application of international auditing standards (isa and issai) to increase efficiency and...

7/30/2019 Application of international auditing standards (ISA and ISSAI) to increase efficiency and effectiveness of external public sector auditing

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DrDuko njegota, Auditor General of the Supreme Office forRepublika Srpska Public Sector Auditing

The authors views expressed in this presentation do not necessarily reflect the views of

the United States Agency for International Development or the United States

Government.

Application of international auditing

standards (ISA and ISSAI) to increase

efficiency and effectiveness ofexternal public sector auditing


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Partnership for Advancing Reforms in the Economy (PARE)

Law on Public Sector Auditing of RepublikaSrpska (RS), 2005

Auditor General and his deputy are responsible to

ensure that the functions of the SAI are performedindependently, impartially, and in accordance with

INTOSAI auditing standards, IFAC-auditing

standards, and standards of Republika Srpska;

According to the Law on Accounting and Auditing ofRepublika Srpska, the international auditing

standards (ISA) are applied in Republika Srpska.


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What international accounting and auditingstandards are applied in Republika Srpska?

INTOSAI auditing standards

International auditing standards (ISA)

International public sector accounting standards (IPSAS)

International accounting standards (IAS)

International financial reporting standards (IFRS)

International financial reporting standards for SMEs

(IFRS for SMEs)



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ISSAI framework of auditing standards

Includes 4 levels of standards, principles essential for public

sector auditing prescribed by the Law:

Level 1: Basic principles

Level 2: Preconditions for functioning of SAIs

Level 3: Basic principles of auditing, and

Level 4: Auditing guidelines

In the field of financial auditing, the level 4 encompassesISA standards established by IFAC, and guidelines for

application of such standards by SAIs.



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Basic info on the Supreme Office for RepublikaSrpska Public Sector Auditing (SAI RS)

Established in 1999

Its mandate is to perform financial and performanceaudits

Performance audits are done within financial auditing,

especially in relation to the requirement of ISA 250

Currently employs 50 auditors out of which 10 work inthe performance audit division

Performance audits have been done since 2006



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Subject of auditing by SAI RS

Mandatory financial auditing of Republika Srpska

budget beneficiaries

Financial auditing of the part of local self-governmentunits is performed every year

Every one of the total of 63 local self-government

units has on average been subject to financial

auditing 2 or 3 times SAI RS has the mandate to perform auditing of public

enterprises and public institutions. This is performed

occasionally, depending on available



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What has the practice of applying international

accounting and auditing standards shown so far?

High level of adjustment between domestic and

international legislations;

Confirmed in official evaluations by international

institutions such as European Commission, World

Bank, IMF, IFAC, SNAO, SIGMA etc.;

Established relatively efficient legal and professionalframeworks that can ensure capability of domestic

stakeholders to successfully monitor change and

respond to challenges.



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Impact of economic and financial crisis on adoptionand further development of good practice

Relatively high

Causes restrictions in financial and human resources

Slows down the development of individual processes

essential for the quality of external auditing by SAI RS,

such as further development of treasury operations,

introduction of full accounting basis for budget accounting,effective connection between government financial

statistics (GFS) and national accounting statistics (per ESA

95 methodology) etc.



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Key recommendations

Consistent application of internationally recognized

accounting and auditing methodologies is essential for

establishing and maintaining of transparent system of

public funds management in Republika Srpska and inBosnia and Herzegovina;

Complete and updated adjustment of methodology

applicable in local conditions to internationally accepted

methodologies is by all means a process that has to go oncontinuously;

Full respect for specificities of local economic and other

circumstances is necessary.



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Key messages

Efficiency and effectiveness of public sector external

auditing that SAIs are in charge of largely depends

on the level of application of ISSAI framework Consistent application of ISSAI framework enables

clear positioning of SAIs and the public recognition of

their actual role and importance

All this is especially significant for clear and properdefinition of the role of each SAI in prevention and in

other types of fight against crime and corruption



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Some of the key challenges for SAI of RS Prompt application of ISSAI framework;

Keeping independence of SAI RS as one of the

fundamental principles for its effective and efficient work;

Ensuring of effective and efficient system of externalcontrol of the quality of work of SAI RS;

Increase functionality of the system of internal control and

quality, both at the level of SAI RS and at the level of each

individual auditing engagement; Further improvement of international cooperation;

Professional development and stronger application of IT

in auditing.

Partnershi for Advancin Reforms in the Econom PARE


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THANK YOU FOR YOUR

ATTENTION


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