17.83, 86)

Comments:

XVII.2 Disclosure Please refer to the whole text of the IPSAS 17

Questions Yes No 3(a) Do the financial statements disclose, for each class of property, plant and

equipment recognized in the financial statements as described in IPSAS 17.88?

Comments:

3(b) Do the financial statements also disclose for each class of property, plant and equipment recognized in the financial statements: (a) The existence and amounts of restrictions on title for property, plant and equipment pledged as securities for liabilities (b) The amount of expenditures on account of property, plant and equipment in the course of construction; and (c) The amount of commitments for the acquisition of property, plant and equipment

(d) If it is not disclosed separately, is the amount of compensation from third parties for property, plant and equipment that were impaired, lost or given up that is included in surplus or deficit disclosed? (IPSAS 17.89)

Comments:

3(c) When a class of property, plant and equipment is stated at revalued

amounts is the following disclosed: (a) The basis used to revalue the assets within the class; (b) The effective date of the revaluation (c) Whether an independent valuer was involved (d) The extent to which the assets’ fair values were determined directly by reference to observable prices in an active market or recent market transactions on arm’s length terms: (e) The revaluation surplus, indicating the change for the period and any restrictions on the distribution of the balance to shareholders or other equity holders; (f) The sum of revaluation surpluses for individual items of property, plant and equipment within that class, and (g) The sum of all revaluation deficits for individual items of property, plant and equipment within that class? (IPSAS 17.92)

Comments:

XVIII. SEGMENT REPORTING Please refer to the whole text of the IPSAS 18

Questions Yes No 1(a) Has IPSAS 18 Segment Reporting been adopted as a national standard?

Comments:

1(b) Are there any plans to change the national standards in respect of segment reporting in near future?

Comments:



Questions Yes No 2(a) Segments - Does the financial statement present information about the

segments of the entity (IPSAS 18.12)

Comments:

3(a) Segments – Does the definition of a segment in a national standard correspond with the definition in the IPSAS standard? (IPSAS 18.9)

Comments:

4(a) Segments – Is the financial report segmented in services? (IPSAS 18.17 )

Comments:

4 (b) Segments – Is the financial report segmented geographically? (IPSAS 18.17)

Comments:

5(a) Segment revenue – Are segment revenue free of interest or dividend revenue, including interest earned on advances or loans to other segments? (IPSAS 18.27)

Comments:

5(b) Segment revenue – Are segment revenue free of gains on sales of

investments or gains on extinguishment of debt, unless the segment’s operations are primarily of a financial nature? (IPSAS 18.27)

Comments:

5(d) Segment revenue – Does segment revenue include an entity’s share of net surplus (deficit) of associates, joint ventures, or other investments accounted for under the equity method only if those items are included in consolidated or total entity revenue? (IPSAS 18.27)

Comments:

5(e) Segment revenue – Does segment revenue include a joint venturer’s share of the revenue of a jointly controlled entity that is accounted for by proportionate consolidation in accordance with ISPSA 8 “Interests in Joint Ventures.”? (IPSAS 18.27)

Comments:

6(a) Segment expense – Is segment expense free of interest, including interest incurred on advances or loans form other segments, unless the segment’s operations are primarily of a financial nature? (IPSAS 18.27)

Comments:

6(b) Segment expense – Is segment expense free of losses on sales of investments or losses on extinguishment of debt unless the segment’s operations are primarily of a financial nature? (IPSAS 18.27)

Comments:

6(c) Segment expense – Is segment expense free of an entity’s share of net deficit or losses of associates, joint ventures, or other investments accounted for under the equity method? (IPSAS 18.27)

Comments:

6(d) Segment expense – Is segment expense free of income tax or income-tax equivalent expense that is recognized in accordance with accounting standards dealing with obligations to pay income tax or income tax equivalents? (IPSAS 18.27)

Comments:

6(e) Segment expense – Is segment expense free of general administrative expenses, head office expenses, and other expenses that arise at the entity level and relate to the entity as whole? (IPSAS 18.27)

Comments:

6(f) Segment expense – Does segment expense include a joint venturer’s share

of the expenses of a jointly controlled entity that is accounted for by proportionate consolidation in accordance with IPSAS 8? (IPSAS 18.27)

Comments:

6(g) Segment assets – Does segment reporting show segment assets according to IPSAS 18.27?

Comments:

6(h) Segment liabilities – Does segment reporting show segment liabilities according to IPSAS 18.27?

Comments:

7(a) Segment accounting policies – Does segment information conform to the accounting policies adopted for preparing and presenting the financial statements of the consolidated group or entity? (IPSAS 18.43)?

Comments:

8(a) Joint assets – Have assets, that are jointly used by two or more segments, been allocated to segments if their related revenues and expenses are as well allocated to those segments? (IPSAS 18.47)?

Comments:

9(a) Newly Identified Segments – Have newly identified segments lead to a restatement of prior period segment data that is presented for comparative purposes (IPSAS 18.49)?

Comments:

10(a) Are the segment disclosures consistent with paragraphs 52 – 73? (IPSAS 18.51)

Comments:

XIX. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS Please refer to the whole text of the IPSAS 19

Questions Yes No 1(a) Has IPSAS 19 Provisions, Contingent Liabilities and Contingent Assets

been adopted as a national standard?

Comments:

1(b) Are there any plans to change the national standards in respect of provisions, contingent liabilities and contingent assets in near future?

Comments:



Questions Yes No 2(a) Is a provision recognized when:

(a) An entity has a present obligation (legal or constructive) as a result of a past event; (b) It is probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation; and (c) A reliable estimate can be made of the amount of the obligation?

If these conditions are not met, no provision should be recognized. (IPSAS 19.22)

Comments:

2(b) In some cases it is not clear whether there is a present obligation. In these cases is a past event deemed to give rise to a present obligation if, taking account of all available evidence, it is more likely than not that a present obligation exists at the reporting date? (IPSAS 19.23)

Comments:

2(c) Does an entity disclose but not recognize a contingent liability? (IPSAS 19.35)

Comments:

2(d) Does an entity disclose but not recognize a contingent asset? (IPSAS 19.39)

Comments:

2(e) Is the amount recognized as a provision the best estimate of the expenditure required to settle the present obligation at the reporting date?

(IPSAS 19.44)

Comments:

2(e) Are the risks and uncertainties that inevitably surround many events and

circumstances taken into account in reaching the best estimate of a provision? (IPSAS 19.50)

Comments:

2(f) Where the effect of the time value of money is material, is the amount of a provision the present value of the expenditures expected to be required to settle the obligation? (IPSAS 19.53)

Comments:

2(g) Is the discount rate (or rates) a pre-tax rate (or rates) that reflect(s) current market assessments of the time value of money and the risks specific to the liability? Does the discount rate(s) not reflect risks for which future cash flow estimates have been adjusted? (IPSAS 19.56)

Comments:

2(h) Are future events that may affect the amount required to settle an obligation reflected in the amount of a provision where there is sufficient objective evidence that they will occur? (IPSAS 19.58)

Comments:

2(i) Are gains from the expected disposal of assets not be taken into account in measuring a provision? (IPSAS 19.61)

Comments:

2(j) Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, is the reimbursement recognized when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. Is the reimbursement treated as a separate asset. Does the amount recognized for the reimbursement not exceed the amount of the provision? (IPSAS 19.63)

Comments:

2(k) Are provisions reviewed at each reporting date and adjusted to reflect the current best estimate? If it is no longer probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation, is the provision reversed? (IPSAS 19.69)

Comments:

2(l) Is a provision used only for expenditures for which the provision was originally recognized? (IPSAS 19.71)

Comments:

2(m) If an entity has a contract that is onerous, is the present obligation (net of

recoveries) under the contract recognized and measured as a provision? (IPSAS 19.76)

Comments:

2(n) Does a constructive obligation to restructure arise only when an entity:

(a) has a detailed formal plan for the restructuring identifying at least as described in IPSAS 19.83 (b) Has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it? (IPSAS 19.83)

Comments:

2(o) For each class of provision, does the entity disclose the following as described in IPSAS 19.97 – 19.109)

Comments:

XX. RELATED PARTY DISCLOSURES Please refer to the whole text of the IPSAS 20.

Questions Yes No 1(a) Has IPSAS 20 Related Party Disclosures been adopted as a national

standard?

Comments:

1(b) Are there any plans to change the national standards in respect of related party disclosures in near future?

Comments:



Questions Yes No

2(a) Does the national standard regulate the related party relationship where control exists to be disclosed irrespective of whether there have been transactions between the related parties? (IPSAS 20.25)

Comments:

2(b) In respect of transactions between related parties other than transactions that would occur within a normal supplier or client/recipient relationship on terms and conditions no more or less favorable than those which it is reasonable to expect the entity would it have adopted if dealing with that individual or entity at arm’s length in the same circumstances, the reporting entity does it disclose:

(a) the nature of the related party relationships;

(b) the types of transactions that have occurred; and

(c) the elements of the transactions necessary to clarify the significance of these transactions to its operations and sufficient to enable the financial statements to provide relevant and reliable information for decision making and accountability purposes?

(IPSAS 20.27)

Comments:

2(c) Does an items of a similar nature may be disclosed in aggregate except when separate disclosure is necessary to provide relevant and reliable information for decision making and accountability purposes? (IPSAS 20.32)

Comments:

2(d)

(a) the aggregate remuneration of key management personnel and the number of individuals, determined on a full time equivalent basis, receiving remuneration within this category, showing separately major classes of key management personnel and including a description of each class;

Does an entity disclose following points?

