External Audit: Role of GAO and the Supreme Audit Institution Community

1. External Audit: Role of GAO and the Supreme Audit Institution Community External Audit in Public Financial Management Financial Management Sector Board of the World Bank Helen Hsing US General Accounting Office March 2, 2004

2. INTOSAIInternational Organization of Supreme Audit Institutions 185 member national audit offices dedicated to improving public sector • Governance • Public accountability • Transparency

3. INTOSAI Committees

4. The Evolving Role of the SAIs • Governments and public expectations of governments are changing: • Increasing investor demand for transparency • Global interconnectivity • Transnational security threats • Rapidly evolving available technology • Readily available information • Aging populations • Rising health care costs and budget challenges • Public demand for performance results

5. Essentials for SAI Success • Clear Mandates • Independence • Capacity • Accountability and Integrity • Knowledge Sharing • Adherence to International Standards

6. Types of AuditsMandated and Performed • Financial • Compliance or legislative • Performance • Other

7. SAI: Obstacles to Independence

8. Effective capacity building depends on Communication Cooperation Partnerships Continuity Trust

10. GAO’s Mission • To support the Congress in meeting its constitutional responsibilities • To help improve the performance and ensure the accountability of the federal government for the benefit of the American people According to the Budget and Accounting Act of 1921: • “. . .to investigate, at the seat of government or elsewhere, all matters relating to the receipt, disbursement, and application of government funds.”

11. GAO’s Core Values • Accountability Help the Congress oversee federal programs, policies, and operations to ensure accountability to the American people. • Integrity Ensure that our work is professional, objective, fact-based, nonpartisan, nonideological, fair, and balanced. • Reliability Provide high-quality, timely, accurate, useful, clear and candid information.

12. How Does GAO Carry Out Its Mission? • Oversight Activities • Determining whether government entities are • carrying out their assigned tasks, • spending funds for intended purposes, and • complying with laws and regulations • Insight Activities • Determining which programs and policies work and which don’t • Sharing best practices and benchmarking information horizontally across government and vertically through different levels of government

13. How Does GAO Carry Out Its Mission? • Foresight Activities • Identifying key trends and emerging challenges before they reach crisis proportions • Examples: • challenges of an aging population • changing security threats • demands of the information age • complexities of globalization • evolving governance structures • long-range fiscal challenges.

14. How Does GAO Carry Out Its Mission? • Audits of agency operations • Evaluations of government policies and programs • Investigations of alleged illegal and improper activities • Issuance of legal decisions and opinions • Establishing Professional Standards • Government Auditing Standards--the “yellow book” • Internal Control Standards • Accounting standards--participation in Federal Accounting Standards Advisory Board

15. GAO’sIndependence • Headed by Comptroller General • Joint selection/appointment process of the Congress and the President • 15 year term of office • Can only be removed by impeachment • Reports to the Congress • Budget determined by Congress • FY 2002 budget is $424.3 million

16. GAO’s Independence (cont.) • Access to all government documents guaranteed by law • Separate personnel system • Staff are career civil servants, not political appointees

17. What Did GAO Accomplish in FY 2003? • GAO testified before Congress 189 times • GAO’s work led to $35.4 billion in direct financial benefits • In response to GAO’s work, agencies took over 1043 actions to improve government operations or services • GAO made 2175 recommendations • 82 percent of recommendations made in 1999 were implemented by 2003

18. GAO Initiatives to Build Capacity within SAI Community • Auditor Fellowship Program • Short-term in-country missions

19. G A OShort-term In-country Missions • Ukraine Chamber of Accounts: - agriculture audit program • Indonesia Supreme Audit Board: - banking regulation audits • Guyana Office of the Auditor General: - new audit legislation

20. GAO International Auditor Fellowship Program (IAFP) • Mission • To strengthen SAIs’ ability to fulfill their missions and to enhance accountability and governance worldwide  • Program Objectives • Enhance institutional capacity and individual skills. • Foster continuous learning and knowledge sharing. • Strengthen institutional relationships and professional networks.

21. IAFP Components • Classroom training • OJT and mentoring • Field placements • Follow up assessment and support • Professional/cultural networking

22. Selection of SAIs and Fellows • Developing countries/transitional governments • Auditor General support and commitment • Broad regional representation • Mid-senior level officials • Mid-career • Creating a critical mass NEW !

23. Invited Fellowship Program Candidates 2004

24. Fellows Program At-a-Glance • Program initiated in 1979 • 15-20 Fellows per year • 337 graduates from 94 countries • 15+ graduates are now Ministers, Auditors General, Deputy Auditors General

25. IAFP: Enhancing Institutional Capacity • Comprehensive learning program that includes • classroom instruction • practical applications • intergovernmental field experience • strategy paper and change implementation • interface with auditees, legislators, media NEW !

26. IAFP Course Curricula • Performance Auditing • Approach and methodology selection • Evidence documentation • Interviewing skills • Audit documentation • Critical thinking • Internal controls • Statistical sampling • Fraud awareness

27. IAPF Course Curricula • Information Technology • IT auditing methodology • Data communications • Training Transfer and Knowledge Sharing • Assessing, delivering and evaluating training • Knowledge management • Strategies for managing change • Introducing organizational change • Organizational structure and management

28. IAPF Areas of Focus Strategy papers for on-the-job application: • Zambia: Develop and introduce methods for documenting and referencing audit work • Trinidad & Tobago: Introducing a design matrix for planning and conducting audits

29. Fellowship Program Strategy Paper Topics • Internal Control & Auditing Standards • Audit Evidence & Analytical Procedures • Performance Auditing in Healthcare • Application of Statistical Techniques in Performance Audits • Preparing Training Manuals of Information Technology Auditing Methodology • Parliament – SAI relations • Role and work of economists • Strengthen training capacity • Standardization of audit management process • Environmental auditing

30. Change How will you • introduce change? • deal with opposition? • overcome obstacles? • minimize negative influences? • deal with political and cultural issues?

31. Opportunities • Identify countries for strategic partnerships • Fellowship advisory board • Fellowship Curriculum Update • Translation of course materials & manuals • Fellowship Follow-up in country • CFAAs • Knowledge Sharing • Web-based communication tool?

32. IAFP: Measures of Success • Individual course evaluation • Participant assessment of content and instruction • IAFP overall evaluation • Focus groups • Evaluation instrument being revised by Applied • Research & Methodology team • Post-IAFP assessment • Auditor General and participant feedback Under Construction

33. Opportunities & Challenges • Strategic partnerships with donors • Long term technical assistance to sustain capacity • Translation of course materials & manuals • Knowledge sharing • Web-based communication tool? • Distance learning options? • Coalition building • Within the SAI • Intergovernmental - within country • Donor and SAI coordination