The material in this Annex is excerpted from the INTOSAI “Implementation Guidelines for Performance Auditing”
Performance auditors must possess specific professional skill
Performance auditing is an information-based activity, with professional values occupying a central position. These values include the importance of auditors being given the opportunity to develop their skills and attain good quality of results in their audits. This includes creating an environment that is stimulating and that furthers quality improvements.
All auditors should possess adequate professional proficiency to perform their tasks. The SAIs should recruit personnel with suitable qualifications, adopt policies and procedures to develop and train SAI employees to performance their tasks effectively, prepare written guidance concerning the conduct of audits, support the skills and experience available with the SAI and review the internal procedures.
The ability to recruit the right staff is a decisive factor in performance auditing. Each staff member is a unique investment. A performance auditor must be well educated, and in general it is required that the auditor should have a university degree and experience in investigative/evaluation work. Personal qualities are also of considerable importance (analytical ability, creativity, receptiveness, social skills, integrity, judgment, endurance, good oral and writing skills etc.).
To become a performance auditor, a performance audit team-leader or a performance audit manager, certain distinctive qualifications have to be met. For instance, a performance auditor should be well educated in the social sciences and in scientific investigation/evaluation methods. Special knowledge of the different functional areas to be audited might also prove essential, but advanced skills in accounting and financial auditing are not always needed in performance auditing or program valuation. Where SAIs have organized their performance auditing separately from financial auditing, it is quite acceptable that personnel selected for performance auditing have different backgrounds and skills than those selected for financial auditing. To meet the quality requirements specified in the Auditing Standards, the SAI should have a program to ensure that its staff maintains professional proficiency through continuous education and training. A key factor in the development process is learning through practical auditing work.
Continuous education and training may include such topics as current developments in performance audit methodology, management or supervision, qualitative investigation methods, case study analysis, statistical sampling, quantitative data-gathering techniques, evaluation design, data analysis, and reader-based writing. It may also include subjects related to auditors’ fieldwork, such as public administration, public policy and structure, government administration policy, economics, social sciences, or Information Technology science.
Qualifications for staff members who conduct performance audits include
Performance auditing should be a team effort, since the issues involved are complex. Consequently, not all members need to possess every skill mentioned above. Further more, it may not always be possible for a SAI to recruit people who meet all the requirements. The required skills may therefore be developed once a person is in service, as long as candidates for appointment have clearly demonstrated the potential and attitude for the kind of work that performance auditing entails.
The performance audit should be sufficiently well defined and the audit approach functional. The organization of the audit should satisfy the general requirements of good project management.
The performance audit must be carried out thoroughly, with the aim of collecting relevant, reliable and sufficient evidence in order to enable anyone else to arrive at the same conclusions as the performance audit report. This calls for exercising sound judgment when deciding the audit objective, what and when to audit, the approach and methodology, the scope of the audit, the issues to be reported, and the overall audit conclusion.
Good communication with the auditee(s) and experts from different backgrounds is important during the entire audit process. Similarly, performance audit managers must also be vigilant. It is important that the factual basis of final descriptions, analyses and recommendations is accurate. The report should be objective and balanced and have a sober tone, with the purpose of adding value for the government.
The principles of proper administration should be observed. The audit process should be well recorded. Important decisions made during the course of the audit and the underlying considerations should be recorded in writing. Accessible files and a logbook should be kept. The main objectives of documentation besides helping the auditing team – are to record the audit evidence in support of conclusions and decisions, to provide records to assist audit management and monitoring, and to enable work to be reviewed by senior officers. Information obtained during the audit should be treated as confidential until the report has been tabled.
All government auditors should act with integrity, impartiality, objectivity, competence and professionalism. To meet these standards the performance auditor must be adequately educated and have experience of investigative/evaluation work. Personal qualities are also of considerable importance. Effectiveness, professionalism and care must guide the audit work.
As part of the SAI’s professional obligations it must establish and support adequate systems of quality assurance activities. The systems comprise structures, policies, and procedures designed to provide the SAI with adequate assurance that the work undertaken by the SAI meets professional requirements and standards. Quality assurance activities include:
Quality assurance activities should be designed to ensure that all audits are conducted in accordance with relevant auditing standards. The objectives of quality assurance procedures should incorporate:
The SAI’s general quality assurance policies and procedures should be communicated to its personnel in a manner that provides reasonable assurance that the policies and procedures are understood, and implemented. Events and elements in the audit work that require special attention by the audit managers and the SAI managers are considered below. Systems for quality assurance – especially systems which focus on the final stages of the audit process – are often time consuming and costly. The ideal is a fully integrated system.
Planning and budgeting and the use of consultants
The audit manager needs to take into account factors such as quality, resources, and timing in planning the audit. The budgets consist of allocations for salaries, travel, consultants, and any other direct costs. If the SAI seeks advice from external experts, the standards for exercise of due care and confidentiality of information will apply to such arrangements.
Monitoring and executing the audit
The managers should ensure that the audits are completed within budget and on time, extending the budget if justified. The audit manager must be aware of risks to timely audit completion and ensure audit work is relevant to the objectives and scope of the audit. The development of the data-gathering process and the analytical work has to be monitored. The audit manager should ensure that the audit teams are able to maintain good and proper relations with auditee(s) and other stakeholders.
Progress reporting and audit reporting
The audit manager should inform the SAI management on the progress of the audit, with recommendations for corrective action if needed. The manager must also ensure that the audit reports meet the reporting standards.
Quality assurance review program – external and internal reviews
A quality assurance review program is a series of external and internal reviews of activities undertaken by the SAI – it assesses the overall quality of the work performed and covers various issues and perspectives. Consequently, the program has to be flexible. The results of the program should be reported to the SAI management at least annually (with a high volume of performance audits). A quality assurance review may examine adherence to policy and procedures and identify areas where there is any opportunity for improvements in these policies and procedures, or it may assess the quality of work performed to meet specified objectives or specific stakeholders’ perspectives. Quality assurance reviews will generally address both adherence to specified processes and the quality of the work performed. The report on the quality assurance review program should summarize the results of all the reviews including the tasks selected (number and type), the findings, and any recommendations.
It is important that all quality assurance/control activities have a high degree of legitimacy among the auditors and that the procedures and systems are not too sophisticated. Besides quality assurance and control activities, perhaps the most effective way to promote quality in audit work is to recruit competent staff and to create working conditions that:
In an information-based and professional activity such as performance auditing, it is generally more important to support the audit teams in their efforts to achieve a good level of quality in their work, than to supervise them in the traditional sense of the term.