Annual meeting of the heads and representatives of the Baltic and Nordic SAIs Vilnius, 2-3 September Minutes

Transcription

1 Annual meeting of the heads and representatives of the Baltic and Nordic SAIs Vilnius, 2-3 September 2004 Minutes September 4, 2004 Welcome addresses Mr Jonas Liaučius, Auditor General of the National Audit Office of Lithuania, welcomed the participants of the annual Baltic and Nordic SAI s meetings in Vilnius and the delegation from the Supreme Chamber of Control of Poland (NIK) as a new member and opened the meeting. The Auditor General noted that this meeting is traditional but some features make it special. The main difference is made by the recent accession of three Baltic countries and Poland to the European Union. Mr Liaučius acquainted the participants with the plan of the meeting two working groups and a plenary session afterwards summarising the work of the working groups. Mr Artūras Zuokas, the Mayor of Vilnius, welcomed the participants and stressed that the activity of the National Audit Offices is a warranty of the transparent activity of the state. He wished the delegations the good and productive work. Mr Mirosław Sekuła, President of the National Audit Office of Poland, thanked Mr Oviir for informing and Mr Liaučius for inviting him to the meeting. Mr Sekuła talked about the importance of regional cooperation and he said that the NAO of Poland has experience in working with NAOL and other SAI s. Mr President stressed that all the Baltic countries have similar goals for the future and Poland, as a new member of the Baltic and Nordic SAI s meetings, will contribute positively to its further development. Mr Mihkel Oviir, Auditor General of Estonia, expressed his feeling of pleasure to participate at the meeting. He asked if somebody has any remarks on minutes of the meeting in Pühajärve. Mr Jonas Liaučius asked about remarks on new agenda. The agenda was approved.

2 2 The work continued in two working groups: working group on IT use in auditing, moderator Mr Dainius Jakimavičius working group on Auditing of State Revenue, moderator Mr Gintaras Miškinis The work in working group on IT use in auditing, moderator Mr Dainius Jakimavičius, Lithuania Moderator Mr Dainius Jakimavičius suggested all the participants to introduce themselves. The participants had introduced themselves and outlined the subjects of their presentations. Mr Dainius Jakimavičius stressed that this seminar aims to share the experience of other countries in IT use in order to facilitate the audit documentation process. He said that it is important to discuss the IT development strategies and IT tools the different audit offices have and proposed to start the presentations of participating delegations. Mr Gintaras Grikšas from NAOL had started the presentation IT use in auditing by NAO Lithuania; he presented the experience of the NAOL in going to advanced IT use in audit documentation and management. Mr Grikšas introduced the integrated information system of the NAOL VAKIS, he talked about the potential and shortcomings of it. He said this system is old and not flexible so in 2002 the NAOL prepared a new IT strategy and the plan of its implementation. In February 2004 IT management committee representing the main users of IT in the NAOL was established and the implementation plan concerning development of applications for the key business processes of the NAOL was confirmed in March Mr Grikšas said that at this moment NAOL has conceptualized and prioritized the need of integrated IT subsystem for audit process management and documentation. Ms Kristina Jakštonytė introduced the methodological issues, requirements and expectations of the NAOL in using the appropriate IT applications. She said that the working group had analysed some products which are on the market including TeamMate and the procurement process is ongoing. Ms Jakštonytė stressed that the application should be very flexible and easy to adjust to our methodology. Also she mentioned the risks of implementation of the new application as well as future perspectives. Mr Tore Nilsen from the Office of the Auditor General of Norway (OAG) started his presentation from the short overview of the main systems which are familiar to all auditors of the OAG PROSIT (processoriented IT tool, developed by OAG), TOMAS (technical system for extraction, transforming and receiving financial data form auditees, developed by OAG), WinIDEA (data analysis software based on data extracted by TOMAS or received by CD) and general software like Microsoft Office and Microsoft Outlook. Mr Nilsen said that those IT tools are easy to use and he is interested in how are they contributing to the goals of OAG. Then he presented general objectives of all the IT tools, methodological

