This element of AQMS of human resources management along with its sub-elements is explained in the following flow diagram:
The sub-elements are discussed in subsequent sections.
3.1 People are the most valuable assets of an audit institution. Sound human resources management should provide employees a rewarding and professional environment, as well as maintaining and enhancing the capabilities of the people. As a result, well-trained and professionally competent workforce plays a significant role in achieving high quality of audit processes and outputs.
3.2 It is a common practice to set up a human resources management function within a SAI as a part of the SAI’s management system. Generally, strategies of human resources management should be designed to create a diverse workforce with knowledge, skills, and abilities needed to support the achievement of the SAI’s vision, mission, the core values and the strategic goals.
3.3 The following aspects need to be emphasized in regard to human resources management:
3.4 The SAI’s efforts to maintain and improve effective human resources management are discussed in four sections:
INTOSAI Auditing Standards state: (INTOSAI Auditing Standards P-35, 36 & 48)
3.5 The SAIs should adopt policies and procedures to recruit personnel with suitable qualification.
SAI personnel should possess suitable academic qualifications and be equipped with appropriate training and experience. The SAI should establish, and regularly review, minimum educational requirements for the appointment of auditors.
3.6 Audit of financial systems, accounting records and financial statements requires training in accounting and related disciplines as well as a knowledge of applicable legislation and executive orders affecting the accountability of the audited entity. Further, the conduct of performance audits may require, in addition to the above, training in such areas as administration, management, economics and the social sciences.
3.7 If the SAI employs external experts as consultants it must exercise due care to assure itself of the consultants’ competence and aptitude for the particular tasks involved. This standard applies also where outside auditors are engaged on contract with the SAI. In addition care must be taken to ensure that audit contracts include adequate provision for the SAI to determine the planning, the audit scope, the performing, and the reporting on the audit.
3.8 Should the SAI, in the performance of its functions, need to seek advice from specialists external to the SAI, the standards for exercise of due care in such arrangements have a bearing also on the maintenance of quality of performance. Obtaining advice from an external expert does not relieve the SAI of responsibility for the opinions formed or conclusions reached on the audit task.
3.9 SAI’s talent pool should be sustained and build through recruiting, hiring, development and retention policies and practices. These policies/practices are targeted towards building and sustaining competencies, which includes knowledge, skills, abilities and behaviours. These are to be identified to achieve high performance of SAI missions and goals. Audit staff should be hired and retained accordingly.
3.10 Experiences of most SAI shows that staff is recruited under the Civil Service Programme. The following factors should be considered by the SAI to determine standards of qualification and competence of the staff members:
3.11 INTOSAI Auditing Standards (INTOSAI Auditing Standards, p.36) state: ”SAI should adopt policies and procedures to develop and train SAI employees to enable them to perform their task effectively and to define the basis for the advancement of auditors and other staff.”
3.12 Training is the process by which employees acquire the skills needed to accomplish their assigned tasks. The purpose of training is that employees be able to do their work to a standard established by the SAI.
3.13 Quality of training and other capacity building activities have very important bearing on the overall quality of the audit processes and outputs. Training is the most important component of “Audit Preparedness”. The SAIs need to be knowledge-centric organizations, with people being the key assets. Government auditors need to be armed with knowledge and good understanding of government environment – role of legislature, legal and institutional arrangements governing the operations of the executive and the charter of the public enterprises and of SAI’s auditing standards, audit methodologies, policies, procedures and practices. The audit methodologies are changing at a faster pace and newer techniques are available in the SAIs like risk based auditing, application of quantitative techniques, increasing use of IT as an audit tool to improve audit quality. As a result, the training has assumed critical importance.
3.14 Capacity building is a concept which goes beyond training of individuals, and includes what has to be done by institutions in terms of attitudes, procedures and conditions. Capacity building is to stimulate the SAI to identify development priorities and further to identify priority changes in terms of approach and training needs, which aims at professional development with increased knowledge, skills and abilities of individuals.
3.15 SAI should establish training function with its responsibility to develop, establish and monitor training policy, conduct annual need assessment, plan and schedule training activities. The SAI should maintain an inventory of skills of personnel to assist in planning of audits as well as to identify professional development needs.
3.16 Training should be a continuing process and should be adapted to the needs of the SAIs so that employees could continuously upgrade themselves and be in tune with the latest technological developments and changes in audit methodologies, techniques and tools. The training activities in the SAI may encompass the following:
Encouraging audit employees to enroll in academic institutions to pursue various disciplines, such as computer science, law, management, research methodology etc. In particular, SAI may assist in developing a ‘Certificate Course in Performance and Financial Auditing’ with a university or any other reputed academic institution. The certificate should be designed to provide a structured development programme for performance and financial auditors, and can be completed in 12-18 months (Adapted from Australian National Audit Office(ANAO) practices).
In addition to the secondments of SAI staff to other agencies, SAI may accept staff from other agencies and legislative secretariat for temporary assignment to the SAI to enhance awareness and understanding of the SAI’s role and responsibilities.
Providing opportunity to participate in training course, seminars and workshops held by international or regional institutions, universities and other SAIs, e.g. training courses provided by INTOSAI development Initiative (IDI).
3.17 INTOSAI development Initiative (IDI) has identified or developed a set of guidelines, which were intended to provide member SAIs with a standardized and efficient means of designing, developing, delivering and evaluating its training programmes. This guideline uses and promotes a systematic approach for training, which contains at least the following five components:
Besides taking part in the IDI provided courses, this approach is recommended to SAIs for developing its own in-house training courses.
3.18 Continuing professional education should be established at each level of SAI, which should be monitored and appropriate documentation maintained. Professional development programmes should be reviewed periodically.
3.19 Performance management system should be developed to provide timely and constructive feedback to employees for their performance. The objective of performance management is to maximize the individual potential of the staff for further improvement.
3.20 Two key aspects of the competency-based performance system are performance feedback and appraisal.
3.21 The system should provide the SAI management with the information to recognize and reward high performers, as well as information needed to deal with inadequate performance.
3.22 The appraisal is an assessment of individual staff performance. The SAI should establish and publish performance standards for each core competency. Periodically, supervisors and managers should prepare and deliver performance appraisals by honestly, accurately and consistently applying the competency-based standards.
3.23 The senior management of SAI should set the overall policy on performance management and monitor its implementation vis-ŕ-vis the appraisal standards and policies.
3.24 The promotions and advancement of the audit personnel is normally based on seniority and merit, which are judged through the performance appraisals. SAI should develop a system to give greater weightage to high performance and meritorious work, especially for promotions to the middle and senior management levels.
3.25 The performance management system should enable the SAI employees to discuss performance requirements with their supervisors, to become familiar with the critical elements and performance standards that apply to them, prepare self-assessments and seek feedback from the supervisors, when appropriate.
3.26 Salaries and allowances, personnel welfare and benefits for SAI employees are usually covered under the public service regulations in most states. The SAI personnel receive salaries similar to their counterparts in equivalent grades/ levels in the other branches of service. Working conditions in the public sector audit should be made sufficiently attractive to retain the services of experienced personnel. The SAI may work towards a separate salary structure for its personnel.
3.27 SAI should have a suitable reward scheme to commend or reward employees who meet or exceed clearly defined and transparent standards of high performance. SAI may consider the following incentives:
As a powerful and meaningful incentive, high performers may be allowed to opt for training courses, domestically and internationally.