* Country paper presented at the third international seminar of ASOSAI held at Bali Indonesia during June 1988.
The quality assurance and improving performance within the State Audit Institution (SAI) is one of the main objectives which the SAIs should strive to realize vigorously and earnestly.
There are many main methods which the SAIs can use to elevate the quality level of their audit work and to improve their performance. We may find most of them explained in Sydney Statement of 1986. Thus we shall firstly analyse these methods and then explain to what extent they are applied in the United Arab Emirates (U A E).
The most significant methods which assure quality and improve the standard of performance of SAI are the following:-
Article 136 of the Constitution of U A E provides for in an obligatory form, the establishment of SAI to perform supreme audit in the Federal Government and envisges a law to organize the SAI, determine its mission, the powers of its staff, and the guarantees that shoud be provided for it, its president and staff for performing their functions independently and successfully.
According to this constitutional provision the Federal Law No 7 for 1976 was issued, explaining the principal objective of the SAI as follows: "The SAI shall audit the funds of the State and other authorities stated in article (4) herein. The SAI shall particularly ensure the safety and legality of managing such funds and the implementation of development projects". The Law determines also the mission of the SAI with so much clarity and detail as follows :
1. The auditees;
The SAI is authorised to audit the ministries, departments of Federal government, Federal National Council, public corporations, the companies or bodies in whose capital the State or any public artificial person may have a share of not less then 25% or for which the State guarantees a minimum limit of profit or offers a financial subsidy and any other body the audit of which is entrusted to the SAI by the Federal Supreme Council, the President of the State or the Cabinet.
2. The Kinds of audit
a) According to the time during which audit is performed the SAI is authorised to perform three kinds of audit:
b) According to the nature of audit performed the SAI is authorised to exercise two kinds of audit:
(3) Kinds of financial operations audited
The SAI is authorised to audit multifarious kinds of financial operations relevant to public expenditures, public revenues, trusts accounts, advances accounts, current accounts, loans, investments, warehouses, cash funds, developmental projects, appropriation and final accounts.
In accordance with the Organic Law, the president of the SAI issued decision No 1 for the year 1978 as a regulation for organizing the process of the audit work in the SAI, explaining the detailed objectives and powers in a manner consistent with the organizational structure of units and officials in the SAI, as well as explaining the procedures and methods of realizing such objectives and exercising such powers.
The preparation of sufficient financial resources for the SAI is one of the essential and main requirements for performing its mission. The Organic Law includes all the legal authority which ensures the independence of the SAI for providing for these resources. The President of the SAI has the power of preparing the estimates of the expenditures of SAI with the agreement of the Speaker of the Federal National Council who will forward the estimates within the prescribed time to the Minister of Finance. The latter will insert the estimates as forwarded to him under a special section of the State's General Budget. The president of the SAI has also all the powers of the Minister of Finance regarding the preparation of estimates of the SAI expenditures for the General Budget and regarding the use of appropriations allocated to the SAI in the budget, without being subject to the control of the Cabinet, the Minister of Finance or the Council of Civil Service.
The provisions of the Organic Law of the SAI also help the SAI to have the human resources of appropriate quality and quantity. The SAI has an extensive discretionary power for determining the nature of the human resources that it needs. The SAI identifies its needs of officials, both their number and nature in the light of the needs of audit work and the requirements of the implementation of the SAI's plans and programmes. Then the SAI announces its needs of officials, determining their qualifications and experiences as well as their rewards in the light of those qualifications and experiences. The SAI interviews those candidates whose applications are acceptable to acertain their knowledge and skill. The president of the SAI has the power of appointing those who passed the interview successfully according to their sequence of success, after the approval of the Personnel commission who has the power of Civil Service Council in the State. The officials are nominated for the departments by decisions issued by the president of SAI. The audit work is divided among them by memos issued by the vice-president on the proposals of the concerned director according to the audit work plan. The evaluation of their performance and the measurement of their efficiency are accomplished with the criteria adopted in that plan. The SAI correlates always the results of evaluation and the promotions of these officials, their Candidature for fellowships and financial incentives.
The Organic Law assures for the professional officials all the financial rewards as well as the guarantees which enable them to do the audit work independently and neutrally. The most significant guaranty is the irremovability.
