Twinning Project Fiche Development of external audit and control of public finances in Ukraine Annex A: Logical framework Logical Framework for the Twinning Project: Development of external audit and control of public finances in Ukraine Programme and number: ENI 2015, UA 15 ENI FI 01 16 (UA/56) Project completion date: May 2019 Duration: 24 months + 3 months Total budget: 1,500,000 Euro Intervention logic Benchmarks Sources of Information Assumptions (external to project) Overall Objective Improvement of the external state audit and control system by implementing INTOSAI standards (levels I-III), improvement of the quality of audits and strengthening the institutional capacity of the ACU. External state audit and control system is improved by implementing INTOSAI standards. Institutional capacity of the ACU is strengthened and quality of audits is improved. Reports on implementation of the EU- Ukraine Association Agenda and the European Union-Ukraine Association Agreement Final report of the Twinning project. Project Purpose - Legislation approximation in the area of external control and audit in line with INTOSAI standards (levels I-III). - Enhanced quality of audits. Legislation on the external control and audit is analysed (including elaborated drafts), recommendations, drafts of. Regular Twinning reports. Reports from other EUfunded projects. Parliament and the Government continue ensuring the policy of transparent and effective public external financial 1
Intervention logic Benchmarks Sources of Information Assumptions (external to project) - Improvement of internal policies of the Accounting Chamber focused on audit and control methodologies; risk management system; training and certification of staff. -Strengthening institutional capacity of the Accounting Chamber by enhancing cooperation between the ACU, the Parliament, the Government and Ukrainian public, specifically by ensuring proper followup and public access to the ACU reports. legislation, rules and procedures are prepared in line with the INTOSAI standards. Audit quality is enhanced by preparing manuals, conducting trainings and study visits, support of conducting pilot audits. Internal policies of the ACU regarding audit and control methodologies, risk management etc are improved. Institutional capacity of the ACU is strengthened by enhanced cooperation with key stakeholders (the Parliament, the Government and Ukrainian public). Final report of the Twinning project. Drafts of primary/secondary legislation, rules and procedures control. Commitment by other stakeholders. Political sustainability and stability. Responsiveness of twinning partners to a changing context. Necessary legal provisions, administrative arrangements and resources are available. The Parliament and the Government support strengthening interaction with the ACU Mandatory Results (Components) Component 1: Legislation approximation in the area of external audit and control in line with INTOSAI standards Result 1.1.: Provisions of the new Law of Ukraine On the Accounting Chamber and ISSAIs (levels I-III) are supported by appropriate/corresponding national legislation. Gaps related to levels I-II of ISSAIs in primary legislation related to the area of external audit and control are identified. Draft amendments or new legislation to Budget and Tax Codes as well as corresponding laws, relevant government. Gap analysis report with relevant recommendations, prepared by Twinning project. Draft amendments or new legislation to Budget and Tax Codes as well as corresponding laws, relevant government ACU management remains receptive to reform and is committed to the project ACU staff has sufficient time to engage with project Continued support of the Parliament Budget 2
Intervention logic Benchmarks Sources of Information Assumptions (external to project) Result 1.2.: The Strategic Development Plan (SDP) of the Accounting Chamber of Ukraine as well as Strategy for ISSAIs implementation as a part of the SDP are improved. decrees addressing identified gaps are developed. 1 round table focused on presentation of proposed amendments is organized The Strategic Development Plan of the ACU based on the EU best practices and internal operational planning system of the ACU is improved; ISSAIs implementation strategy as a part of SDP is developed; Improvement of monitoring and performance assessment system during SDP implementation process is facilitated. 1 round table is organized. decrees addressing identified gaps. Agenda and minutes of round table. Report on improvement of the SDP of the ACU prepared by Twinning project. Report with recommendations on development of the ISSAIs implementation strategy, prepared by Twinning project Report on improvement of monitoring and performance assessment system during SDP implementation process, prepared by Twinning project Agenda and minutes of round table. Committee. Evaluation can be carried out at the end of the Twinning Project. All works are performed by high level experts in coordination with Beneficiary representatives 3