(b) the total amount of all other remuneration and compensation provided to key management personnel, and close members of the family of key management personnel, by the reporting entity during the reporting period showing separately the aggregate amounts provided to:

key management personnel; and

close members of the family of key management personnel; and

(c) in respect of loans which are not widely available to persons who are not key management personnel and loans whose availability is not widely known by members of the public, for each individual member of key management personnel and each close member of the family of key management personnel:

(i) the amount of loans advanced during the period and terms and conditions thereof;

(ii) the amount of loans repaid during the period;

(iii) the amount of the closing balance of all loans and receivables; and

(iv) where the individual is not a director or member of the governing body or senior management group of the entity, the relationship of the individual to such.

(IPSAS 20.34)

Comments:

XXI. IMPAIRMENT OF NON-CASH GENERATING ASSETS Please refer to the whole text of the IPSAS 21

Questions Yes No 1(a) Has IPSAS 21 Impairment of Non-Cash-Generating assets been adopted

as a national standard?

Comments:

1(b) Are there any plans to change the national standards in respect of impairment of non-cash-generating assets in near future?

Comments:



Questions Yes No 2(a) Is the definition of cash generating assets and non-cash-generating assets

the same as in the IPSAS? Cash generating assets are assets held to generate a commercial return, non-cash-generating assets all other assets. (IPSAS 21.14)

Comments:

2(b) Is the concept of impairment in the national accounting standards based on the concept of economic benefit as well as service potential? (IPSAS 21.14)

Comments:

2(c) Are the national accounting standards defining an impairment loss as the amount by which the carrying amount of an asset exceeds its recoverable service amount? (IPSAS 21.14)

Comments:

2(d) Is the recoverable service amount defined as the higher of the assets fair value less costs to sell and its value in use? (IPSAS 21.14)

Comments:

2(e) Do the national accounting standards prescribe a two step procedure identifying impaired assets? In a first step the entity should assess whether there is an indication that an asset may be impaired, in a second step the entity should to measure a possible impairment loss, but only for those assets which have been identified in the first step. (IPSAS 21.22)

Comments:

2(f) Does the assessment of an indication of impairment include both external

and internal sources of information? Does it include other aspects than physical damage, i.e. changes in demand, technology or policy? (IPSAS 21.23)

Comments:

2(g) Is the measurement of fair value less Cost to Sell the same as in IPSAS, i.e. the price in an arm’s length transaction minus incremental cost that would be attributable to the disposal of the asset? (IPSAS 21.36)

Comments:

2(h) Are the allowed approaches for measurement of the value in use the same as in IPSAS, i.e.

- depreciated replacement cost approach

- restoration cost approach

- service units approach? (IPSAS 21.40-21.45)

Comments:

2(i) Is the consequence of impairment, the revaluation of the asset to its recoverable service amount, the same in the national accounting standard as in IPSAS? (IPSAS 21.48)

Comments:

2(j) Are impairment losses recognized immediately in surplus or deficit? (IPSAS 21.50)

Comments:

2(k) If the impairment loss is greater than the carrying amount, do the national accounting standards allow the recognition of a liability only if this is required by another standard? (IPSAS 21.51)

Comments:

2(l) Do national accounting standards require adjusting depreciation after the recognition of impairment? (IPSAS 21.53)

Comments:

2(m) Do national accounting standards require reversing impairment losses if there has been a favorable change in estimates? A reversal of an impairment loss is a revaluation to value higher than previous recoverable service amount adjusted for depreciation (IPSAS 21.61)

Comments:

2(n) Are reversals of impairment losses limited to the carrying amount that

would have been determined if no impairment loss had been recognized in prior periods? (IPSAS 21.64)

Comments:

2(o) Are disclosure requirements the same as in IPSAS 21.68-21.74?

Comments:

XXII. DISCLOSURE OF FINANCIAL INFORMATION ABOUT THE GENERAL GOVERNMENT SECTOR Please refer to the whole text of the IPSAS 22

Questions Yes No 1(a) Has IPSAS 22 Disclosure of Financial Information About the General

Government Sector been adopted as a national standard?

Comments:

1(b) Are there any plans to change the national standards in respect of disclosure of financial information about the general government sector in near future?

Comments:



Questions Yes No

2 Is the government preparing and presenting consolidated financial statements under the accrual basis of accounting as well as GFS-type financial information about the General Government Sector? (IPSAS 22.2)

Comments:

If the answer to question 2 is NO, the questionnaire about Disclosure of Financial Information about the General Government Sector ends here, as IPSAS 22 is not applicable and neither is the following sub-section about IPSAS 22.

Questions Yes No 3(a) Is financial information about the general government sector disclosed in

conformity with the accounting policies adopted for preparing and presenting the consolidated financial statements of the government?

(IPSAS 22.23)

Comments:

3(b) Does information about the general government sector exclude the requirements of IPSAS 6 in respect of entities in the public financial corporations and public non-financial corporations sectors? (IPSAS 22.24)

Comments:

3(c) Does the general government sector recognize its investment in the public financial corporations and public non-financial corporations sectors as an asset and account for it at the carrying amount of the net assets of its investee? (IPSAS 22.25)

Comments:

3(d) Do disclosures about the general government sector include the following:

(a) Assets by major class, showing separately the investment in other sectors;

(b) Liabilities by major class;

(c) Net assets/equity;

(d) Total revaluation increments and decrements and other items of revenue and expense recognized directly in net assets/equity;

(e) Revenue by major class;

(f) Expenses by major class;

(g) Surplus or deficit;

(h) Cash flows from operating activities by major class;

(i) Cash flows from investing activities; and

(j) Cash flows from financing activities? (IPSAS 22.35)

Comments:

3(e) Do the disclosures disclose the significant controlled entities that are included in the general government sector and any changes in those entities from the prior period, together with an explanation of the reasons why any such entity was no longer included? (IPSAS 22.40)

Comments:

3(f) Are the general government sector disclosures reconciled to the

consolidated financial statements of the government showing separately the amount of the adjustment to each equivalent item in those financial statements? (IPSAS 22.43)

Comments:

XXIII. REVENUE FROM NON-EXCHANGE TRANSACTIONS (TAXES AND TRANSFERS) Please refer to the whole text of the IPSAS 23

Questions Yes No 1(a) Has IPSAS 23 Revenue From Non-Exchange Transactions (Taxes and

Transfers) been adopted as a national standard?

Comments:

1(b) Are there any plans to change the national standards in respect of revenue from non-exchange transactions (taxes and transfers) in near future?

Comments:



Questions Yes No 2 Do national accounting standards identify transactions which are non-

exchange transactions? Non-exchange transactions are transactions in which an entity receives a value without directly giving approximately the same value in exchange. Common examples are taxes, fines, some subsidies etc. (IPSAS 23.7)

Comments:

Questions Yes No 3(a) Do the national accounting standards require that inflow of resources from

a non-exchange transaction, other than services in-kind, that meet the definition of an asset be recognized as an asset when:

(a) It is probable that the future economic benefits or service potential associated with the asset will flow to the entity; and

(b) The fair value of the asset can be measured reliably? (IPSAS 23.31)

Comments:

3(b) Do national accounting standards require that assets acquire through a non-exchange transaction be initially measured at its fair value as of the date of acquisition? (IPSAS 23.42)

Comments:

3(c) Do national accounting standards require that inflow of resources from a non-exchange transaction that is recognized as an asset also should be recognized as revenue, except to the extent that a liability is also

recognized in respect of the same inflow? (IPSAS 23.44)

Comments:

3(d) Is revenue from non-exchange transactions measured at the amount increase in net assets recognized by the entity? (IPSAS 23.48)

Comments:

3(e) Are present obligations arising from a non-exchange transaction that meets the definition of a liability recognized as a liability when:

(a) it is probable that an outflow of resources embodying future economic benefits or service potential will be required to settle the obligation; and

(b) a reliable estimate can be made of the amount of the obligation? (IPSAS 23.50)

Comments:

3(f) Do national accounting standards recognize an asset in respect of taxes

when the taxable event occurs and the asset recognition criteria are met? (IPSAS 23.59)

Comments:

3(g) Is taxation revenue determined at a gross amount and not reduced for expenses paid through the tax system? (IPSAS 23.71)

Comments:

3(h) Do national accounting standards not allow taxation revenue to be grossed up for the amount of tax expenditures? (IPSAS 23.73)

Comments:

3(i) Does the entity recognize an asset in respect of transfers when the transferred resources meet the definition of an asset and satisfy the criteria for recognition of an asset? (IPSAS 23.76)

Comments:

3(j) Does the entity recognize services in-kind as revenue and as an asset? The entity is not required to recognize services in-kind. (IPSAS 23.98)

Comments:

3(k) Do the national accounting standards require disclosures consistent with paragraphs 106 and 107 of IPSAS 23? (IPSAS 23.106 -107)

Comments:

XXIV. PRESENTATION OF BUDGET INFORMATION IN FINANCIAL STATEMENTS Please refer to the whole text of the IPSAS 24

Questions Yes No 1(a) Has IPSAS 24 Presentation of Budget Information in Financial

Statements been adopted as a national standard?

Comments:

1(b) Are there any plans to change the national standards in respect of presentation of budget information in financial statements in near future?