3 3 and technical changes and challenges as well as objectives and characteristic of PROSIT and TOMAS. Also Mr Nilsen underlined that IT tools must support the need of OAG on all levels: strategic, tactical, operational and specially give an increased value to the auditing process and the goals of OAG. After the presentation there was a discussion among participants about the use of the mentioned IT tools. Mr Pentti Mykkänen from the State Audit Office of Finland informed that his presentation IT use in auditing will be especially concentrated on the situation in the financial audit and also some information regarding performance audit unit. Mr Mykkänen talked about methodological issues, such as standard working papers and classified typical questionnaires for financial audit which are used for the audit of financial statements, salaries and procurements. Mr Mykkänen noted that their financial audit methodology is flexible and can be updated when necessary. There are classified typical questionnaires for performance audit which are used to some extent. Afterwards Mr Mykkänen presented IT tools for the analysis of information such as ACL and Rondo (electronic accounts receivable and archiving system). Rondo is summarizing, calculating, searching and preparing own reports. Mr Mykkänen said that if somebody is interested in IT tools for the analysis of information in performance audit he will give an e- mail address of the person responsible for that area. There are trainings of auditors regarding new versions and new audit procedures also trainings for new-comers. Regarding the audit management software, the State Audit Office of Finland does not use any software like TeamMate, PROSIT or other. There is a lot of information in electronic form on the intranet, for example documents regarding objectives and goals, planning documents including project lists, audit manual, guides and guidelines also text archives and archives of regulations. Regarding legal issues the auditors do not have any problems in receiving information needed from public authorities. Mr Jeppe Brinck from the National Audit Office of Denmark (NAOD) made a presentation on Using TeamMate in performance audit. He presented lessons learned from NAOD in using TeamMate an audit support system developed by Price Waterhouse Coopers. The system is most commonly used for financial audit. However, the National Audit Office of Denmark also uses TeamMate in performance audit since The presentation demonstrated how the National Audit Office of Denmark uses TeamMate in performance audit and how using it has changed since the system was implemented. Mr Brinck also talked about the implementation process and the problems the National Audit Office of Denmark faced during it. Most users found it difficult to get used to the system. This was partly due to technical problems and to the fact that changing habits is not always easy. At present time most users have accepted that the system is far from perfect but may support the daily work. At the moment the auditors use the program in a limited way and a lot of

4 4 existing features in the system are kept unused. They use less functions of the system now compared to when they first implemented it. One of the main benefits of the system is the way it improves the handling of electronic documents in the work process. Also Mr Brinck mentioned other advantages of the system and the plans of the system development in the future. Mr Wiesław Karliński from the Supreme Chamber of Control of Poland (NIK) made a presentation Use of IT tools in auditing, he introduced four areas of using IT in auditing as subject of audit, tools aiding the auditing s organization and management, tools of aiding auditing process, tools aiding preparation of auditing s reports. Then Mr Karliński presented IT tool Auditor s tool kit (assistant). He described the main characteristics and operational principles of this CAAT. Also Mr Karliński presented the example forms of this IT tool. Mr Anders Hjertstrand from the Swedish National Audit Office said that the Swedish National Audit Office face the same problems like other participants of the meeting. He informed that the Swedish National Audit Office developed own IT system. The basic idea was to provide the individual auditor with information in six areas. They have analysed what kind of information auditors needed to conduct a productive audit, because the Audit guide should always be available to the auditor even performing an audit outside the Office. Mr Hjertstrand stressed that auditors should not work at the office but at the auditee s and the auditor should always have an access to external information. So the Swedish National Audit Office developed a tool which fulfilled all the requirements mentioned. The system supports the entire audit process with functions for regular documentation, risk analysis and audit planning and it is developed using Microsoft standard products and all working papers are created in Word or Excel. Mr Dainius Jakimavičius thanked all the participants for their presentations. He noted that it was very useful to find out about experience and different approaches of other countries. It was a good possibility for all to learn from good examples. Mr Jakimavičius said that tomorrow the participants will continue the discussion knowing the experience of other countries. The work in working group on Audit of State Revenue, moderator Mr Gintaras Miškinis, Lithuania Mr Gintaras Miškinis started by introduction of participants, after which Mr Birger Persson was asked about his experience in Revenue audit, main issues in this area. Mr Birger Persson presented the main points of the Audit study VAT carousels and other fraud in the trade between Germany and Sweden : audit problem, audit premise and direction, types of fraud etc. After his presentation members of the group had many questions and comments.

