PSCINTOSAI Professional Standards Committee

PSC Steering Committee meeting30 – 31 May, Johannesburg, South Africa

Harmonisation of ISSAIs – Revision of the Fundamental Auditing

Principles

Our previous discussionsPSC SC Washington 2006 – ‘Fundamental Auditing Principles’ and guidelines based on a ‘dual approach’

PSC SC Yaounde 2006 and Manama 2007 – The PSC Survey: The use and needs for standards

INCOSAI 2007 Mexico – The ISSAI Framework

PSC SC Beijing 2008 – The INTOSAI Due proces

PSC SC Brasilia 2009 – The revision of the Fundamental Auditing Principles

PSC Regions Bruxelles 2010 – The auditing function of SAI’s: Recommendations on the revision of the Fundamental Auditing Principles

PSC SC Copenhagen 2010 – Project proposal on ISSAI harmonisation – revision of the Fundamental Auditing Principles

INCOSAI 2010 Johannesburg – South Africa Declaration on ISSAIs, launch of ISSAIs and of the ISSAI harmonisation project

PSC SC 2011 Wellington – The project group’s first report: The draft ISSAI 100, outlines of 200-400 and the purpose and authority of ISSAIs at the 4 levels of the ISSAI Framework

Agenda

A) Overall progressB) Draft ISSAI 100 C) Draft ISSAI 300D) The planned draft ISSAIs 200 and 400E) Specific matters – withdrawal of the ‘old’

ISSAIs 100-400

Shelmadene Petzer, INTOSAI Chair (South Africa)Chen You, INTOSAI 1. Vice chair (China)Luo Quan, INTOSAI 1. Vice chair (China)Juan Javier Perez-Saavedra, INTOSAI SAI database (Mexico)Sudhir Kumar, Chair of the Knowledge Sharing Comittee (India)

Jonas Hallström, FAS (Sweden)Ian Johnston, FAS (UK)Beryl Davis, FAS (USA)Heather Keaston, FAS (USA)Jeanette Franzel, FAS (USA)

Carlos Sampaio de Freitas, PAS (Brasilia)Gloria da Costa Bastos, PAS (Brasilia)Norbert Weinrichter, PAS (Austria)Tony Angleryd, PAS (Sweden)

Mona Palsrud, CAS (Norway)Manfred Kraff, CAS (European Court of Auditors)Niels-Erik Brokopp, CAS (European Court of Auditors)Bahia Remaoun, CAS (European Court of Auditors)Mária Kysucká, CAS (Slovakia)

The project groups’ workMarch 2011 - First project group meeting

Development of first draft ISSAI 100

Draft outlines of ISSAI 200, 300 and 400

Feedback from the PSC Steering Comittee in June

Discussion at meetings in FAS and CAS – written comments on first draft 300 in PAS

First draft ISSAIs 200, 300 and 400 ready from drafting groups by October

November 2011 - Second project group meeting

Cross-cutting issues – drafting style and reference to the ISSAIs (authority)

Agreement in principle in February 2012

Written comments to ISSAI 100 by the PSC Steering Comittee

May 2012 – Third project group meeting

Goal A: Revise the ISSAI 100-999 Fundamental Auditing Principles in order to ensure that:

- they describe the general role and auditing function of a SAI and are relevant and useful for all members of INTOSAI; - they provide overview and further references to the full set of ISSAIs where more operational guidance is provided;

- they provide a consistent set of concepts and an improved link between ISSAI 1 The Lima Declaration and the new set of comprehensive guidelines that are launched in 2010

ISSAI 100 - Fundamental Principles of Public Sector Auditing

ISSAI 200 - Fundamental Principles of Financial Auditing

ISSAI 300 - Fundamental Principles ofPerformance Auditing

ISSAI 400 - Fundamental Principles of Compliance Audit

Mandates of SAIs – provide for different types of audit work

ISSAI 200 Financial Auditing

ISSAI 400Compliance Auditing

ISSAI 300Performance Auditing

ISSAI 100 Fundamental Principles of Public Sector Auditing

How does it work as a package?

General AuditingGuidelines ISAs

The ISSAI 100 provides the fundamental principles which are applicable to all public sector engagements whatever its form or context

The ISSAI 200, 300 and 400 further elaborate on the principles to be applied in the context of financial auditing, perfomance auditing and compliance auditing. The principles contained in these documents should be applied in conjunction with the principles presented in ISSAI 100.