Comments:



Questions Yes No 2(a) Does the entity present a comparison of the budget amounts for which it is

held publicly accountable and actual amounts either as a separate additional financial statement or as additional budget columns in the financial statements which are presented in accordance with IPSAS? (24.14)

Comments:

2(b) Does the comparison of budget and actual amounts present separately for each level of legislative oversight:

(a) the original and final budget amounts;

(b) the actual amounts on a comparable basis; and

(c) by way of note disclosure, explain material differences between the budget and actual amounts? (IPSAS 24.14)

Comments:

2(c) Does the entity present a comparison of budget and actual amounts as additional columns in the primary financial statements only where the financial statements and the budget are prepared on a comparable basis? (IPSAS 24.21)

Comments:

2 (d) Does the entity present an explanation of whether changes between the original and final budget are a consequence or reallocations within the budget or other factors in the notes or in a separate report? (IPSAS 24.29)

Comments:

2(e) Are the comparisons of budget and actual amounts presented on a comparable basis to the budget? (IPSAS 24.31)

Comments:

2(f) Does the entity explain in the notes to the financial statements the

budgetary basis and classification basis adopted in the approved budget? (IPSAS 24.39)

Comments:

2(g) Does the entity disclose in the notes to the financial statements the period

of the approved budget? (IPSAS 24.43)

Comments:

2(h) Does the entity identify in the notes to the financial statements the entities included in the approved budget? (IPSAS 24.45)

Comments:

2(i) Do the national accounting standards require that actual amounts presented on a comparable basis to the budget, where the financial statements and the budget are not prepared on a comparable basis, be reconciled to the following actual amounts presented in the financial statements, identifying separately any basis, timing and entity differences:

(a) if the accrual basis is adopted for the budget, total revenues, total expenses and net cash flows from operating activities, investing activities and financing activities; or

(b) if a basis other than the accrual basis is adopted for the budget, net cash flows from operating activities, investing activities and financing activities? (IPSAS 24.47)

Comments:

2(j) Is the reconciliation disclosed on the face of the statement of comparison of budget and actual amounts or in the notes to the financial statements? (IPSAS 24.47)

Comments:

XXV. EMPLOYEE BENEFITS Please refer to the whole text of the IPSAS 25

Questions Yes No 1(a) Has IPSAS 25 Employee Benefits been adopted as a national standard?

Comments:

1(b) Are there any plans to change the national standards in respect of employee benefits in near future?

Comments:



Questions Yes No 2(a) Do national accounting rules require the recognition of short term

employee benefits such as wages, paid leave, bonuses, medical care etc in the accounting period the employee has rendered the service? The employee benefit is either recognized as an expense or as an accrued expense (liability), the latter if the benefit is carried forward to the next period (IPSAS 25.13)

Comments:

Questions Yes No 3(a) Do national accounting rules reflect the distinction between Defined

Contribution Plans (DCP) and Defined Benefit Plans (DBP)? Under a DCP the entity’s legal or constructive obligation is limited to the amount that it agrees to fund. In consequence the actuarial and investment risks fall on the employee. Under a DBP in contrast, the entity has a legal or constructive obligation to provide certain benefits such as a minimum return on investment or a defined pension. (IPSAS 25.27 to IPSAS 25.30)

Comments:

3(b) If there are multi-employer plans, is there a requirement for the entity to account for its proportionate share in the plan? (IPSAS 25.32)

Comments:

3(c) If there are multi-employer, state or other composite plans, is there a requirement for the entity to account for its proportionate share in the plan? (IPSAS 25.32, 25.43, 25.47)

Comments:

3(d) Under a DCP, is the entity required to recognize the contribution during the period the employee has rendered service, either as an expense or as an accrued expense (liability)? Unless they do not fall due within twelve months, the contribution is not discounted (IPSAS 25.55 and 25.56)

Comments:

3(e) Under a DBP, is the entity required to recognize not only legal but also constructive obligations arising out of the entity’s informal practices? (IPSAS 25.63)

Comments:

3(f) Under a DBP, the amount recognized is the net total of the present value of the defined benefit obligation plus the actuarial gains minus actuarial losses mines any past service cost not yet recognized minus the fair value at the reporting date of plan assets out of which the obligations are to be settled? The net total may be negative (an asset) or positive (a liability) (IPSAS 25.65)

Comments:

3(g) Under a DBP, is the entity required to recognize current service cost, interest cost, the expected return on any plan assets, actuarial gains and losses (depending on the accounting policy), past service cost, the effect of curtailments and settlements in the surplus/deficit? (IPSAS 25.74)

Comments:

3(h) Under a DBP, is the Projected Unit Credit Method the actuarial method to

be used? (IPSAS 25.77)

Comments:

3(i) Under a DBP, are actuarial assumptions to be unbiased and mutually compatible, as well as based on market expectations? Shall they reflect the current value of money as well as estimated future increases/changes? (IPSAS 25.85 to 25.117)

Comments:

3(j) Under a DBP, are actuarial gains and losses either recognized in the surplus/deficit or directly in net assets/equity? If recognized in the surplus/deficit, does the corridor method apply? (IPSAS 25.105 to 25.107)

Comments:

3(k) Are to disclosure requirement in respect of DBP the same as under IPSAS? (IPSAS 25.140 to 25.146)

Comments:

Questions Yes No 4(a) Other long term employee benefits, such as jubilee benefits, are to be

recognized as an asset or a liability at the net total of the present value of the benefit minus the fair value of the plan assets (if any). (IPSAS 25.150)

Comments:

4(b) Current service cost, interest cost, the expected return on plan assets, actuarial gains and losses, past service cost and the effect of curtailments or settlements are to be recognized as surplus/deficit. (IPSAS 25.151)

Comments:

4(c) Other long term employee benefits, such as jubilee benefits, are to be recognized at the net total of the present value of the benefit minus the fair value of the plan assets (if any). (IPSAS 25.150)

Comments:

XXVI. IMPAIRMENT OF CASH GENERATING ASSETS Please refer to the whole text of the IPSAS 26

Questions Yes No 1(a) Has IPSAS 26 Impairment of Cash Generating Assets been adopted as a

national standard?

Comments:

1(b) Are there any plans to change the national standards in respect of impairment of cash generating assets in near future?

Comments:



Questions Yes No 2(a) Is the definition of cash generating assets and non-cash-generating assets

the same as in the IPSAS? Cash generating assets are assets held to generate a commercial return, non-cash-generating assets all other assets. (IPSAS 26.13)

Comments:

2(b) Are the national accounting standards defining an impairment loss as the amount by which the carrying amount of an asset exceeds its recoverable amount? (IPSAS 26.13)

Comments:

2(c) Is the recoverable amount defined as the higher of the assets fair value less costs to sell and its value in use? (IPSAS 26.13)

Comments:

2(d) Do the national accounting standards prescribe a two step procedure identifying impaired assets? In a first step the entity should assess whether there is an indication that an asset may be impaired, in a second step the entity should measure a possible impairment loss, but only for those assets which have been identified in the first step. (IPSAS 26.21)

Comments:

2(e) Does the assessment of an indication of impairment include both external

and internal sources of information? Does it include other aspects than physical damage, i.e. changes in demand, technology or policy? (IPSAS 26.25)

Comments:

2(f) Is the measurement of fair value less cost to sell the same as in IPSAS, i.e. the price in an arm’s length transaction minus incremental cost that would be attributable to the disposal of the asset? (IPSAS 26.38)

Comments:

2(g) Are the allowed approaches for measurement of the value in use the same as in IPSAS, i.e. estimated future cash inflows and outflows to be derived from continuing use of the asset and from its ultimate disposal. (IPSAS 26.43-26.45)

Comments:

2(h) Are future cash flows to be estimated based on the management’s best estimate of the range of economic conditions but greater weight shall be given to external evidence? Budgets and extrapolations are used cautiously. (IPSAS 26.46 to 26.67)

Comments:

2(i) Are discount rates defined as pre-tax rates that reflect the time value of the money including a risk premium if the future cash flows have not been adjusted for the risk? (IPSAS 26.68)

Comments:

2(j) If the recoverable amount of an asset is less than its carrying amount, is the carrying amount to be reduced to the recoverable amount? Is such an impairment loss to be recognized immediately in the surplus/deficit? (IPSAS 26.72 and 26.73)

Comments:

2(k) If the recoverable amount cannot be estimated for an individual asset, is the recoverable amount to be determined based on the cash-generating unit? (IPSAS 26.77 to 26.97)

Comments:

2(l) Do national accounting standards require reversing impairment losses if there has been a favorable change in estimates? A reversal of an impairment loss is a revaluation to value higher than previous recoverable service amount adjusted for depreciation (IPSAS 21.98 to 26.111)

Comments:

2(m) Are reversals of impairment losses limited to the carrying amount that

would have been determined if no impairment loss had been recognized in prior periods? (IPSAS 26.106 and 26.110)

Comments:

2(n) Are disclosure requirements the same as in IPSAS 26.114 to 26.125?

Comments:

The World Bank

Public Sector Auditing: A Comparison to International Standards

Assessment of potential in-country value added of adopting the concepts and standards that comprise the

International Standards for Supreme Audit Institutions (ISSAI) to the extent that they are not already incorporated into the

National Public Sector Auditing Standards (NPSAS)

AUDIT DIAGNOSTIC TOOL – PART 3

April, 2009

CONTENTS

Foreword ................................................................................................................................ 1General Information ............................................................................................................... 2I. Relevant GAPs in Auditing between ISSAI and National Standards – Value added due to Auditing Effects ..................................................................................................................... 3

I.1 Summaries of Gaps in Key Provisions ......................................................................... 3I.2 Assessment of Opportunities to Add Value .................................................................. 9

II. Value Added due to Reputation Effects .......................................................................... 10II.1 Summaries of Gaps in Key Provisions ...................................................................... 10II.2 Assessment of Opportunities to Add Value .............................................................. 11

III. Value Added due to Training Effects ............................................................................ 12III.1 Summaries of Gaps in Key Provisions .................................................................... 12III.2 Assessment of Opportunities to Add Value ............................................................. 12

FOREWORD

As part of its public sector financial management reform program, the World Bank has developed a framework for assessing the variance between national and international standards in public sector auditing. This toolkit is developed for use in different countries to promote improvements in public sector auditing. This part of the review assesses the potential value added that an adoption of the International Standards of Supreme Audit Institutions (ISSAI) and the IFAC International Standards on Auditing (ISAs) would provide in comparison to the prevailing national public sector auditing standards and practices. The assessment identifies potential value added directly in the field of auditing, but also in respect of reputation of the SAI and training of the audit staff.