5 5 Then the floor was given to Ms Johanna Kormu and Mr Hannu Rajamäki, who made a presentation Control of VAT in intercommunity trade in Finland. Ms Ines Metsalu presented Estonian report Mandate of the State Audit Office of Estonia, Mr Tönis Saar added some remarks to the presentation. Mr Waldemar Długołęcki introduced the situation and problems in Poland and Ms Everita Pole presented Latvian experience. Mr Arūnas Juozulynas made the last presentation Joint/Simultaneous Auditing of State Revenue/Cooperation Between Tax Administrators in the Field of Combating Value Added Tax Fraud, after which he suggested to consider the idea of performing parallel audits. After that the group moderator invited for a short discussion about parallel audits: about forms of performing such audits, required premises for success, methodological aspects. Mr Nigel Penny commented that the idea of parallel audits is good, but one has to be careful in how to proceed with such audits: organization and setting up of them is very important. Implementation of such an idea needs an established framework first. Mr Tönis Saar noted that Estonians are open to cooperation, which is always useful, but they have their own timetables and planned work to do first. Mr Nigel Penny suggested that the moderator should be mandated to tell to Auditors General about the suggestion to establish a working group on parallel audits. Mr Birger Persson pointed out that parallel audit is a very good idea and it is useful for countries which are performing it. Mr Waldemar Długołęcki noted that there were many issues about parallel audits which had to be discussed first: level of cooperation between countries performing the audit, aspects of audit plan etc. The moderator Mr Miškinis summarized that there was a suggestion to establish a working group for discussions and preparations for parallel audits. Mr Tönis Saar stressed that for the next one or two years Estonians are not ready to join parallel audits and, besides, they do not have enough competence in revenue audit. Mr Hannu Rajamäki promissed to take the information to the Finnish Auditor General. Mr Gintaras Miškinis told that the working group on Auditing of State Revenue had not taken any decision apart from commitment to inform the management about the suggestion. He concluded the session of the working group by stating that it would be best for the group members to inform and discuss with their own Auditors General about the suggestion and by telling that during the after the lunch session he would just inform about the suggestion and approaches of the group members.

6 6 Presentation of the results of the working sessions Mr Jonas Liaučius opened the session and gave floor to Mr Dainius Jakimavičius, who told about the work in the working group on IT use in auditing and recalled presentations made. He stressed that their working group did not come to any concrete conclusion, but sharing of information itself was very useful for all the participants. It was good to know about other countries activities and ways of finding solutions. Learning from each other lets us avoid mistakes. The work in the second working group was presented by the group moderator Mr Gintaras Miškinis, who started by emphasizing that work in their group was different from the working group on IT use in auditing. The session went more in the form of discussions, which was required by the particularity of the topic itself revenue audit is quite a new, but relevant audit and as such is included into the next EUROSAI agenda. The working group came to several agreements: all the participants of the group agreed that they had little experience in that area, but they were interested in such audits and looked for new opportunities to exchange experience and knowledge. Everybody agreed that they needed cooperation. Mr Miškinis pointed out that presentation made by Mr Birger Persson was extremely interesting. It formed a good base for sharing of ideas and views. During discussions Lithuanian and Polish representatives mentioned possibility for parallel audits. The working group had suggested various approaches for performing of parallel audits. One suggestion was establishing of the working group related to parallel audits which could start investigating possibilities for such audits. Mr Gitaras Miškinis noted that the final decision on such working group had to be taken by Auditors General. Mr Jonas Liaučius shortly presented the meeting of Auditors General. First, there was an exchange of information about certain issues, although because of lack of time Auditors General could not discuss everything they wanted. Mr Liaučius stressed also that revenue audit is very important for all the countries and that there would be possibility to find ways of supporting auditors in performing that audit. Ms Dainora Venckevičienė concluded the session by inviting all the participants to the National Audit Office of Lithuania.