But despite all these features our SAI has been still suffering from many difficulties especially in regard to the recruitment of the officials and their retention within the SAI because of the difficulty of performing the audit work and the paucity of the financial rewards given to them as compared with what is paid by the entities in the public and private sectors who attract most of the graduates
Our SAI has done its best since its establishment in applying the planning techniques in managing the audit work at the level of each of its departments. But since the year 1985/1986 the SAI has begun to apply the comprehensive plan system for all the departments in the SAI and for all the work done in it. The plan has general objectives which are the objectives of the SAI audit as well as special and detailed objectives relevant to the strategy or the policy which the SAI intends to apply in the year to which the plan relates. The annual comprehensive plan is divided into many branch plans and programs in a manner consistent with the organizational structure of the departments and audit sections, sectoral or functional. The plan is prepared on the basis of determining the real days of work and the daily performance average of the auditor. This average should be consistent with the nature of each operation and it covers all the elements and aspects of their audit; beginning from the preliminary survey stage and ending with preparing the report. The plan should determine also the extent of selective audit which should be applied on the basis of accurate statistical principles identified in the light of the audit results in previous years and according to the safety and strength of the internal control system applied in the auditee. The plan includes studying some topics which represent general substantial problems and require the participation of some or all the departments in the SAI to study them for the general report. The plan may contain also some important projects which will serve the audit work and provide for the methods that facilitate it such as the project of preparing the audit guide. The work on the guide is distributed in every plan to all the departments of SAI according to their specialization and nature of operations.
The plan is followed up in accordance with accurate quantitative and qualitative bases and criteria as we shall explain at the end of this paper.
Thus, the plan, its programmes, criteria, standards, and the methods of its preparation and follow up elevate the quality of the work to the required level in the SAI
The SAI cannot realize its required objectives, conduct an effective and successful audit, prepare fruitful reports and propose appropriate recommendations and solutions unless the audit staff is adequate and equipped with the best level of knowledge, ability and skill. This cannot be realized because knowledge and skill are still developing as a result of the new audit coverage and techniques on the one hand, and the increase in the multifarious activities of the State and the scarcity of its resources on the other hand.
The audit activities require the training of the staff, sharpening their knowledge and elevating them to the level which enables them to carry out the audit work efficiently and with high capability. Our SAI pays his great attention to training, making available all the possibilities in this field whether on the SAI level, or on the Arabic level, or on the international and regional levels.
On the SAI level, the emphasis is firstly on the qualifying training of the newly appointed graduates as assistant auditors. They are trained on job intensively for about a year, urging them to use their theoretical knowledge of the courses they have studied in the university and learn through performing their audit work. They have to be trained, according to a well laid out programme, on how to audit multifarious financial operations in conformity with the adopted procedures and starting from reliable evidences. They do all that with the help of professional officials of the position of not less than senior auditors. They will not be responsible for exercising the audit work independently unless they have spent a year in training in this field. SAI arranges also qualifying training courses for the auditors when it is considerd necessary to elevate their standard of skill and knowledge. In some cases, they are put through training and studying for about three months. During such courses they can attend theoretical and practical presentations in various disciplines which are beneficial to the SAI and to increase their knowledge such as public finance, financial administration, government auditing, public administration, accountancy, administrative law etc. These courses may be sometimes specialized and arranged for short periods, for not more than ten days.
In addition to training on job and training courses, our SAI holds seminars and workshops for its directors and controllers to enlarge their knowledge and improve their direction and supervision on the audit staff, regarding some specialized and important topics such as: effectiveness audit, efficiency and economy audits as two important factors of performance audit, evaluation of the system of internal audit. For the effectiveness of training courses and seminars, our SAI has a special regulation for organizing them, depending upon the evaluation of the results of these courses and seminars as well as the identification of the range of its impacts on the improvement of the quality standard of the audit performance.
Training on the Arabic level is carried out in this field by the ARAB organization of Supreme Audit Institutions [ARABOSAI] and according to the annual plan of this organization which includes many of the training courses and seminars which are conducted by the General Secretariat with the cooperation of the Arab SAIs or the SAIs and establishments in other countries. Our SAI participated and is still participating in all the courses and seminars arranged by the ARABOSAI from the date of its establishment. It cooperated also with the ARABOSAI in arranging two seminars. The first one was on "The requirements which help the SAIs to exercise performance audit on the public services of education " and the second one was on "The SAIs Systems of following up their findings and their sanctions". The ARABOSAI has good expertise for organizing training courses and seminars, planning them and evaluating their results. In fact the ARABOSAI has played a very important and useful role in this field.
