Joint Seminar Brussels 2017

SAI-IA Cooperation at an Informal Level Klaus Freudenschuss, ACA

Outline of presentation General information on the ACA General information on the ACA-IA relations in Austria Standards for the relations between the ACA and the IA Cooperation at an informal level between ACA and IA Summary

General information on the ACA 1761 foundation of the Austrian Court of Audit The ACA as a federal body of the State, the provinces and the municipalities Organisationally: body of the National Council Functionally: body of the National Council or body of the regional Parliaments The ACA defines its audit programme and methods in an independent manner

ACA – strategy – audit objectives The ACA as a Supreme Audit Institution focuses on Strategic audit objectives Primary objective: ensure the most effective use of public funds Audit criteria: efficiency, effectiveness, economy regularity, compliance Headcount (1 January 2017): 305 (of which 250 auditors); Average age 47.46; Proportion of women: In the audit service 41 %, in an leading position 38 %

Audit and Advisory Activities Main audits: Performance Audits Audit types: Selective audits Cross-cutting audits Sample audits Follow-up audits EU audits European Court of Auditors (ECA) support audits Proactive audits – audits on demand

ACA – audit as the core activity The ACA carries out audits on the level of the Federation the provinces municipalities with more than 10,000 inhabitants (since 2011) municipal associations social insurance agencies legal entities, foundations, funds, institutions companies > 50% public contribution or predominant influence chambers

General information on the IA- ACA relations in Austria Percentage of entities audited by the ACA via internal audit: ministries, provinces, municipalities: all agencies, public enterprises: about 50% - although: more than 90% of funds are audited by IA IA of the Federation: Coordination Unit for Internal Audits of the Federation after its dissolution certain tasks of the Unit for IA were taken over by the Federal Chancellery Challenges: Communication and networking platform Central representation of the IA for reform measures Central point of contact

General information on the IA- ACA relations in Austria Audits of the IA by the ACA in 2003, 2009, 2010 The ACA recommended, among others, to to adopt a separate federal audit act, integration of the IA in the the entity and providing access to all information systems, Strengthening the independence and objectivity of the IA by approving the appointment and removal of the head of the IA and the termination of contracts with external auditors (if applicable), also by the supervisory board

Basis for coordination and cooperation (formal, informal) As regards the coordination between SAIs and internal auditors in Austria there is no legislation there are no legislative restrictions there is no formal agreement or protocol there is no specific legislation requiring internal auditors to report to the SAI

ACA internal rules regarding coordination and cooperation INTOSAI GOV 9150 Auditing Standards: Coordination and Cooperation between SAIs and Internal Auditors in the Public Sector Audit manual/quality standards for audits that refer to the cooperation with the internal audit: i.e. roles and responsibilities in the audit process standardised audit preparation on-site audit process steps for the audit report audit across entities ACA Guideline on Internal Control Systems (ICS) Provides support for the audit team regarding, among others, the conception of ICS audits. ACA has to to evaluate the contribution that is made or can be made by the IA to the functioning of systems and control bodies Reports of the IA are to be taken into account in the framework of ICS audits

ACA – audit process Preparation Concept On-site visits Final meeting Result Report representative body the public audited entity

Cooperation at an informal level Important point of contact in the audited entity, regular contacts in particular at the onset of an audit - Exchange of information Making use of the IA’s audit results for preparing an audit Additional documentary evidence, which, however, does not replace a sufficient collection of evidence by the auditors themselves Promising approaches regarding education and further training Support of applicable recommendations of the IA Follow–up of the ACA’s recommendations by the IA is becoming increasingly important Coordination and cooperation regarding concrete audit activities need further development

Cooperation at an informal level Advantages from the viewpoint of the ACA: Optimal use of resources since no permanent additional expenditure for resources arises from the relations with the IA during the year at the beginning of the audit, exchange of experiences; relationship of trust; common interest in compliance and performance audits.  Benefits for SAI as well as the audited entity: more efficient audits (targeted, under certain circumstances reduced time for preparation, lesser burden for the audited entities)…  Cooperation between SAIs and IAs should be intensified

Dealing with the risks of coordination Obstacles/risks for coordination and cooperation? required evaluation of the quality of the IA’s audit work auditors must verify the independence and objectivity of the IA’s audit work if they want to rely on it. As regards the guarantee of confidentiality, the Federal Constitutional Law (Article 20) as well as the Federal Civil Servants Act (Section 46) contain general provisions on professional secrecy. No cooperation in performing audit procedures (e.g. audit of entities with multiple locations)

Summary Internal and external audit face the same challenges The ACA perceive IA in the public sector as an important partner regarding the audit and improvement of processes in public institutions and companies. The independence and objectivity of the IA is a fundamental requirement for cooperation.

Questions?

ACA in the Three Lines of Defense Model