7 7 September 5, 2004 Mr Anders Hjertstrand from the Swedish National Audit Office opened the session on recent developments in Baltic and Nordic countries. The representatives of all countries talked in alphabetical order. Mr Roman Smigielski from the National Audit Office of Denmark presented the reforms at the NAOD. The structure reform is one of them. There are two levels of administration in Denmark now and the matter of moving from two levels administration to one level is under discussion, there will be no counties anymore just bigger municipalities. The main problem for the NAOD is that the tasks of the counties will be moved to municipalities and the state. Another reform is on moving from cash accounting to the accruals based accounting. Mr Smigielski listed out the reasons of doing that and talked about advantages of accruals based accounting. Tõnis Saar from the State Audit Office of Estonia made a presentation on the developments in Mr Saar noted that they are using accruals based accounting already but he informed that the state s accountancy is being rearranged at the moment. He talked about changes in the Accounting Act and State Budget Act. Select Committee of the Riigikogu on the Control of State Budget, which is headed by the opposition, was established in 2004 and cooperation with them is a new challenge for the SAO of Estonija. Also Mr Saar told about the cooperation with SAIs of other countries. Mr Hannu Nieminen from the State Audit Office of Finland said that they have accruals based accounting system which is similar to this in Estonia. Mr Nieminen noted that since the SAO was connected to the Parliament in the beginning of the year 2001, the development of procedures is being done all the time in order to meet the requirements of the Parliament. In Finland there are two audit offices reporting directly to the Parliament Parliamentary State Audit Office and State Audit Office. There is also appointed the Parliamentary Working Group which aims to change the tasks of the Parliamentary State Audit Office and to make them similar to those at the Public Accounts Committee in the UK. Mr Nieminen said that there was established a new institution in Finland Government Controler s Institution and described the functions of that institution. He stressed that co-operation between State Controller and SAO is very important. Mr Raits Černajs, the Auditor General of the Latvian SAO started by expressing his gratefulness for the excellent organization of the meeting, for all the events not only official meetings, discussions and resolutions, but also an informal part, which gave possibility to participants of the meeting to discuss with