Level 3 - Fundamental Auditing Principles

Common for all SAIs – but each SAI apply the principles which are relevant

Provides a basis for SAIs to: - develop auditing standards, or - adopt existing auditing standards which are consistent with the principles

Level 4

General auditing guidelines- May be adopted as auditing standards by SAIs

Guidelines on specific subjects - Knowledge sharing

ISSAI 100 - Fundamental Principles of Public Sector Auditing

ISSAI 200 - Fundamental Principles of Financial Auditing

ISSAI 300 - Fundamental Principles ofPerformance Auditing

ISSAI 400 - Fundamental Principles of Compliance Audit

Plan for finalization

1) The ISSAIs 200 and 400 ready for approval by PSC SC by October 2012

2) The project group will rely upon the competencies of the subcommittees

3) A high level of engagement of the INTOSAI community will be ensured - articles in INTOSAI Journal- announce exposure of ISSAI 100-400 by15 October 2012- make drafts available at ISSAI website- PSC chair to carry out any informal consultations deemed necessary in order to ensure that there is a genuine and strong support - Exposure drafts presented to the Governing Board in November 2012

Agenda

A) Overall progresB) Draft ISSAI 100 C) Draft ISSAI 300D) The planned draft ISSAIs 200 and 400E) Specific matters – withdrawal of the ‘old’

ISSAIs 100-400

Due process

Initialassessment

ProjectProposal

Drafting byproject group/Subcommittee

Exposure Draft

Approval by

Steering Committee

Endors-ment version

(Preliminary drafts)

Approval by

Steering Committee

Approval by

Steering Committee

Public Exposure (90 days minimum)

Confirmation

by Governing

Board

Endorsement by

INCOSAI

ISSAI/INTOSAI GOV

All comments published

Maintenanceresponsibillity(subcomittees)

Monitoring and

regular reviews

Confidence and assurance in public sector auditing

Depending on the purpose of the audit, the level of confidence may be communicated in different ways;

A) By providing an explicit statement on the level of assurance in an opinion in a standardized format or in a conclusion in a non- standardized form.

 B) By providing a consistent and persuasive description of the audit objective, the evidence obtained, the findings, the conclusions and recommendations.

In both cases the audits are required to be objective and results are based on findings supported by sufficient and appropriate evidence.

Elements of public sector auditing

-The practitioner/auditor

- Responsible party

- Intended users

- Underlying subject matter

- Suitable criteria

References to the ISSAIs

Option 1:We conducted our audit in accordance with [national standards] based on (or consistent with) the Fundamental Auditing Principles (ISSAI 100-999) of the International Standards of Supreme Audit Institutions.

Option 2 – if ISSAIs at level 4 is adopted as the auditing standard:We conducted our (financial, performance and/or compliance) audit (or audits) in accordance with the International Standards of Supreme Audit Institutions (on financial, performance and/or compliance auditing).

May be added:The audit/audits was based on ISSAIs xxx [name of the ISSAI or range of ISSAIs] The financial audit guidelines (ISSAI 1000-1999) are based on the ISAs and can therefore not be referred to individually.

3 specific questions

a) Is the level of flexibility of the requirements in ISSAI 100 at the right level?

b) The ISSAI 200 will be based on the Financial Audit Guidelines/ISAs - but what about ISSAI 100?

c) Glossary?

Due process - Approval of exposure drafts

The steering committee approves:

• that the exposure draft fulfills the purpose of the project in line with the directions of the approved project proposal and is of high quality;

• that any overlaps and inconsistencies in the ISSAI framework in relation to the proposed text have been appropriately addressed, and

• that the exposure draft can be submitted for public exposure.

Agenda

A) Overall progresB) Draft ISSAI 100 C) Draft ISSAI 300D) The planned draft ISSAIs 200 and 400E) Specific matters – withdrawal of the ‘old’

ISSAIs 100-400

Please provide your comments

Depending on any such comments the PSC Steering Committee is kindly asked to consider and decide whether;

• the draft ISSAI can be approved for exposure – pending on any further work that the Steering Committee find should be carried out before the formal exposure process in November 2012.

• or the draft should be approved through written procedure together with ISSAI 200 and 400.

Agenda

A) Overall progresB) Draft ISSAI 100 C) Draft ISSAI 300D) The planned draft ISSAIs 200 and 400E) Specific matters – withdrawal of the ‘old’

ISSAIs 100-400

Consider whether the remaining exposure draft ISSAIs 200 and 400 can be approved by the Steering Committee through written procedure before the planned exposure period.

Agenda

A) Overall progresB) Draft ISSAI 100 C) Draft ISSAI 300D) The planned draft ISSAIs 200 and 400E) Specific matters – withdrawal of the ‘old’

ISSAIs 100-400

The PSC Steering Committee is kindly asked to approve of the exposure period of 90 days from November 2012 and invited to discuss if any further steps can/should be taken in order to engage the INTOSAI community.

The PSC Steering Committee is kindly asked to consider whether it would be a problem to follow the normal Due Process or a specific arrangement should be made to accommodate SAIs which may still wish to use the ‘old’ INTOSAI Auditing Standards.

INTOSAI Due Proces:

“ISSAIs and INTOSAI GOVs that have been replaced, in accordance with this due process, by an endorsement version with the same number in accordance with a project proposal are withdrawn without further decision”.