The INTOSAI Professional Standards Committee has adopted a hierarchical four level

framework of ISSAI standards that incorporate the ISA standards in the Level 4 Guidelines: • Level 1 Founding Principles – Lima Declaration on Auditing Precepts • Level 2: Prerequisites for the Functioning of Supreme Audit Institutions • Level 3 INTOSAI Auditing Standards • Level 4: Auditing Guidelines The Lima Declaration identifies the purpose of audit as 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. These are the opportunities for adding value by using best practice standards. The diagnostic uses the results of Audit Diagnostics Part I and Part II to summarize the opportunities for adding value by adopting key practices contained in the ISSAI. These are classified into added value through better auditing practices, improved reputation of the SAI and better skills of the auditor.

This Diagnostic Tool Part 3 should be used in conjunction with the ISSAI published on the INTOSAI website (www.issai.org) and the IFAC IAASB 2008 Handbook of International Auditing, Assurance, and Ethics Pronouncements as of January 1, 2008.

References to specific Standards are placed in brackets at the end of each question. Note on Terminology Used in this Questionnaire

“Standard” refers to any applicable implementation guideline on financial audit and compliance audit issued as part of the International Standards of Supreme Audit Institutions (ISSAI) by the Professional Standards Committee of INTOSAI; and any International Standard on Auditing (ISA) issued by the International Auditing and Assurance Standards Board of IFAC.


GENERAL INFORMATION

Country:




Address:

Telephone Number:

Fax Number:

E-mail Address:

I. RELEVANT GAPS IN AUDITING BETWEEN ISSAI AND NATIONAL STANDARDS – VALUE ADDED DUE TO AUDITING EFFECTS I .1 Summar ies of G aps in K ey Pr ovisions

Questions Yes No 1(a) ISSAI 1- Lima Declaration on Auditing Precepts - Preamble

Does the Public Sector Auditing Law provide adequate powers and protections?

i. Is there an Audit Law?

ii. Does the Law cover all government controlled entities including GBEs?

iii. Does the Law empower a full range of audits for all government owned or controlled entities including regularity, financial, and performance audits?

iv. Does the Law provide sanctions against non-compliance?

Comments:

1(b) ISSAI 11 - INTOSAI Guidelines and Good Practices Related to SAI Independence

Does the SAI adopt good practices in relation to its independence?

i. The existence of an appropriate and effective constitutional/statutory/legal framework and of de facto application provisions of this framework

ii. The independence of SAI heads and members (of collegial institutions), including security of tenure and legal immunity in the normal discharge of their duties

iii. A sufficiently broad mandate and full discretion, in the discharge of SAI functions

iv. Unrestricted access to information

v. The right and obligation to report on work

vi. The freedom to decide the content and timing of audit reports and to publish and disseminate them

vii. The existence of effective follow-up mechanisms on SAI recommendations

viii. The existence of effective follow-up mechanisms on SAI recommendations

Comments:

1© ISSAI 30 - Code of Ethics

Are public sector auditors required to adhere to a code of ethics or a code of conduct?

i. Is the code consistent with the ISSAI Code of Ethics?

ii. Is there a register of senior staff member interests in place?

Comments:

1(d) ISSAI 1210 Exposure Draft - Agreeing the Terms of Audit

Engagements

Does the SAI have the consultation arrangements in place to ensure good cooperation wit h the auditee and the legislature?

i. Is there an engagement letter, and do discussions occur with management prior to the audit?

ii. Does the SAI inform the legislature about its work program?

Comments:

1(e) ISSAI 1220 - Quality Control for Audits of Historical Financial Information

Does the SAI have the quality control and assurance programs in place to ensure audit performance and results?

i. Is there a process to record that work at each level and audit phase is properly supervised; and documented work is reviewed by a senior audit member?

ii. Does the review process ensure that all evaluations and conclusions are soundly based and are supported by competent, relevant and reasonable audit evidence as the foundation for the final audit opinion or report

Comments:

1f) ISSAI 1230 - Audit Documentation

Does the SAI have procedures for the confidentiality, safe custody, integrity, accessibility and retrieval of documentation covering the record of audit procedures performed, relevant audit evidence obtained, and conclusions the auditor reached?

i. Are there adequate procedures to ensure timely completion of the assembly of the audit file and working papers?

Comments:

1(g) ISSAI 1240 Exposure Draft - The Auditor's Responsibility Relating to Fraud in an Audit of Financial Statements

Does the audit procedure include a documented assessment of fraud risk factors as set out in the ISA 240?

i. Does the audit procedure include a documented examination of processes such as procurement and personnel expenses that are prone to high fraud risk factors as set out in the ISA 240?

Comments:

1(h) ISSAI 1250 Exposure Draft - Considerations of Laws and Regulations in an Audit of Financial Statements

Does the auditor report all identified instances of non-compliance with laws and regulations or only those that are material?

i. Can the auditor direct the entity to correct or make recoveries where instances of non-compliance are found?

ii. Are the audit evaluations used to report to management on defects in the system of internal controls and are

recommendations made on the steps that should be taken to improve the system?

Comments:

1(i) ISSAI 1260 - Communication of Audit Matters with those Charged with Governance

Does the SAI report to levels above auditee management?

i. Does the SAI express an opinion as to whether the financial statements are prepared in all material respects in accordance with the applicable reporting framework?

ii. Are reports provided to those charged with governance on other matters such as exceeding budget authorizations, non-compliance with authorities and on the effectiveness of internal control systems?

Comments:

1(j) ISSAI 1300 - Planning an Audit of Financial Statements

Does the audit planning objective require (i) expressing an opinion whether the financial statements have been prepared, in all material respects, in accordance with the applicable financial reporting framework; (ii) reporting whether the public sector auditors found any instances of non-compliance with authorities including budget and accountability and (iii) reporting on the effectiveness of internal control?

i. Does the auditor evaluate whether Management, with the oversight of those charged with governance, has created and maintained a culture of honesty and ethical behavior?

ii. Does the audit review the internal audit of the audited entity and its work program?

iii. Is there a process to study and evaluate the reliability of internal control?

Comments:

1(k) ISSAI 1315 - Identifying and Assessing the Risks of Material Misstatements Through Understanding the Entity and its Environment

In developing the overall audit plan, does the auditor perform risk assessment procedures?

i. Is there a process to study and evaluate the reliability of internal control in determining the extent and scope of the audit?

ii. Does the auditor perform risk assessment procedures to provide a basis for the identification and assessment of risks of material misstatement at the financial statement and assertion levels?

iii. Does the audit evaluate and report whether the audit work performed has identified a material weakness in the design, implementation or maintenance of internal control?

Comments:

1(l) ISSAI 1320 Exposure Draft - Materiality in Planning and Performing an Audit

Does the planning process document appropriate materiality levels?

i. Is there a process for setting materiality for planning purposes?

ii. Is there a review of materiality levels as audit procedures are performed during the course of the audit?

iii. Where the audit objectives include reporting on instances of non-compliance with authorities or for reporting on the effectiveness of controls. are materiality levels set?

Comments:

1(m) ISSAI 1330 - The Auditor’s Responses to Assessed Risks

Is the objective of the auditor to obtain sufficient appropriate audit evidence about the assessed risks of material misstatement, through designing and implementing appropriate responses to those risks?

i. Does the auditor design audit tests to address the assessed risks of material misstatement at the financial statement level?

ii. Does the auditor perform tests of controls to obtain sufficient appropriate audit evidence that the controls were operating effectively?

iii. Does the auditor make management aware in writing of material weaknesses in the design or operation of the accounting and internal control systems?

Comments:

1(n) ISSAI 1450 – Evaluation of Misstatements Identified during the Audit

In expressing an opinion whether the financial statements have been prepared, in all material respects, in accordance with the applicable financial reporting framework, does the auditor accumulate misstatements identified during the audit, other than those that are clearly trivial?

i. Does the auditor separately evaluate financial statement misstatements, instances of non-compliance with authorities and control deviations?

ii. Does the auditor order the entity to correct any instance of non-compliance with authorities?

iii. Does the auditor communicate all misstatements accumulated during the audit to the appropriate level of management on a timely basis and request management to correct them?

Comments:

1(o) ISSAI 1530 Exposure Draft - Audit Sampling and Other Means of Testing

Do the audit procedures specify the use of audit sampling for tests of controls and account balances?

i. Do the audit procedures require the auditor to identify the characteristics or attributes that indicate

performance of a control, as well as possible deviation conditions which indicate departures from adequate performance?

ii. Are audit sampling and other means of selecting items for testing and gathering audit evidence used to verify assertions about a financial statement amounts?

Comments:

1(p) ISSAI 1550 Exposure Draft - Related Parties

Are audit procedures used to assess risks where entities that are under common control by a government engage in significant transactions or share resources to a significant extent with one another?

i. Do the auditors obtain evidence that significant transactions with related parties outside the entity’s normal course of business are appropriately authorized and approved?

Comments:

1(q) ISSAI 1700 - Reporting on Financial Statements

At the end of each audit does the auditor prepare a clear written opinion, setting out the findings in an appropriate form?

i. Does the opinion paragraph contain a reference to the financial reporting framework?

Comments:

1(r) INTOSAI Auditing Standards 2.2.37

Is the SAI equipped with adequate audit technologies?

i. Does the SAI use TeamMate or another automated audit management system?

ii. Does the SAI use ACL or another Computer Assisted Audit Tool?

Comments:

1(s) ISSAI 1550 Exposure Draft - Considering the Relevance and Reliability of Audit Evidence

When obtaining audit evidence from tests of control does the auditor have procedures to assess the relevance and reliability of the information to be used as audit evidence, including the adequacy of the accuracy and completeness of the information and its degree of detail?

i. Does the audit of tangible assets include physical examination of the assets?

ii. When long-term investments are material to the financial statements, does the auditor obtain sufficient appropriate audit evidence regarding their valuation and disclosure?

iii. Does the auditor obtain evidence on the entity's exercise of its responsibilities to satisfy itself about grant transactions to other parties?