Intervention logic Benchmarks Sources of Information Assumptions (external to project) Mandatory Results (Components) Component 2: Development of audit methodologies and reporting capacities Result 2.1.: Basic requirements of international standards ISSAI (levels I-III) are incorporated into guidelines and manuals of the Accounting Chamber of Ukraine on financial audit, compliance audit and performance audit as well as into audit practices. The guidelines (procedures/manuals) to conduct financial, compliance and performance audits are reviewed and improved with the advice of experts. 2 study visits for 6 people for gaining experience in matters of conducting audits in accordance with international standards of INTOSAI are conducted. 3 practical trainings with the participation of experts in relevant fields for the auditors are conducted. Pilot audits with the participation of experts are conducted. The follow-up mechanism for audit recommendations on the results of audits and approaches for opening information from follow-up reports are elaborated. Project report on implementation of ISSAIs in manuals and standards of the ACU,. Project reports on changes in system, procedures and standards of audit performance. Reports on results of pilot audits. Training materials Reports on results of conducted trainings and study visits. ACU management remains receptive to reform and is committed to the project ACU staff has sufficient time to engage with project Continued support of the Parliament Budget Committee. Evaluation can be carried out at the end of the Twinning Project. Training materials are prepared. 4
Intervention logic Benchmarks Sources of Information Assumptions (external to project) Result 2.2.: The risk management system as well as audit quality control and assurance system are implemented. Recommendations on implementation of riskbased management system are provided. Proposals for improvement of audits quality control and assurance system are developed (Twinning will not be able to improve the quality control system.) Approaches for government bodies anti-corruption risk assessment and risk analysis and monitoring process are elaborated. 1 study visit is conducned. Training materials for auditors prepared, trainings are conducted Project report with analysis and recommendations on implementation of riskbased management system. Project report with analysis and recommendations to improve audits quality control and assurance system. ACU management remains receptive to reform and is committed to the project ACU staff has sufficient time to engage with project Continued support of the Parliament Budget Committee. Evaluation can be carried out at the end of the Twinning Project. Result 2.3.: ISSAIs on IT audit are implemented with corresponding training for the auditors. Draft manual on IT auditing based on corresponding ISSAIs is developed. Practical trainings for IT auditors on conducting IT audits are conducted. Draft manual on IT auditing. Training materials and reports on results of conducted training events. Report on pilot IT audit. Pilot IT audit with the participation of experts is 5
Intervention logic Benchmarks Sources of Information Assumptions (external to project) conducted. 1 training course is developed and conducted. 1 study visit is conducted. Training materials are prepared. Result 2.4.: IDEA software is incorporated with supporting training for improvement of financial audit. The ACU was provided with IDEA software/idea software was updated for the ACU. Training for auditors on IDEA software usage is conducted. Project reports with relevant analysis and recommendations. Reports on practical trainings for auditors on IDEA software usage. ACU management remains receptive to reform and is committed to the project ACU staff has sufficient time to engage with project Relevant software can be procured or developed and incorporated within existing IT infrastructure. Component 3: Strengthening of the ACU's institutional capacity and improving impact of the ACU s audit results Result 3.1.: Recommendations on the improvement of organisational structure and functions of the ACU are developed. Assessment of the professional capacities of ACU staff to implement ISSAIs is conducted. The internal organisational structure of the ACU is reviewed in accordance with the new Law of Ukraine On the Accounting Chamber and the best practice of European SAIs. Assessment report on ACU staff professional capacities, prepared by Twinning project. Draft new/updated ACU organigram and internal regulations. Policy papers, draft manuals and procedures for new management system. ACU management remains receptive to reform and is committed to the project ACU staff has sufficient time to engage with project ACU have access to sufficient qualified and skilled staff to work alongside MS experts on the 6