8 8 their colleagues and find solutions to important issues. The Auditor General presented activities of the Latvian SAO and other governmental offices and institutions during the last year. One of the most significant meetings was the Meeting of the Heads of SAIs of Central and Eastern European Countries, Cyprus, Malta, Turkey and ECA which took place in Riga. It was an important milestone after six years of intensive preparations. The results of it were significant practical issues Guidelines on Audit Activity, Internal Control Systems, Joint Audit Activities, Audit Manuals, training activities; resolutions were adopted. There are still relevant problems left after the meeting which were discussed during the Auditors General meeting on September 4: reforming of accountancy and auditing system, audit quality problems, types and methods of auditors certifications, audit quality insurance etc. Mr Černajs also informed that Latvian SAO finished the Twinning 1 project which was conducted with the United Kingdom NAO. A very important event last year was the establishment of Parliamentary Public Accounts and Audit Committee, which took six years to be created. Latvian SAO is already presenting audit reports to the Parliament, and the reports are very seriously discussed. Latvian Auditor General mentioned that bilateral cooperation with the Netherlands Court of Audit was very useful for the Latvian SAO in the following areas: strengthening of management and functioning of a SAI, public relations and communication policy etc. In the context of cooperation several pilot audits were carried out. Mr Černajs mentioned that Latvian SAO started carrying out of internal workshops in which results of audits were discussed by Audit Departments. Such workshops were welcomed by the auditors. International developments are occurring in Latvian SAO as well: the above mentioned Twinning project, project with the Netherlands, signing of a bilateral agreement with the Bulgarian Audit Office is planned, small projects are planned with the Danish National Audit Office and, of course, cooperation with Estonia and Lithuania. There is also a plan to invite SIGMA to carry out a peer review in the Latvian SAI in November. Ms Dainora Venckevičienė shortly presented activities of the Lithuanian National Audit Office in the Phare Twinning project, where there is a very close cooperation with Danish and Swedish colleagues and the main partner the UK NAO. As it was already mentioned in Estonia s meeting last year, Lithuanian NAO had Twinning 1 and in 2004 Twinning 2 was started. The second project will last for 18 months and it is a successful continuation of the Twinning 1, which was evaluated by the European Commission Delegation as a very successful project. Twinning 2 is sustaining the NAO s operational capacities. The main objective of the project is to facilitate the NAO to operate efficiently and effectively in Lithuanian and the EU public auditing environment. The expected results fall under headings: Corporate Support, Financial Audit, Performance Audit, Revenue and State Audit and EU Funds Audit.

9 9 Twinning 2 is even more important than Twinning 1, because more activities are involved, so the preparation of the Twinning Covenant and the project was a very thorough process and NAOL s auditors paid much attention to that. A very close cooperation with the Danish and Swedish colleagues is conducted: they help Lithuanian part in implementing Twinning activities. NAOL has a cooperation protocol signed with Denmark two years ago, which was renewed in Cooperation with Poland is very active as well, there is a protocol of cooperation, renewed in National Audit Office of Lithuania takes part in the work of EUROSAI and INTOSAI working groups and committees: INTOSAI Auditing Standards Committee, Programmes Evaluation, IT Audit Committee and Internal Control Standards Committee. Cooperation with the ECA is also taking place. Mr Jonas Liaučius, Auditor General of the National Audit Office of Lithuania, added some remarks: he mentioned that Lithuanian Parliament is a strategic partner of the NAOL. Starting with elections of the new Parliament in October 2004 a new full Parliamentary Committee will be established Public Accounts and Auditing Committee. Mr Liaučius also mentioned a new function of the NAOL audit of municipalities. The Auditor General noted that NAOL received and is still receiving a very strong support from the EU: in terms of both Phare projects, short term experts who are helping NAOL implement Twinning project and material support (purchase of IT equipment, equipment of training centre). Mr Bjarne Mörk-Eidem started by telling that in year 2004 situation was very special in the Office of the Auditor General of Norway: a new Auditor General Act was released (the old Act was from 1918 and the Constitution of Norway is from 1814). According to The Constitution, the Parliament should elect 5 Auditors General. The old Act was a very good one, it was possible to change minor issues in it without breaking the law. In 1996 the request from Parliament came, requiring to make a new Act. In December 2000 the Office proposed to the Parliament a new Act, which was left undiscussed until Only in July the new Act came into force. The new Act has several changes in it. One of the main features is the expressed full independence of OAG, which means financial independence as well. Another important aspect is a right to access all the needed information for auditors work. According to the Freedom Information Act, Norwegian media has the right to access almost all the information they need. Under the new Act, the information is available to the media only in the stage when the information is presented to the Parliament, which means that when the case is handled, it is handled between the OAG and the respective Department and only afterwards the information is open to the media as well. One of the biggest changes in the new Act is the reporting of the OAG to the Parliament. Starting with next year the reporting will be changed: evaluation of the total administration in every ministry will be