Comments:

1(t) INTOSAI Auditing Standards 2.2.37

Is the SAI equipped with adequate audit technologies?

i. Does the SAI use TeamMate or another automated audit management system?

ii. Does the SAI use ACL or another Computer Assisted Audit Tool?

Comments:

1(u) ISSAI 1400 Exposure Draft – Compliance Audit for Financial Statements

Does the SAI provide a separate compliance opinion as part of its report on the Government’s financial statements?

i. In planning compliance audit, does the auditor set lower materiality levels than would be the case for an audit of financial statements?

ii. Is statistical sampling used to form an opinion on whether activities, financial transactions and operations comply with the authorities which govern them in all material respects?

Comments:

I .2 Assessment of Oppor tunities to Add V alue Comment Please evaluate the possible modification of national standards and audit practices to

include those elements of the ISSAI guidelines that are not presently practiced. Consider the following issues as well as any others that arise from the diagnostics.

i. Are there any changes to the mandate and powers contained in the Audit Law that would give the SAI an improved opportunity to

ii.

reveal deviations from accepted standards and violations of the principles of legality, efficiency, effectiveness and economy of financial management?

iii.

Are there any changes to the independence provisions contained in the Audit Law that would give the SAI an improved opportunity to carry out its audits and make public reports effectively?

iv. Are there changes to the compliance audit methodologies in use by more comprehensive adoption of the ISSAI Guidelines that would lead to better identification of financial management inadequacies and improved corrective action in individual cases; would make those accountable accept responsibility; would assist in obtaining compensation or restitution, or would help to prevent breaches?

Is it feasible to adopt a more effective Code of Ethics to ensure auditors act in accordance with professional standards of behavior?

v. Are there changes to the certification audit methodologies in use by more comprehensive adoption of the ISSAI Guidelines that would lead to better reporting of the financial position and greater transparency of government operations and finances?

vi. Which phases or milestones could be identified in the process of adopting full accrual accounting? The adoption and implementation of the full suite of IPSAS in a single sequence may be onerous. Thus what could be done to facilitate such a project?

Response/Comments:

II. VALUE ADDED DUE TO REPUTATION EFFECTS I I .1 Summar ies of G aps in K ey Pr ovisions Questions Yes No 1(a) ISSAI 20 - Principles on transparency and accountability of Supreme Audit Institutions

Is there an effective arrangement for setting public sector auditing standards?

i. Are there written national auditing standards for public sector entities?

ii. Is there a national professional body or standard-setting body responsible for setting auditing standards for the government owned companies and statutory bodies?

iii. Are the standards generally consistent with ISSAI?

iv. Is the reputation of the national standards similar to the reputation of their private sector counterpart(s)?

Comments:

1(b) ISSAI 11 – INTOSAI Guidelines and Good Practices Related to SAI Independence

Are audit certification reports of high reputation?

i. Are audit reports made public within 6 months of the end of the financial year?

ii. Are audit certification opinions in the ISSAI format?

Response/Comments:

1(c) ISSAI 11 – INTOSAI Guidelines and Good Practices Related to SAI Independence

Are other audit reports of high reputation?

i. Are the audit reports made public within 4 months of their completion?

Response/Comments:

1(d) ISSAI INTOSAI Auditing Standards 30 - Competence

Is it – according to the professional requirements - possible for public sector auditors trained abroad to accept appointments in this country?

Response/Comments:

1(e) ISSAI INTOSAI Auditing Standards 1.0.20

Is there an effective arrangement for the accountability of the SAI?

i. Does the SAI prepare an annual report on its operations and performance that is separate to its reports on its audits?

ii. Does the SAI undergo peer review?

Comments:

1(f) ISSAI 1 - Lima Declaration on Auditing Precepts 18 - Mandate

Does the scope of the audit mandate include extra-budgetary funds?

i. Does the SAI have the full audit mandate for reporting publicly on the audit of all public moneys?

Comments:

1(g) ISSAI 11 - INTOSAI Guidelines on Independence 7

Are the powers to follow up audits effective in achieving corrective action, proper restitution or compensation, reformed processes and disciplinary actions against offenders?

i. Does the SAI have the full cooperation of the legislative scrutiny committee in reviewing and reporting on the SAI reports within one year of the completion of the audit report?

ii. Are audit objections generally resolved within one year or do backlogs arise for several years?

Comments:

I I .2 Assessment of Oppor tunities to Add V alue

Comment Based on the diagnostics including the above summary issues, please assess whether there are there any changes to the SAI’s internal management and external liaison arrangements that would improve its reputation and lead to greater value and responses to its work in improving management and accountability in public finances.

Response/Comments:

III. VALUE ADDED DUE TO TRAINING EFFECTS I I I .1 Summar ies of G aps in K ey Pr ovisions

Questions Yes No 1(a) ISSAI INTOSAI Auditing Standards 30 - Competence

Is there a standardized arrangement for the training of public sector auditors?

i. Is the curriculum in accordance with international best-practices

?

ii. Does the syllabus cover all areas recommended by International Federation of Accountants’ educational guidelines (IEG 9)?

iii. Are the degrees earned at institutions inside the country internationally recognized?

iv. Are there minimum academic requirements for auditors?

Comments:

1(c) ISSAI INTOSAI Auditing Standards 30 – Competence

Do the available training/degree programs give clear information about the suitability of candidates who have successfully passed these programs for specific positions in public sector auditing?

Comments:

1(d) ISSAI INTOSAI Auditing Standards 30 - Competence

Is it – according to the professional requirements - possible for public sector auditors trained in this country to accept appointments in other countries?

Comments:

I I I .2 Assessment of Oppor tunities to Add V alue

Comment Based on the diagnostics including the above summary issues, please assess whether there are there any changes to the SAI’s recruitment and training practices that would lead to improved operations and more effective audits and reports.

Response/Comments:

The World Bank


Assessment of Actual Accounting Practices


April, 2009

CONTENTS

Foreword ................................................................................................................................ 2

FOREWORD

As part of its public sector financial management reform program, the World Bank has developed a framework for assessing the variance between national and international standards in public sector accounting. This toolkit is developed for use in different countries to promote improvements in public sector financial management. This diagnostic tool is designed to assess the actual accounting practices and evaluate them against the standard or rule they refer to. Since those standards or rules may vary among jurisdictions or even among various entities within one jurisdiction, the following approach is suggested:

(i) For those public sector institutions required to prepare and present financial statements in accordance with IPSAS, an assessment should be performed of those financial statements by reference to IPSAS. Diagnostic Tool (Part 2 for cash and Part 3 for accrual) and should be applied for each entity to be assessed individually.

(ii) For those public sector institutions not [yet] required to prepare and present financial statements in accordance with IPSAS, the assessment should be performed by reference to the standard or rule currently applicable to those entities. In order to conduct such an assessment, it is necessary to first assess the standard/rule against the IPSAS, using the Diagnostic Tool – Part 2 and/or Part 3. Sections in which the assessor comes to the conclusion that they are at least, partly applicable to the other standard/rule (i.e. answer “yes”) should then be used to conduct an assessment on the individual entity level about current accounting practices. On the other hand, those sections not covered by the other standard/rule (i.e. answer “no”) should not be assessed any further at the individual entity level.

(iii) For State Owned Enterprises (SOEs) required to follow the International Financial Reporting Standards (IFRS), Diagnostic Tool-Part 5 (same template as Part II of ROSC A&A with reference to IFRS) should be used.

It is further encouraged to validate the findings in relevant fields by the entity’s nature even if compliance with the standards or rules seems obvious i.e. if an entity controls various other entities, control and consolidation issues should be assessed in detail; or if an entity holds substantial property, plant and equipment, accounting in this area should be examined more closely. The purpose of this assessment is not a comprehensive compliance review. This assessment identifies current levels of compliance in relevant areas which allows drawing conclusions on the capacity of a jurisdiction to handle complex international accounting standards such as the IPSAS. If a jurisdiction shows good levels of compliance with similar complex standards (though different in substance), it reinforces the assumption that a jurisdiction is able to adopt and implement international standards and vice versa.

The World Bank


Assessment of Financial Reporting For State Owned Enterprises

DIAGNOSTIC TOOL - PART 5 (Same Template as Part II of ROSC A&A

– Review of National Standards with reference to IFRS)

April, 2009

The World Bank


Assessment of potential in-country value Added of adopting the various concepts of

International Standards


April, 2009

CONTENTS

Foreword ................................................................................................................................ 2I. Relevant GAPs in accounting between INTERNATIONAL and national standards – Value added due to accounting effects ................................................................................... 3II. Relevant GAPs in AUDITING between INTERNATIONAL and national standards – Value added due to AUDITING effects ................................................................................. 8III. Value added due to reputation effects ............................................................................ 10IV. Value added due to training effects ............................................................................... 11

FOREWORD

As part of its public sector financial management reform program, the World Bank has

developed a framework for assessing the variance between national and international

standards in public sector accounting. This toolkit is developed for use in different

countries to promote improvements in public sector financial management. This part of

the review assesses the potential value added that an adoption of the International Public

Sector Accounting Standards (IPSASs) in the field of accounting and INTOSAI/IAS in

the field of auditing would provide in comparison to the national standards of the

respective country. The assessment identifies potential value added directly in the field of

accounting and auditing, but also in respect of reputation and training of local financial

management staff.

Preparers may use the Comments box to highlight specific

differences that are not covered in the tool in the

questionnaire.

