The ISSAI implementation in 2011 – ISSAIs for financial audit.The Swedish National Audit Office.

Meeting of Experts of SAIs of the Baltic and Nordic countries and Poland 4-5 september,

Audit Director Carin Rytoft Drangel

23-04-201

Financial year 2011

Full implementation of ISSAI 1000- 1810 Financial Audit Standards.

We will use the Performance Audit Standards.

We will not use the Compliance Audit Standards.

23-04-202

Three step implementation (financial audit guidelines) 1998: Our first methodology based on the ISAs

effective as of 1998.

2005-2007: Implementation of all the requirements in the (then existing) ISAs.

2011: Implementation (in full) of the revised and redrafted ISAs.

23-04-203

The Swedish mandate According to the legislation “Act on the Audit of Public

Operations”

Audit of all government agencies (about 250), with the intention of determining if their financial statements are true and fair. We issue an auditor’s report for each agency.

According to generally accepted audit principles. Defined in the same way as in the private sector. (International Standards on Auditing =ISA)

The financial statements comprise other information required by the parliament through instructions and appropriation directions. (included in the financial reporting framework)

23-04-204

Preparations

Discussions with the Parliament and the Auditor Generals about the implementation, despite our clear legislation. Implementation in full or inspired by….

Clarify the responsibility of the management (for the Government Offices and Ministries).

The staff needs to understand the big picture. Training. Translation (done by the institute of chartered

accountants in Sweden ). Decision about references to the ISSAIs in the Audit

reports in 2012.

23-04-205

Experiences so far Increased communication with management and those

charged with governance . Written representations from management introduced. Presentation of all findings to management before

issuing auditor’s report. Identification of some weaknesses in the financial

reporting framework. Inconsistencies in the legislation for the consolidated

accounts for Sweden. Underestimated need for education and training.

Recommendation: Tests and training courses. The infrastructure ( audit tool and documents) was not

prepared for the ISSAI implementation.

23-04-206

Experiences so far

It requires dedicated method developers to change the existing methodology manuals, working paper, templates, courses etc.

There will be a great need for professional meetings to discuss and establish the methodology.

23-04-207

Have we succeeded?

We delivered all audit reports in time. We did receive the written representations from the

management of the 250 agencies. We expected a more heavy workload but we

underestimated the hours needed. We are currently performing an inspection of seven

completed engagements for 2011 in order to evaluate our system of quality control and in order to evaluate our ISSAI implementation.

We will have a peer review in 2013.

23-04-208

Is there anything positive to say about the implementation? The management of the agencies are positive to the

increased communication and also to the written representations (with few exceptions).

We have had a lot of discussions about how to implement the audit methodology in practice. The staff has now a better knowledge of the methodology, and a more harmonized view.

We have found some weaknesses in the financial reporting framework. This has together with inconsistencies in the legislation for the consolidated accounts for Sweden led to a discussion with the Government.

23-04-209