Intervention logic Benchmarks Sources of Information Assumptions (external to project) Functional responsibilities of each ACU organizational unit, job descriptions for auditors and advisors for Members of the Board, establishing lines of authority and responsibility by updating the internal regulation of the institution are developed. Internal regulations, including Rules of Procedures of the Accounting Chamber, the Code of Ethics are reviewed. The training events on strengthening of institutional capacities of the ACU in the areas of HR management, staff training are conducted. Suggestions to improve internal document management system are developed. Functional responsibilities of ACU organizational unit, job descriptions for auditors and advisors for Members of the Board. Draft suggestions to improve internal document management system. Training materials and reports on results of conducted training events. development program. Evaluation can be carried out at the end of the Twinning Project. 7
Intervention logic Benchmarks Sources of Information Assumptions (external to project) Result 3.2.: The interactive web-site of the ACU is made fully operational, including online dialogue with civil society, subscription to news, on-line comments to audit reports, user-friendly design of the web-site. The system of audit reports publication, informing stakeholders and the public on completed audits is enhanced. The ACU s web-site as an integral part of designing the communications strategy is modernized. The modern communications strategy to enhance public credibility, and establish schemes for online communication with public is developed. Project report with relevant analysis and recommendations on upgrade of the ACU s web-site. Draft Strategy. Communication ACU management remains receptive to reform and is committed to the project ACU staff has sufficient time to engage with project ACU have access to sufficient qualified and skilled staff to work alongside MS experts on the development program. Evaluation can be carried out at the end of the Twinning Project. Result 3.3.: The framework of interaction between the ACU and key stakeholders (the President of Ukraine, the Budget Committee of the Parliament of Ukraine, the Cabinet of Ministers of Ukraine, the Ministry of Finance of Ukraine, State Treasury Service of Ukraine, key budget holders etc.) including evaluation of follow up on audit reports by the Budget Committee of the Parliament is developed. The current state of cooperation between the ACU and Parliament/ Government is analyzed. The draft interaction framework with Budget Committee, Parliament, the Government and audited entities in accordance with EU best practices is developed. Guidelines to support the improvement of the procedures on follow up of ACU decisions, based on Project reports with relevant analysis and recommendations on cooperation between the ACU and the Parliament/ Government. Draft framework. interaction Draft guidelines to support the improvement of the procedures on follow up of ACU decisions. Draft concept and design of the ACU Annual Commitments of the key stakeholders involved in public finance audit. Key stakeholders clearly understand the purpose, methods and consequences of the ACU s Effective cooperation with key stakeholders, especially the Parliament of Ukraine and the Government. ACU management remains receptive to reform and is committed to the project 8
Intervention logic Benchmarks Sources of Information Assumptions (external to project) the experience of the EU are developed. Proposals on improving structure of the reports submitted to the Parliament and the corresponding committees and reporting models based on the EU good practices are prepared. Training events for the auditors who prepare such reports are conducted. Proposal on new concept and design of the ACU Annual Report to the Parliament according to art. 30 of the Law of Ukraine On the Accounting Chamber is developed. Report. Training materials and reports on results of conducted training events. ACU staff has sufficient time to engage with project ACU have access to sufficient qualified and skilled staff to work alongside MS experts on the development program. Intervention logic Benchmarks Assumption 9
Intervention logic Benchmarks Assumption Activities 1 0.1 Kick-off meeting to launch the Project Presentation of the project, the Project office of the Resident Twinning Advisor (RTA) in the premises of the Accounting Chamber of Ukraine is conducted with support of 2 interpreters (simultaneous interpretation). 0.2 Final round-table discussions (closure meeting) 0.3 Round table meetings 1.1.1 Revise and identify gaps related to levels I-III of ISSAIs in primary legislation related to the area of external audit and control. The results of the project are presented, including presentations on the project s achievements and raising public awareness with support of 2 interpreters (simultaneous interpretation). The round table meetings are organized, involving the Budget Committee, Government bodies, civil society, professional organizations and academia, aimed at discussion of the main challenges related to the value and benefits of external audit, particularly, the value of financial auditing, interaction with Parliament, the Government and audited entities, external audit role in detecting and reducing corruption. Revision and identification of gaps is conducted through 1 STE x 4 missions x 5 days + interpretation (5 days) + 1 The activities and the number of man/days for STEs proposed in the logical framework are indicative. 10