I. RELEVANT GAPS IN ACCOUNTING BETWEEN INTERNATIONAL AND NATIONAL STANDARDS – VALUE ADDED DUE TO ACCOUNTING EFFECTS

Questions Yes No

1(a) Are financial reports adopting the national standards prepared on a full accrual basis of accounting or rather on a modified/partially accrual basis??

i. Do the financial reports adopting the national standards recognize all assets of the government?

ii. Do the financial reports adopting the national standards measure the value of all assets based on general principles (i.e. cost method, fair value)?

iii. Do the financial reports adopting the national standards recognize all liabilities of the government?

iv. Do the financial reports adopting the national standards measure the value of all liabilities based on general principles (i.e. fair value)?

v. Do the financial reports adopting the national standards recognize all the revenues of the period?

vi. Do the financial reports adopting the national standards measure all the revenues of the period in accordance with the respective increase of assets and/or decrease of liabilities?

vii. Do the financial reports adopting the national standards recognize all the expenses of the period?

viii. Do the financial reports adopting the national standards measure all the expenses of the period in accordance with the respective decrease of assets and/or increase of liabilities?

ix. Adopting the national standards, are all no transactions booked directly through the net assets/equity, with the exception of contributions from owners, the distribution of gains/losses and transactions between the various accounts within net assets/equity?

Comments:

1(b) Are financial statements adopting the national standards presented in

similar way like the financial statements adopting the IPSAS’?

i. Do the financial statements adopting the national standards include a statement of financial position (i.e. balance sheet)?

ii. Do the financial statements adopting the national standards include a statement of financial performance (i.e. surplus and deficit)?

iii. Do the financial statements adopting the national standards include a cash flow statement?

iv. Do the financial reports adopting the national standards include a statement explaining the changes in net assets/equity?

v. In financial reports adopting the national standards, is there a section presenting the accounting policies and providing notes the financial statements?

Comments:

1(c) Are the financial reports prepared and presented adopting the national

standards conforming with general qualitative characteristics?

i. Are the financial reports prepared on a going concern basis?

ii. Are the financial reports consistent with the reports published in previous periods unless there is a significant change in operation or in the standards?

iii. Are all material items presented separately and all immaterial amounts aggregated?

iv. Is there offsetting of assets/liabilities and expenses/revenues unless the national standards require to do so or they result from transactions which are not material?

v. Is there comparative information in the financial statements?

vi. Are there principles or rules in conflict with the qualitative characteristics prescribed in IPSAS 1 Appendix 2?

Response/Comments:

1(d) Are the national standards rigorous enough to ensure comparability of financial reports prepared by various entities reporting under the national standards?

Response/Comments:

1(e) Are the national standards a sufficient basis for an audit opinion qualified?

Response/Comments:

Questions

1(g) Please evaluate the possible introduction of full accrual accounting against an improvement of cash basis accounting.

i.

ii.

Are there any accrual basis aspects (i.e. asset accounting, accounts receivable/payable, provisions) already adopted by the current national rules or standards?

iii.

Are there any accrual basis aspects (i.e. asset accounting, accounts receivable/payable, provisions) already implemented by the current national rules or standards?

iv. Is the cash basis IPSAS a possible milestone or is it rather a step back?

Is it feasible to adopt accrual accounting, or is this too far reaching based on the current situation?

v. What is a realistic time frame for the adoption of full accrual accounting and reporting?

vi. Which phases or milestones could be identified in the process of adopting full accrual accounting? The adoption and implementation of the full suite of IPSAS in a single sequence may be onerous. Thus what could be done to facilitate such a project?

Response/Comments:

Questions 1(h) Are there an incremental approach, i.e. feasible steps on the way to full accrual basis?

Such steps take existing areas of expertise or area in which accounting is already very close to full accrual into account. On the other side areas of weakness which are particularly relevant for decision making should be addressed earlier than less important areas. An incremental approach tries to build on strengths and realize prioritized improvements in areas of weaknesses.

Response/Comments:

II. RELEVANT GAPS IN AUDITING BETWEEN INTERNATIONAL AND NATIONAL STANDARDS – VALUE ADDED DUE TO AUDITING EFFECTS

Questions

2(a) ….

Response/Comments:

III. VALUE ADDED DUE TO REPUTATION EFFECTS

Questions Yes No 3(a) In the national public sector constituency, are the national standards

transparence and reliable?

i. Is the authority of the national standards undisputed and respected by all relevant groups within the national constituency?

ii. Is there an aspiration to develop and improve the national standards in a continuous process and hence keep the reputation high?

iii. Is there a general perception that the national standards are a source of transparency and reliability?

iv. Is the reputation of the national standards similar to the reputation of their private sector counterpart(s)?

Comments:

4(b) Are the national standards well known and perceived internationally, i.e. in neighboring countries, international organizations or by international business partners?

i. Are the national standards known in other countries?

ii. Are the national standards ever taken as a (positive) example?

Response/Comments:

4(c) Are there any suggestions and/or recommendations by national and/or international constituents, i.e. international organizations or lenders, to implement international standards rather than national ones?

Response/Comments:

4(d) Is it – according to the professional requirements - possible for public sector accountants and auditors trained abroad to accept appointments in this country?

Response/Comments:

IV. VALUE ADDED DUE TO TRAINING EFFECTS

Questions Yes No 4(a) Is there a standardized for the training of public sector accountants?


?

ii. Are the degrees earned at institutions inside the country internationally recognized?

Comments:

4(b) Is there a standardized for the training of public sector auditors?


?

ii. Are the degrees earned at institutions inside the country internationally recognized?

Comments:

4(c) Do the available training/degree programs give clear information about the suitability of candidates who have successfully passed these programs for specific positions in public sector accounting/auditing?

Comments:

4(d) Is it – according to the professional requirements - possible for public sector accountants and auditors trained in this country to accept appointments in other countries?

Comments:

The World Bank

Public Sector Auditing: A Comparison to International Standards

Assessment of the Public Sector Auditing Environment

AUDIT DIAGNOSTIC TOOL - PART 1

April, 2009

CONTENTS

Foreword ............................................................................................................................. 1General Information ............................................................................................................ 2I. Statutory Framework ....................................................................................................... 3

I.1. Overview .................................................................................................................. 3I.2. Public Sector Auditing Law ..................................................................................... 3

II. Academic Education, Professional Education, Training ................................................ 5II.1. Academic Education ............................................................................................... 5II.2. Professional Education ............................................................................................ 6II.3. Continuing Education .............................................................................................. 7II.4. Labor Market in Public Sector Auditing ................................................................. 8

III. Setting Auditing Standards ........................................................................................... 9III.1. National Auditing Standards .................................................................................. 9III.2. Code of Ethics ...................................................................................................... 10III.3. Standard Setting Body ......................................................................................... 11

IV. Accountability for the SAI .......................................................................................... 13IV.1. Internal ................................................................................................................. 13IV.2. External ................................................................................................................ 13

V. Independence provided by the Legislation .................................................................. 14V.1. Constitutional Framework ..................................................................................... 14V.2 Heads and Board Members of SAI ........................................................................ 14V.3. SAI Mandate ......................................................................................................... 14V.4. Powers of Access .................................................................................................. 16V.5. Reporting Powers .................................................................................................. 17V.6. Audit Follow-up Powers ....................................................................................... 18V.7. SAI Powers over Resources .................................................................................. 18

VI. Information Technology ............................................................................................. 20VII. Code of Ethics ........................................................................................................... 21VIII. Country Data ............................................................................................................ 22

VIII.1. National Budget Aggregates ............................................................................. 22VIII.2. Public Sector Audit Mandate ............................................................................ 22

FOREWORD

As part of its public sector financial management reform program, the World Bank has developed a framework for assessing the variance between national and international standards in public sector auditing. This toolkit is developed for use in different countries to promote improvements in public sector auditing. This part of the review assesses the comparability of the International Standards of Supreme Audit Institutions (ISSAI) to the National Public Sector Accounting Standards of the respective country. The assessment also covers the Public Sector auditing environment that focuses on the statutory framework, professional education, standard setting process, code of ethics and the accountability and independence of the Supreme Audit Institutions (SAIs).

The International Organization of Supreme Audit Institutions (INTOSAI) Professional

Standards Committee has adopted a hierarchical four level framework of ISSAI standards: • Level 1 Founding Principles – Lima Declaration on Auditing Precepts • Level 2: Prerequisites for the Functioning of Supreme Audit Institutions • Level 3 INTOSAI Auditing Standards • Level 4: Auditing Guidelines While the questionnaire is designed to assess the major gaps existing between national and

international public sector auditing standards, it may not fully cover the many detailed differences that may exist between the two.

Preparers may use the Comments box to highlight specific differences that are not covered in the tool in the questionnaire. This Diagnostic Tool Part 1 should be used in conjunction with the ISSAI standards published on the INTOSAI website (www.issai.org) and the International Federation of Accountants (IFAC) International Audit and Assurance Standards Board (IAASB) 2008 Handbook of International Auditing, Assurance, and Ethics Pronouncements as of January 1, 2008.



“Standard” refers to any applicable standards and implementation guidelines on financial audit and compliance audit issued as part of the ISSAI by the Professional Standards Committee of INTOSAI; any International Standard on Auditing (ISA) issued by the International Auditing and Assurance Standards Board of IFAC; and any International Education Guidelines (IEG) issued by IFAC.


GENERAL INFORMATION

Country:




Address:

Telephone Number:

Fax Number:

E-mail Address:

I. STATUTORY FRAMEWORK I .1. Over view

Questions 1(a) What type best describes the SAI (a 'court' with a judicial function; a 'collegiate' body without a judicial function; an independent audit office headed by an Auditor General; an audit office headed by an Auditor General within the structure of government)? (INTOSAI Auditing Standards 1.0.20)

Comments:

1(b) What are the consequences of this type of SAI on the auditing environment? Please describe.

Comments:

I .2. Public Sector Auditing L aw

Questions 2(a) The Lima Declaration states that to achieve the orderly and efficient use of public funds it is indispensable that each country have a Supreme Audit Institution whose independence is guaranteed by law. (ISSAI Lima Declaration Preamble).

What is (are) the Audit Law(s) or Act(s) relevant for public sector entities? What is its enacting body, enactment date and the latest amendment date? With your response to the questionnaire, please attach a copy of the Law(s) or Act(s) in the country’s official language and in English (if available).