10 10 made and reported to the Parliament, instead of the current system of reporting only of the negative issues and deficiencies. A totally new thing in the new Auditor General Act the OAGs corporate control can also embrace performance audit of wholly state owned companies, which is very good especially in the situation when the country is moving to the accruals based accounting system. A new aspect in the Act the Board of Auditors General, and not the Parliament, have the right to appoint the managers in the OAG now. The former responsibility of the OAG to audit public foundations, which was against the Act for the Public Foundations, will cease in Mr Bjarne Mörk-Eidem also mentioned that Norwegian OAG had a close connection with the Parliament, which is handling all the cases of the OAG on behalf of Parliament. The direct contacts and meetings are very seldom, most of the work is done through written form. Ms Aleksandra Kukula from the National Audit Office of Poland talked about the new recruitment system, introduced in 2003, which covers several positions: auditors, audit supervisors and does not cover administrative positions. External recruitment procedures of the new system were introduced first, then internal procedures. Currently both of them are in use. The basic assumption for the system is that if there are vacancies in the Polish NAO for auditors or audit supervisors, then the internal recruitment procedure is implemented and only in the case when there is no possibility to fill the vacancy with internal resources, the external procedure is proceeded. So first, the vacancies are announced internally via and then the competition is run by special Recruitment Board, the members of which are appointed each time by Mr Sekuła, the President himself. The Board runs competitions, but does not have the right to make final decisions: after the procedure they only recommend to the President the candidates for the post. The President himself makes final decisions. So far all the recommendations made by the Recruitment Board were accepted by the President. If the internal competition is not successful, the external procedure is implemented: the public accouncement in the NIK website is published, as well as in the press and the competition is run. Recommendations by the Recruitment Board again are made to the President and he decides whether to accept recommendations. There are 3 stages of selection of candidates in the external procedure (preselection of applicants, psychological and linguistic tests and interviews). Ms Kukula mentioned that the number of applicants was surprising: for the second external competition there were 60 vacancies and 1,300 applications were received and in the third competition there were 950 applicants for 40 vacancies.

11 11 The reason for introducing the new recruitment system was the Constitutional right to equal access to public service for every citizen, INTOSAI International Auditing Standards and NIK s own Auditing Standards. The success of the new system is still not easy to evaluate, but the system is widely discussed in the Office. Ms Kukula stressed that there is hope that the new system would let use the existing resources of HR more effectively and efficiently and would help increase the internal mobility of the staff as well as would give possibility to recruit the best candidates from outside. Mr Anders Hjertstrand started by reporting on achievements of the Swedish NAO during the first year of operation and the situation the new organization was in. He reminded that the staff of the new organization came mainly from the two former auditing agencies. Out of 300 people 130 work on financial auditing and 90 on performance auditing; there are also units for international issues, for quality and process development and a number of administrative support functions. There were slight internal changes in financial auditing (audit teams were reallocated, new managers appointed) and major external changes: since year-end Swedish government agencies started to pay for NAO s financial audits and a number of minor agencies were exempted from the requirement to deliver interim reports, which left financial auditors more time to focus on the major government agencies. Performance auditors inherited many audit assignments from the former auditing agencies, during the first year of operation around 20 performance audits conducted, the next year around 35. There are already general themes for the next few years audits. Building of the new organization demanded extra efforts and much work during the first 6 months of operation a lot of time was spent on meetings and communication with all the major players in Parliament, the Government Offices, agencies and companies. Particular emphasis is laid on the relationship with the Parliament there were even training courses organized for the staff on knowledge of Parliament. The new organization puts much stress on development of internal management systems and routines; focus is on quality assurance both in financial and performance audit. There is an IT tool for financial auditors (the same software, the same method used, access to the same documentation). The revision of the Audit Guide was made. The new organization provides an auditing function, develops and builds up its activities and fosters a shared organizational culture. Mr Jonas Liaučius thanked all the participants for their contributions and closed the meeting. He wished the guests to have a pleasant stay in Lithuania and safe trip home.