Jakarta Declaration

Guidelines on Promoting Efficient and Effective Public Administration through Performance Auditing Preamble

Preamble

The principal papers, country papers and comparative review papers on the three sub-themes under the main theme 'The Role of Supreme Audit Institutions (SAIs) in Promoting Efficient and Effective Public Administration through Performance Auditing' were discussed and considered by the ASOSAI Workshop held in Tokyo in July 1997 and deliberated in the 6th International Seminar held in Jakarta in October 1997.

On the occasion of the ASOSAI Workshop at Institute for
International Cooperation, Japan International Cooperation
Agency (JICA), Tokyo on July 3, 1997

As a result of these deliberations, ASOSAI has made a number of recommendations pertaining to each of the following sub-themes:

Sub-theme I: Performance Auditing: Mandates, Concepts, Methodologies and Practices, Reporting and Problems

Sub-theme II: The SAIs Performance Audit Report and Utilisation by Legislature and Executive

Sub-theme III: Audit of Social services

The Assembly recognises that:

With the increased pace of economic and social development, and with the rapidly expanding and diversifying government spending, the dimensions of public accountability have now extended over wider horizons;
Public awareness on, and pressure for economic, efficient and effective government operations with relative increases in demand for accountability have been rapidly growing.
To add value in such an environment is a major challenge for SAIs. From their unique position of being able to look across all agencies in the public sector, SAIs are well placed to make a significant contribution to the development and implementation of public sector reforms. Performance auditing plays an essential role in promoting economic, efficient and effective administration of public sector agencies.

The nature and scope of performance auditing is evolving rapidly as it keeps pace with an environment which is changing at an ever increasing pace. SAIs are at various stages in the evolution of performance auditing. To strengthen the value to be derived from performance auditing, there is great scope for SAIs sharing their experiences and improving the standards and guidelines for undertaking such audits.

An audit report is the culmination of the efforts in carrying out a performance auditing and its utilisation by the executive and the legislature will assist in improving the performance and accountability of public administration.

The significance of the audit of Social Service programs arises not only from the extent of government expenditure involved, but also from the impact of such programmes on large sections of the population and the wide diversity of these programmes.

The Assembly resolved to adopt the following guidelines on 'Promoting Efficient and Effective Public Administration through Performance Auditing'.

Sub-theme 1: Performance Auditing: Mandate, Concepts, Methodologies and Practices, Reporting and Other Issues/Problems

1.1 ASOSAI supports the removal of any impediments to SAIs being able to properly undertake a performance audit role.

1.2 ASOSAI requests the Auditing Standards Committee of INTOSAI to consider the desirability of reviewing and updating as appropriate the Auditing Standards relating to performance auditing.

1.3 ASOSAI develop broad guidelines for performance auditing. Some of the elements to be covered include:

Performance Audit Methodology
Performance Audit Planning
Audit Objectives
Audit Criteria
Consultation with Agencies and other Stakeholders
Understanding the business and the environment of entities subject to audit
Developing Auditing Findings
Audit Evidence
Data Analysis
Developing Audit Recommendations
Performance Audit Reporting
Follow-up Auditing

1.4. ASOSAI is committed to developing mechanisms for the sharing of information, including through the Internet, between member SAIs. Such information will include experiences in performance auditing as well as developments in methodology and standards. In developing such mechanisms consideration should be given to the differing levels of information technology available to SAIs.

1.5. Member SAIs are encouraged to:

define their core performance audit skill requirements and regularly review their skill levels and proficiency standards against these requirements. This might include a programme for acquiring, developing and maintaining the necessary level of core skills.
establish appropriate accountability measures which will enable individual SAIs to account for their own expenditures and the standard of performance achieved against institutional objectives and performance targets. To this end, clear performance indicators and a supporting management information system need to be in place.
recognise the importance of developing and maintaining clear communication with auditees and other government agencies in the conduct of all auditing activity including performance auditing. Such open communication will, amongst other issues, aim to communicate and promote the benefits of performance auditing, to secure better co operation by agencies and their acceptance of audit findings and recommendations.

If the Developing Nations fail to catch up and the gap between the advanced and developing countries become wider, it would be difficult to create a peaceful and prosperous world that has long been the dream of the mankind . Because, sooner or later, the socio-economic problems confronting developing countries will also become problems of advanced nations Consequently, in the implementation of Development all nations should work shoulder to shoulder with the sprit of partnership."

- Extract from HE Mr. Soeharto's Address at 7th ASOSAI Assembly

Sub-theme 2: Performance Audit Report and Its Utilisation by the Executive and the Legislature

2.1 ASOSAI recognises the need for the development of a suitable institutional framework for ensuring that lessons learnt from performance auditing are used for future plans and programmes to the maximum extent possible.

2.2 ASOSAI encourages the individual SAIs to:

establish close co-operation with the executive and legislature providing them with support needed for maximum confidence in the utilisation of performance audit reports.
give sufficient information in their performance audit reports to provide a clear indication of the degree of assurance that users might derive from them.
co-operate in reinforcing the capability of other SAIs in undertaking performance audit through, such measures as, training, joint research, and sharing of software's.
Secure necessary resources and authority to obtain specialist advice or to seek co-operation from outside agencies to enhance the capability to undertake performance auditing.
adopt suitable strategies for popularising the concept of performance auditing with a view to making it an integral part of public sector audit.

It is common ground that the economies of countries around the world are becoming increasingly intertwined and interdependent. It is therefore all the more necessary that as the universally accepted source of assurance about financial matters, we the Supreme Audit Institutions, develop a common approach and a common understanding of professional practices in the field of accounting and auditing. The efforts of ASOSAI ought to be viewed in this perspective.

-Extract from Mr. V.K. Shunglu's Speech at 7th ASOSAI Assembly

Sub-theme 3: Audit of Social Services

3.1 Where social service programmes are funded wholly or in part by government, audit of such programmes executed either by government or non governmental organisations should be as comprehensive as possible and address questions of economy, efficiency, and effectiveness.

3.2 The responsibility for establishing effective performance targets, standards, indicators and effective systems for monitoring and evaluating performance lies primarily with the auditee. In conducting performance auditing, the SAIs' responsibility should cover:

assessing the existence, adequacy and appropriateness of performance targets, standards and indicators.
ascertaining the existence and operation of appropriately designed management systems.
assessing the performance of the programmes using the targets, standards, and indicators.
reporting the findings thereon, and
conducting as appropriate, follow-up reviews or audits.

There is a need to understand the importance of having such measurement and to be aware of a public chaos without an existing adequate audit system in Government

- Extract from Dr. J.B. Sumarlin's address at 7th ASOSAI Assembly