Intervention logic Benchmarks Assumption 1.1.2 Develop new legislation and/or draft amendments to Budget and Tax Codes and as well as corresponding laws, relevant government decrees addressing identified gaps. translation (100 pages). Draft amendments or new legislation is prepared through 2 STEs x 3 missions x 10 days + interpretation (9 days) + translation (200 pages). partners 1.2.1 Improve the Strategic Development Plan 2 of the ACU based on EU best practices and internal planning system framework for elaboration the supportive planning of operational 1.2.2 Develop ISSAIs implementation strategy as a part of SDP. 1.2.3 Facilitate improvement of monitoring and performance assessment system during SDP implementation process. Improvement recommendations are prepared through 1 STE x 1 mission x 5 wdays + translation (100 pages). Draft ISSAI implementation strategy is developed with support of 1 STE x 2 missions x 5 wdays + translation (100 pages). Monitoring and performance assessment system is improved through 1 STE mission x 5 days + translation (100 pages). Report with recommendations provided. 2 Strategic Development Plan includes Strategy of ACU capacity, institutional and professional development and Action Plan for its implementation. 11
Intervention logic Benchmarks Assumption 2.1.1 Review and improve, with the advice of experts, the guidelines (procedures/manuals) to conduct financial, compliance and performance audits. 2.1.2 Conduct study visits for gaining experience in matters of conducting audits in accordance with international standards of INTOSAI. 2.1.3 Provide practical training sessions on annual audit planning of the Accounting Chamber. 2.1.4 Conduct staff training for audit of EU funds. Recommendations for improvement of guidelines (procedures/manuals) to conduct financial, compliance and performance audits are prepared with support of 2 STEs x 3 missions x 10 wdays + interpretation (12 days) + translation (150 pages). Four 5-days study visits to EU countries for 6 people organized and conducted. Study tour report prepared and discussed. Four practical trainings for the auditors provided with the support of 3 STEs x 3 missions x 3 wdays + translation (100 pages). Two practical trainings for the auditors provided with the support of 2 STEs x 2 missions x 3 wdays + translation (100 pages). ACU staff able to assimilate modern audit techniques. ACU staff able to assimilate modern audit techniques. Trained personnel/auditors remain in the ACU. ACU staff able to assimilate modern audit techniques. Availability and commitment of the auditors participate in trainings. Trained personnel/auditors remain in the ACU. Trained personnel / auditors work in ACU. 12
Intervention logic Benchmarks Assumption 2.1.5 Identify and conduct pilot audits (performance, financial, compliance) with the participation of experts. 2.1.6 Elaborate the follow-up mechanism for audit recommendations on the results of audits and approaches for opening information from follow-up reports. Pilot audits (performance, financial and compliance) are identified and conducted through 2 STEs x 8 missions x 5 wdays + interpretation (15 days) + translation (120 pages). Follow-up mechanism is elaborated with support of 1 STE x 1 mission x 5 days. ACU staff able to assimilate modern audit techniques. Trained personnel / auditors remain in ACU. 2.2.1 Provide recommendations on implementation of risk-based management system. 2.2.2 Improve audits quality control and assurance system. 2.2.3 Work out approaches for government organizations anti-corruption risk assessment and risk analysis and monitoring process. Recommendations on implementation of risk-based management system are elaborated through 1 STE x 1 mission x 10 wdays + translation (40 pages). Recommendations on audits quality control and assurance system elaborated through 2 STEs x 1 mission x 5 wdays + translation (100 pages). Report with recommendations provided. Approaches for government organizations anti-corruption risk assessment and risk analysis and monitoring process are worked out with assistance of 1 STE x 2 missions x 5 wdays. Report with recommendations partners and stakeholders. partners and stakeholders. partners and stakeholders. 13