Comments:

2(b) If there is more than one Law or Act, what are the delimitations between the various laws or acts? (i.e. indicate which ones are relevant for which level of government or for which kind of legal entity)

Comments:

2(c) Is the law also applicable to Government Business Enterprises (GBEs)? GBEs are government owned entities which are selling goods or services at a profit or full cost recovery. They are controlled by the government but not fully reliant on government funding.

Comments:

2(d) What are the main provisions of the Law(s)?

Comments:

2(e) What are the specific statutory auditing requirements established by the legislation? Distinguish among the various types of audits and entities, if applicable.

Comments:

2(f) Does the SAI have authority to conduct a full range of audits for all government owned or controlled entities including regularity, financial, and performance audits? Please list any exclusion. (Lima Declaration Sections 18-19).

Comments:

2(g) Does the legislation set out civil or criminal liability in the event of non-compliance with the auditing requirements? Describe how it applies.

Comments:

2(h) Does the legislation set out any administrative sanction mechanism (other than civil or criminal liability) for enforcing auditing requirements? Describe how it applies.

Comments:

2(i) Have there been cases where sanctions described under items 6 and 7 above have been exercised? If yes, briefly describe a few recent cases.

Comments:

2(j) Are there any practical problems in implementing the sanctions requirements of the legislation? If yes, how can they be overcome?

Comments:

2(k) In general, how have the provisions of the legislation facilitated or constrained the development of an enabling environment for strong auditing practices? What further legislation is required?

Comments:

2(l) Are all the legal requirements in the legislation implemented in practice?

Comments:

II. ACADEMIC EDUCATION, PROFESSIONAL EDUCATION, TRAINING I I .1. Academic E ducation

Questions 1(a) What kind of training programs in auditing are provided in the government’s and the SAI’s training schools (commenting on the quality of curriculum and teaching, including availability of skilled instructors and teaching materials, and the number of years/semesters of the curriculum). Does the syllabus cover all areas recommended by the International Federation of Accountants’ educational guidelines (IEG 9): “organizational and business knowledge core,” “information technology knowledge core,” and “accounting and accounting-related knowledge core”?

Comments:

1(b) Do the universities or other academic institutions provide any degree programs addressing public sector auditing issues in a substantial magnitude?

Comments:

1(c) Are there any non-degree programs provided by academic institutions addressing public auditing or related areas? (e.g. Diploma or Certificate in Public Sector Audit)

Comments:

1(d) Please provide a rough estimate of the numbers of students/participants graduating from/finishing any of the above mentioned programs (items 3(a) through 3(d)).

Table:

1(e) Do the curriculums of the SAI training and the academic institutions extend to internationally recognized standards of auditing (i.e. IFAC ISA, INTOSAI ISSAI)? If yes, please describe briefly how this is done. Is particular emphasis given on technical practical application of such standards?

Comments:

1(f) Are (some of) the programs internationally accredited, either by professional or academic accreditation bodies? If yes, which kind of accreditation is in place?

Comments:

1(g) Are there minimum academic requirements for auditors in specific positions or above certain hierarchy levels? If yes, what are those requirements? Describe the academic criteria used for recruitment and promotion of SAI auditors. Describe the extent to which staff are recruited or developed with professional qualifications provided by the national Institute of Chartered Accountants or equivalent. (INTOSAI Lima Declaration Section 14 and INTOSAI

Auditing Standards 2.1.4)

Comments:

1(h) Are there minimum academic requirements for an individual seeking to begin a study/training program leading to membership in a professional accounting or auditing body? If yes, what are those requirements?

Comments:

I I .2. Pr ofessional E ducation

Questions 2(a) Is there a professional license required for certain positions in the field of auditing? Please describe briefly?

Comments:

2(b) Are there professional education requirements for an individual to obtain a professional license as an auditor?

Comments:

2(c) Is the system of professional education/professional licenses the same in the private and public sector? If no, please highlight the differences.

Comments:

2(d) Do the entry requirements of the professional education programs comply with IFAC International Education Standards (IES 1): “at least equivalent to that required for admission into a recognized university degree program or its equivalent”? Please specify if requirements for public sector are different from their private sector counterparts.

Comments:

2(e) Do the syllabi of the professional education programs cover all areas required by IFAC International Education Standards (IES 2): “accounting, finance and related knowledge”, “organizational and business knowledge” and “information technology and competences” as defined in the standard? Please specify if requirements for public sector are different from their private sector counterparts.

Table:

2(f) Do the entry requirements of the professional education programs comply with IFAC International Education Standards (IES 5): 3 years, with not more than 12 months credited from graduate degree programs towards it? Please specify if requirements for public sector are

different from their private sector counterparts.

Comments:

2(g) Is there a professional examination requirement in compliance with IFAC International Education Standards (IES 6): recorded form, reliability and validity, coverage of the syllabus, made at the end of pre-qualification program, in responsibility of professional body or regulatory authority? Please specify if requirements for public sector are different from their private sector counterparts.

Comments:

2(h) Is there a professional education/examination program which is in co-operation with international providers of such programs (i.e. Chartered Institute of Public Finance and Accountancy, United Kingdom (CIPFA) or similar)? Does it lead to the internationally recognized professional qualifications?

Comments:

I I .3. C ontinuing E ducation

Questions 3(a) Is continuing education for professionally qualified individuals (i.e. CPAs) required and promoted by the SAI? Describe the program operated in the SAI for the continuing professional development of its personnel, including, as appropriate, provision of in-house training and encouragement of attendance at external courses. (INTOSAI Lima Declaration Section 14 and INTOSAI Auditing Standards 2.1.5-2.1.12)

Comments:

3(b) Is continuing education for individuals working in the field of public sector auditing required and promoted by their employers?

Comments:

3(c) Is there a systematic approach to continuing education programs?

Comments:

3(d) Are (some of the) continuing education programs evaluated or accredited by an independent body?

Comments:

I I .4. L abor M ar ket in Public Sector Auditing

Questions 4(a) Is there a separate market segment for public sector auditing or are public sector auditors recruited from the same market as their private sector counterparts?

Comments:

4(b) How would you describe market conditions? (i.e. excess demand for professionally qualified individuals, excess supply from some specific programs)

Comments:

4(c) Is there a substantial in- or outflow of public sector auditors to/from other countries (“brain drain” phenomenon)?

Comments:

4(d) Is there a substantial in- or outflow of public sector auditors to/from the private sector?

Comments:

III. SETTING AUDITING STANDARDS I I I .1. National Auditing Standar ds

Questions 1(a) Are there written national auditing standards for public sector entities? Please provide a copy of the standards.

Comments:

1(b) Are the national auditing standards identical for public sector entities and for private companies?

Comments:

1(c) What is the source of legal authority of the national standards? Is the legal authority limited somehow? Who is responsible for setting auditing standards for the budget sector?

Comments:

1(d) Is there a due process before new or revised standards are issued?

Comments:

1(e) Is it transparent how feedback from the constituency during the due process is reflected in the standard setting?

Comments:

1(f) Is there a requirement or practice to expose draft standards to a second process, if there are substantial changes from the draft text and specific matters for comment exposed in the first process?

Comments:

1(g) Do the national auditing standards for public sector entities accord with (a) INTOSAI ISSAI, (b) INTOSAI Auditing Standards, (c) the IAASB International Standards for Auditing? (ISA 200.5 and INTOSAI Auditing Standards1.0.14)

Comments:

1(h) Is there a national professional body or standard-setting body responsible for setting auditing standards for the government owned companies and statutory bodies? What is the legal backing for these standards? Are Government Business Enterprises (GBEs) following private or public sector standards? GBEs are government owned entities which are selling goods or services at a profit or full cost recovery. They are controlled by the government but not fully reliant on government funding

Comments:

1(i) Is there any arrangement for issuance of practical implementation or interpretation guidelines for the standards? If yes, how is this arrangement accomplished?

Comments:

1(j) Have efforts been made to make national public sector auditing standards comparable with the emerging ISSAI standards?

Comments:

1(k) Do the standards that are in place for the budget sector require that the objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared, in all material respects, in accordance with an identified financial reporting framework. (ISA 200.2).

Comments:

I I I .2. C ode of E thics

Questions 2(a) Are public sector auditors required to adhere to a code of ethics or a code of conduct? If yes, is the code legally enforceable? Who developed the code and when? Are there any substantial differences between the public and the private sector? Please provide a copy. (ISSAI Code of Ethics)

Comments:

2(b) Provide an analysis of the main differences between the national code and the ISSAI Code of Ethics.

Comments:

2(c) Is the code of conduct part of the auditors’ employment contract?

Comments:

2(e) Is there a register of senior staff member interests in place? Please describe its coverage.

Comments:

2(f) Are policies and procedures for protecting “whistleblowers” in place? If so what issues have arisen?

Comments:

I I I .3. Standar d Setting B ody

Questions 3(a) Is/are there national standard setting body/ies for auditing? Please name the relevant bodies and show the differences between their missions and legal authority. Clearly identify those which are relevant for the public sector.

Comments:

3(b) Describe the governance of those standard setting bodies which are relevant for the public sector. This should include a description of the structure and responsibilities of boards, committees and senior staff including their strategic, administrative, supervisory and standard setting capacities.

Comments:

3(c) What is the composition of the standard setting entities within the standard setting body? Who is nominating the individual members of this entity? What are the members’ qualifications?

Comments:

3(d) Are the individuals responsible for standard setting tasks independent or acting as representatives on behalf of some other organizations? What is the proportion of independent members? Is the SAI represented?

Comments:

3(e) Do rules exist on how to handle conflict of interest issues within a standard setting body or entity? I.e. is there a requirement for abstention or suspension in specified situations?

Comments:

3(f) Do rules exist to limit the power and influence of individuals or parts of the constituency? Are there quota rules to limit the number of members from the same background? Is the term of members fixed with limited possibilities of extension?

