issai 400 fundamental principles of compliance audit compliance audit subcommittee vilnius,...
TRANSCRIPT
![Page 1: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/1.jpg)
ISSAI 400
Fundamental Principles of Compliance Audit
Compliance Audit Subcommittee
Vilnius, Lithuania 19th-20th of September 2012
Mona Paulsrud, CAS harmonization team
![Page 2: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/2.jpg)
ISSAI 400 presentation
1. The approach of the CAS harmonization team to ISSAI 400
2. Structure and contents of ISSAI 400
![Page 3: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/3.jpg)
CAS’ contribution to the developmentof public sector auditing
![Page 4: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/4.jpg)
The purpose and authority of ISSAI 400
ISSAI 400 Principles of Compliance Audit
ISSAI 4000 Compliance Audit Guidelines41004200
![Page 5: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/5.jpg)
![Page 6: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/6.jpg)
AIM OF ISSAI 400
To provide a coherent, high level framework of Compliance Audit in the public sector, covering
both ISSAI 4100 and ISSAI 4200.
![Page 7: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/7.jpg)
CAS’ approach in developing ISSAI 400
• Financial audit – the cradle of the audit profession and audit theory
• Defines basic concepts and terminology of auditing
![Page 8: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/8.jpg)
Compliance Audit – The extended perspective
![Page 9: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/9.jpg)
CAS’ strategy in developing ISSAI 400
• Build upon existing contents and terminology of the ISSAI 4000 series
• Create a coherent story of Compliance Audit
• High, generic level of concepts and principles
• Dual approach – updated IFAC terminology
![Page 10: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/10.jpg)
ISSAI 400 – Basic structure
1. Introduction2. Purpose and authority of ISSAI 4003. The nature of Compliance Audit } Story of CA
4. Elements of Compliance Audit } Audit theory
5. Principles of Compliance Audit } Requirements
6. Making reference to the ISSAIs
![Page 11: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/11.jpg)
The nature of Compliance Audit
The independent asessment of whether a particular subject matter is in compliance with established criteria.
![Page 12: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/12.jpg)
The nature of Compliance Audit
Origins of cash flow in the public sector are the decisions and premises of the legislature.
![Page 13: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/13.jpg)
Public sector context of the SAI
Compliance Audit
THE LEGISTALURE
THE EXECUTIVE
THE ENTITY
AUTHORITIES
AUTHORITIES
AUTHORITIES
![Page 14: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/14.jpg)
The elements of Compliance Audit
ISSAI 4100 or ISSAI 4200?
Authorities
Subject matter
The three partiesSAI
![Page 15: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/15.jpg)
Authorities and criteria
AUTHORITIES
CRITERIA
![Page 16: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/16.jpg)
SUBJECT MATTER
Underlying subject matter Subject matter information
![Page 17: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/17.jpg)
17
INTENDED USER
PRACTITIONER
ELEMENTS OF AN AUDIT
RESPONSIBLE PARTY
THE LEGISLATURE
THE GOVERNMENT
THE SAI
The three parties of Compliance Audit
![Page 18: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/18.jpg)
Assurance in Compliance Audit
• Attest engagements• Direct reporting
audits
Forms of assurance
• Reasonable assurance
• Limited assurance
Levels of assurance
![Page 19: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/19.jpg)
Forms of reporting
• Long form reporting• Short form reporting• Findings
• Opinions & various forms of conclusions
![Page 20: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/20.jpg)
Variations of Compliance Audit
SUBJECT MATTER
FORMS OF REPORTING
ASSURANCEAPPROACH
AUDIT EVIDENCE
![Page 21: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/21.jpg)
The elements of Compliance Audit
ISSAI 4100 or ISSAI 4200?
Authorities
Subject matter
The three partiesSAI
![Page 22: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/22.jpg)
Principles of Compliance Audit
Principles: at the level of an individual audit
Planning Gathering evidence
Concluding and reporting
![Page 23: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/23.jpg)
Principles of Compliance Audit
Principles = «should statments»
Able to fit all variations of Compliance Audit.
To be translated into «shall statements» when level 4 is to be used as authoritative standards.
![Page 24: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/24.jpg)
PRINCIPLES TO BE APPLIED IN CONDUCTING A COMPLIANCE AUDIT
1. General principles: to be considered prior to comencement and at more
than one point throughout the audit process
2. Principles related to the audit process:related to steps in the audit process itself
![Page 25: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/25.jpg)
General principles
1. Legal basis2. Ethics and independence3. Quality control4. Audit team management and skills5. Audit risk6. Materiality7. Professional judgment and skeptisim8. Documentation9. Communication
![Page 26: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/26.jpg)
Audit team management and skills
… includes an understanding of and practical experience of the type of audit being undertaken; an
understanding of the applicable standards and authorities; an understanding of the entity’s legal basis
and operations; and the ability and experience to exercise professional judgement.
ISSAI 400 para. 54
![Page 27: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/27.jpg)
Audit risk
Audit risk in Compliance Audit covers both attestation and direct engagements.
inherent risk - control risk - detection risk
The degree to which these components are relevant to the audit is affected by the nature of the subject matter, whether the audit is performed as a reasonable assurance or limited assurance audit and whether it is a direct or an attestation engagement.
ISSAI 400 para. 56
![Page 28: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/28.jpg)
Materiality
Value
ContextNature
![Page 29: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/29.jpg)
Materiality
Materiality in Compliance Audit consists of both quantitative and qualitative factors.…
An essential part of determining materiality is to consider the importance of compliance for the intended users and the consequences of potential or identified instances of non-compliance.
ISSAI 400 para. 58
![Page 30: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/30.jpg)
Principles related to the audit process
1. Planning and designing a compliance audit• Subject matter and criteria• Audit scope• Understanding the entity• Risk assessment• Understaning internal control and control environment• Risk of fraud• Audit strategy and audit plan
2. Gathering audit evidence
3. Evaluating audit evidence, concluding and reporting• Evaluating audit evidence and forming conclusions• Reporting• Follow up
![Page 31: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/31.jpg)
Planning and designing a compliance audit
5. Internal control and
control environment
6. Risk of fraud
7. Audit strategy and plan
2. Audit scope
3. Understanding the entity
4. Risk assessment
1. Subject matter and criteria
![Page 32: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/32.jpg)
Gathering audit evidence
Sufficient and appropriate audit evidence.
![Page 33: ISSAI 400 Fundamental Principles of Compliance Audit Compliance Audit Subcommittee Vilnius, Lithuania 19th-20th of September 2012 Mona Paulsrud, CAS harmonization](https://reader034.vdocument.in/reader034/viewer/2022051316/5697bff21a28abf838cbbda4/html5/thumbnails/33.jpg)
Evaluating audit evidence, concluding and reporting
Evaluating audit evidence
and forming conclusions
Reporting Follow up