Intervention logic Benchmarks Assumption provided. 2.3.1 Develop Manual on IT auditing based on corresponding ISSAIs. 2.3.2 Conduct practical trainings for IT auditors on conducting IT audits. 2.3.3 Conduct pilot IT audit with the participation of experts. 1 STE x 3 missions x 5 days + translation (80 pages). Draft Manual on IT auditing is provided. Three practical trainings for the auditors provided with the support of 2 STEs x 3 missions x 5 wdays + translation (100 pages). Pilot audit is conducted through 2 STEs x 3 missions x 5 wdays + interpretation (15 days) + translation (100 pages). ACU staff able to assimilate modern audit techniques. ACU staff able to assimilate modern audit techniques. Trained personnel / auditors remain in ACU. ACU staff able to assimilate modern audit techniques. Trained personnel / auditors remain in ACU. 2.4.1 Update/Provide IDEA software for the ACU. IDEA software is updated/provided for the ACU use with support of 1 STE x 2 missions x 5 wdays + translation (100 pages). ACU staff able to assimilate modern audit techniques. 14
Intervention logic Benchmarks Assumption 2.4.2 Provide supportive training for the ACU staff. Supportive training is provided through 1 STE x 3 missions x 5 wdays + interpretation (15 days) + translation (60 pages). Report with recommendations provided. ACU staff able to assimilate modern audit techniques. Trained personnel / auditors remain in ACU. 3.1.1 Assess the professional capacities of ACU staff to implement ISSAIs. 3.1.2 Review the internal organisational structure of the ACU in accordance with the new Law of Ukraine On the Accounting Chamber and the best practice of European SAIs. Assessment is conducted through 1 STE x 2 missions x 5 wdays) + interpretation (10 days) + translation (100 pages). Report with recommendations provided. The internal organisational structure of the ACU is reviewed through 1 STE x 2 missions x 5 wdays + interpretation (5 days) + translation (50 pages). 3.1.3 Develop functional responsibilities of each ACU organizational unit, job descriptions for auditors and advisors for Members of the Board, establishing lines of authority and responsibility by updating the internal regulation of the institution. 3.1.4 Review internal regulations, including Rules of Procedures of the Accounting Chamber, the Code of Ethics. Draft functional responsibilities are elaborated through 1 STE x 3 missions x 5 wdays + interpretation (15 days) + translation (80 pages). Internal regulations of the ACU are reviewed through 1 STE x 1c mission x 5 days + translation (100 pages). 15
Intervention logic Benchmarks Assumption 3.1.5 Conduct the training events on strengthening the institutional capacities of the ACU in the areas of annual planning of activities, including audit planning, budget planning, HR, staff training etc. 3.1.6 Develop suggestions to improve internal management document system Report with recommendations provided. Trainings are conducted through 2 STEs x 2 missions x 5 wdays + interpretation (5 days) + translation (50 pages). Report with corresponding suggestions is provided through 1 STE x 1 mission x 5 wdays + translation (40 pages). Trained personnel / auditors remain in ACU. 3.2.1 Develop concept for modernization of the web-site as an integral part of designing the modern communications strategy. 3.2.2 Design and develop the modern communications strategy to enhance public credibility, and establish schemes for online communication with public. Report with corresponding suggestions to modernize the ACU web-site is provided through 1 STE x 2 mission x 5 wdays + translation (30 pages). Draft communications strategy is developed through 1 STE x 1 mission x 5 days + translation (40 pages). 3.3.1. Analyze the current state of cooperation between the ACU and Parliament/Government. Report with analysis is provided through 1 STE x 1 mission x 5 days + interpretation (5 days) + translation 16
Intervention logic Benchmarks Assumption (50 pages). 3.3.2. Develop a draft interaction framework with Budget Committee, Parliament, the Government and audited entities in accordance with EU best practices. 3.3.3. Develop guidelines to support the improvement of the procedures on follow up of ACU decisions, based on the experience of the EU. 3.3.4. Improve the structure of the reports submitted to the Parliament and the corresponding committees by preparing reporting models based on the EU good practices and conduct training events for the auditors who prepare such reports. 3.3.5 Develop new concept and design of the ACU Annual Report to the Parliament according to art. 30 of the Law of Ukraine On the Accounting Chamber. Draft interaction framework is developed through 1 STE x 1 mission x 5 days + interpretation (5 days) + translation (100 pages). Draft guidelines are developed through 1 STE x 1 mission x 5 days + translation (30 pages). Draft reporting models are prepared through 1 STE x 2 mission x 5 days + translation (30 pages). Study visit to MS country is conducted. New concept and design of the ACU Annual Report is developed through 1 STE x 2 mission x 5 days + translation (30 pages). Study visit to MS country is conducted. 3.3.6 Conduct study visits Study visits are conducted for 6 experts of the ACU x 4 study tours x 5 days 17
Intervention logic Benchmarks Assumption 18