Comments:

3(g) Are there any arrangements to ensure sufficient reflection of the public interest? I.e. is there a public interest oversight board or are there public members?

Comments:

IV. ACCOUNTABILITY FOR THE SAI I V .1. I nter nal

Questions 1(a) What is the accountability process in the SAI? (INTOSAI Auditing Standards 1.0.20) Does the SAI operate a management board? Are its responsibilities laid down in writing? If so please provide a copy.

Comments:

1(b) Is there clear responsibility in the SAI for (i) advising on internal finance, keeping proper financial records and accounts, and maintaining systems of internal control; (ii) for ensuring compliance with laws and regulations?

Comments:

1(c) Does the SAI prepare a corporate plan or equivalent? Please describe content and provide a copy of the most recent plan.

Comments:

I V .2. E xter nal

Questions 2(a) Does the SAI prepare an annual report on its operations and performance (that is separate to its reports on its audits)? If so please provide a copy of the most recent annual report. Does the report provide an objective, balanced and understandable account of activities and achievements, and details of financial position and performance?

Comments:

2(b) Does the SAI undergo peer review or independent performance audit? Are the SAI’s accounts and activities audited by an independent external body? Are such reports, if undertaken, made public or provided to the legislature?

Comments:

V. INDEPENDENCE PROVIDED BY THE LEGISLATION V .1. C onstitutional F r amewor k

Questions 1(a) The existence of an appropriate and effective constitutional/statutory/legal framework and of de facto application provisions of this framework is Principle 1 of the INTOSAI Guidelines on Independence. (ISSAI 11).

Does the Constitution or Audit Legislation spell out in detail the extent of the SAI’s independence sufficiently to ensure that the SAI is independent as a whole?

Comments:

V .2 H eads and B oar d M ember s of SAI

Questions 2(a) The independence of SAI heads and members (of collegial institutions), including security of tenure and legal immunity in the normal discharge of their duties is Principle 2 of the INTOSAI Guidelines on Independence. (ISSAI 11)

Is the Head of the SAI appointed, re-appointed or removed by the Legislature or by the Head of State as approved by the Legislature?

Comments:

2(b) Is the appointment for a sufficiently long and fixed term to allow the Head of the SAI to carry out their mandate without fear or retribution? Is re-appointment allowed?

Comments:

2(c) Please describe the process for any dismissal.

Comments:

2(d) Are the Head of the SAI and any Board Members immune to any prosecution for any, act, past or present, which results from the normal discharge of their duties?

Comments:

V .3. SAI M andate

Questions 3(a) A sufficiently broad mandate and full discretion, in the discharge of SAI functions is Principle 3 of the INTOSAI Guidelines on Independence. (ISSAI 11)

Does the legislation ensure that is there is a sufficiently broad mandate including financial and performance audit, and allow full discretion in the discharge of SAI functions?

Comments:

3(b) Is the SAI empowered to investigate the use of all public monies or assets by an auditee regardless of its legal nature?

Comments:

3(c) Is the SAI empowered to investigate the collection of revenues owed to the Government?

Comments:

3(d) Does the SAI have the power to audit the legality and regularity of the government accounts and entities?

Comments:

3(e) Does the SAI have the power to audit the quality of financial management and reporting?

Comments:

3(f) Does the SAI have the power to audit the economy and efficiency of government operations? Does the SAI have the power to audit the effectiveness of government operations?

Comments:

3(g) Except when specifically required to do so by Legislation, does the SAI avoid the audit of government policy and restrict the audit to policy implementation?

Comments:

3(h) While being respectful of the laws enacted by the Legislature which apply to it, is the SAI free from direction and interference by the Legislature and the Executive in the selection of audit issues?

Comments:

3(i) Is the SAI free from direction and interference by the Legislature and the Executive in programming, planning, conduct, reporting and follow-up of its audits?

Comments:

3(j) Is it clear that the SAI is not involved, or seen to be involved, in any manner, whatsoever, in the management of organizations that it audits?

Comments:

3(k) How does the SAI ensure that its personnel do not develop too close a relationship with entities they audit?

Comments:

3(l) In exercising the discretion that the SAI has in the discharge of its responsibilities, how is it responsive to the interests and wishes of the Legislature and how does it cooperate with governments to pursue improvements in the use and management of public funds?

Comments:

3(m) Does the SAI apply the same standards to its own operations that it applies to the organizations that it audits, in particular:

• application of appropriate audit standards to its work and

• adherence to a code of ethics consistent with INTOSAI good practice?

Comments:

3(n) Does the SAI provide evidence of the economy, efficiency and effectiveness of its operations in an annual report to the Legislature? Is the SAI required to submit itself to some form of review of its performance, and independent audit of its accounts, appropriate to its environment and respectful of its independence?

Comments:

3(o) Has the SAI established an appropriate internal audit function?

Comments:

V .4. Power s of Access

Questions 4(a) Unrestricted access to information is Principle 4 of the INTOSAI Guidelines on

Independence. (ISSAI 11) Does the legislation ensure that there is unrestricted access to information?

Comments:

4(b) Does the legislation ensure that the SAI has unfettered and free access, on a timely basis, to all the documents and the information necessary for the proper discharge of its statutory responsibilities?

Comments:

4(c) Does the legislation ensure that the SAI has adequate powers to obtain documents and information?

Comments:

V .5. R epor ting Power s

Questions 5(a) The right and obligation to report on work is Principle 5 of the INTOSAI Guidelines on Independence (ISSAI 11) and the freedom to decide the content and timing of audit reports and to publish and disseminate them is Principle 6.

Does the legislation give the SAI the right to report on its work?

Comments:

5(b) Does the legislation ensure that the SAI is not restricted from reporting the results of its audit work?

Comments:

5(c) Is the SAI required by law to report annually on the results of its audit work?

Comments:

5(d) Does the legislation give the SAI the right and obligation to publish and disseminate its reports expeditiously?

Comments:

5(e) Does the legislation ensure that the SAI is free to decide on the content of its audit reports?

Comments:

5(f) Does the legislation ensure that the SAI is free to make observations and recommendations in its audit reports, taking into consideration, as appropriate, the views of the audited entity?

Comments:

5(g) Does the legislation specify minimum audit reporting requirements of the SAI and, where appropriate, specific matters that should be subject to a formal audit opinion or certificate?

Comments:

5(h) Does the legislation specify that the SAI is free to decide on the timing of its audit

reports except where specific reporting requirements are prescribed by law?

Comments:

5(i) Does the legislation specify that the SAI cooperates to the extent possible to accommodate specific requests for investigations or audits by the legislature as whole or by the Government?

Comments:

5(j) Does the legislation specify the SAI is free to publish and disseminate its reports once they have been formally tabled as required by law?

Comments:

V .6. Audit F ollow-up Power s

Questions 6(a) The existence of effective follow-up mechanisms on SAI recommendations work is Principle 7 of the INTOSAI Guidelines on Independence (ISSAI 11). Does the legislation ensure there are follow-up mechanisms on SAI recommendations?

Comments:

6(b) Does the legislation provide that the SAI submits its audit reports to the Legislature or governing body of the auditee, as appropriate for review and for follow-up with specific recommendations for corrective action by the Executive or management?

Comments:

6(c) Does the legislation provide that the SAI has its own internal system of follow-up to ensure that its observations and recommendations have been properly addressed?

Comments:

6(d) Does the legislation provide that the SAI submits follow-up reports to the Legislature or Governing Body at the auditee, as appropriate, for its consideration and for its action even when the SAI has its own statutory power for follow-up and sanctions?

Comments:

V .7. SAI Power s over R esour ces

Questions 7(a) Financial and managerial/administrative autonomy and the availability of appropriate human, material, and monetary resources is Principle 8 of the INTOSAI Guidelines on Independence (ISSAI 11). Does the legislation ensure that the Head of the SAI is free to determine the organization of the audit office, including personnel and contract management systems and material acquisition/disposal policies and procedures? Is the SAI free to determine personnel policies, including the selection, recruitment, training, remuneration, promotion, discipline, and dismissal

of staff and contract personnel? (INTOSAI Lima Declaration Section 6)

Comments:

VI. INFORMATION TECHNOLOGY

Questions 1(a) Has the SAI equipped itself with the full range of up-to-date audit methodologies, including systems-based techniques, analytical review methods, statistical sampling, and audit of automated information systems? (INTOSAI Auditing Standards 2.2.37)

Comments:

1(b) What processes are in place for the development and the maintenance of an up-to-date audit manual setting out the SAI's policies, standards and practices for its financial and performance audits? Identify whether any updating of manuals is required.

Comments:

1(c) What IT hardware and software support is available for the conduct of the audits? Please identify any important needs that are considered to be unfilled.

Comments:

1(d) Does the SAI use TeamMate (or another automated audit management system) or ACL (or another Computer Assisted Audit Tool)?

Comments:

VII. CODE OF ETHICS

Questions 1(a) Is there a process to ensure that the auditors have complied with their ethical requirements? Relevant ethical requirements include the INTOSAI Code of Ethics and national ethical requirements applicable to public sector auditors. (ISA 220.8 and ISSAI P6). Please describe the process.

Comments:

VIII. COUNTRY DATA V I I I .1. National B udget Aggr egates

Latest Year Previous Year Comment Government Expenses

Government Revenues

Government Assets

Government Debt Nominal: % of GDP:

Nominal: % of GDP:

Government Surplus /Deficit (-)

Nominal: % of GDP:

Nominal: % of GDP:

V I I I .2. Public Sector Audit M andate

Number Comment Levels of government Number of organizational entities at national level audited

Number of organizational entities at intermediate (e.g. provincial) level audited

Number of organizational entities on local (e.g. municipality) level audited

Number of Government Business Enterprises audited

Number of other agencies/parastatals audited

gap analysis: a framework for comparing public sector...

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