Our SAI makes use also of training courses and seminars held by the ASOS AI as well as those held by the IDI for the Arab world with the cooperation of the ARABOSAI particularly, regarding performance audit and EDP audit. The last seminar was held in Amman-Jordan on "The Management of Human Resources in the SAIs ". The IDI concentrates on training the officials working in the training departments and training trainers as well as organising special seminars for the administrative leaders who are responsible for direction and innovation in audit.
The organizational structure for the units in the SAI has been devised to suit the process of work. The audit work starts from the auditor who examines the financial operations as an auditor, inspector and investigator. When the auditor finishes his work he prepares his report and submits it to the controller who supervises the work of the auditors examining their findings, ensuring the validity of their examinations and the soundness of their recommendations and suggestions. The controller submits his comments to the director who has the power of taking the final decision regarding the auditor's findings, his recommendations and suggestions. In the light of the results accepted by the director, the auditor prepares the preliminary report which is sent to the auditee by the president of the SAI, through the concerned minister. The answer of the auditee is studied by the same authority who prepared the preliminary report. If the auditee responds to the SAI observations there will be no difficulty. But if the auditee refuses to respond, the SAI is obliged to use the legal sanctions against it to force it to implement the demands of the SAI whether refunding money or taking the corrective actions or enforcing the disciplinary action. No doubt, this process of the audit work and the supervision on it will help necessarily, to improve the standard of audit performance and to assure quality.
The availability of a detailed guide, explaining how the SAI audits every financial [or accounting] operation or any financial, [or accounting] statement, will help the SAI to assure quality and to improve the performance standard.
Our SAI has prepared a plan regarding the audit guide giving all the financial operations submitted to SAI either for regularity audit in its two aspects; legality and accounting audits or for performance audit in its three aspects; effectiveness audit, efficiency audit and economy audit. If it is easy to prepare a guide for regularity audit because it is an investigatory audit and its requirements are available, it is very difficult to prepare a guide for performance audit particularly in services sector because it is an evolutionary audit and most of its requirements are not available such as; clear and detailed objectives, a budget prepared according to P.P.B.S. system, classified according to performed work, backed by an accurate planning system, an accurate accounting system and a system of internal control and internal audit which is commensurate with the activity of the auditee as well as appropriate criteria for the measurement of the efficiency of performance either for ensuring the optimum use of inputs, human, material and financial resources establishing the relationships between inputs and outputs and the measurement of productivity or for identifying the relationships between cost and benefit and between cost and effectiveness, starting from the criteria used for internal control, ensuring the soundness of these criteria, and improving them.
The ARABOSAI endeavours to make use of the expertise of the SAIs in the developed countries in this field by doing its best to translate into Arabic the audit guides and criteria such as; the Canadian manual of the year 1987, the Australian guide of efficiency of the year 1986 and the Sweden guide of effectiveness audit of the year 1985. These efforts will make it easy to prepare a general guide on the Arabic level. No doubt, the existence of such a guide will help to find an important base for training and for improving audit work.
The results which the SAI can get at through its examination will not be important and will not have useful impact unless they are brought out clearly and accurately in the preliminary reports presented to the auditee or in the general reports about the activity done by the SAI, submitted to the legislature and notified to the supreme powers in the State.
To make these reports realize their objectives of being successful and efficacious either for regularity audit or performance audit, the following conditions should be fulfilled:
All these conditions will make the reports effective and beneficial, leading to assured quality, improving the standard of audit performance, eliciting good reactions in the auditee and producing useful impact because they will serve as an important and valuable reference.
The impact of the audit management methods in assuring quality and improving audit performance, cannot be realized fully unless it is followed up and evaluated periodically.
Our SAI is very interested in quantitative following up of the performance of audit work. The implementation of the annual plan of audit work in the SAI is monitored by using quantitative criteria which determine what the auditor has implemented monthly; these criteria that can compare the real performance with the proposed performance. This following up is done by the Bureau of Studies and Following up in the SAI who limits the deviations, inquires about their causes and proposes the appropriate solutions to make the plan to be executed within its fixed time and in accordance with its objectives. The Bureau should submit a quarterly report on the result of its following up to the president of the SAI.
In addition to the quantitative follwing up, our SAI does a qualitative following up of the preliminary reports issued by departments in the SAI, ensuring the credibility of reports, reliability of their evidences, criteria supporting them. This also ensures that the reports apply the directions of the president of SAI and it evaluates the importance of observations to determine whether they are substantial and trustworthy to be mentioned in the report.
These two kinds of following up make the audit work respectful and important whether for the auditees or for their supervisory authorities or the legislature.