Enhancing the Stakeholders’ Confidence: Audit Management Integrity, Accountability and the Tone at the Top Assoc. Prof. Dr. Recai AKYEL The President of Turkish Court Of Accounts VII. EUROSAI-OLACEFS Conference Tbilisi September 2012

CONTENT  Conceptual terms: stakeholder confidence, audit management integrity, accountability, tone at the top and their relevance for SAIs  Means to quality audit  Experience of Turkish Court of Accounts 2

Enhancing the Stakeholders’ Confidence “Quality within any organization is not achieved spontaneously; but requires a specific approach led by management.” (EUROSAI Report) 3

Concepts Stakeholders’ confidence Audit management integrity Accountability Tone at the top 4

Stakeholders’ Confidence  Who are the stakeholders of an SAI? -Auditees -Citizens -Civil Society Organizations (CSOs) -Parliament  What does stakeholders’ confidence mean?  Trust of the Parliament, auditees and public, in general, to the outputs of SAI. 5

Audit management integrity  Conditions: -Qualified auditors -Code of conduct -Open and well-defined audit procedures -Adequate monitoring by management 6

Accountability The SAI should also be accountable to somebody. Accountability of the SAI reinforces its independence by giving legitimacy to its actions. (Khan, 2007: 11) 7

Tone at the top “The standard set by the organization’s leadership whereby performance is measured; the culture within which the members of the organization operate; the tone set by senior management; irrespective of management’s documented strategy and policies, it is the force that drives individual professionals; the ‘unseen hand’ that direct activities regardless of management’s proximity to the action; and a commitment to the quality of care clients receive.” (IFAC Transnational Auditors Committee, 2007: 8) 8

How to set right tone at the top  Set the strategy for meeting ethical standards and quality, communicate the strategy internally and externally.  Adopt international standards on quality control  Recruit competent and qualified staff  Review and evaluate the implementation of quality management system 9

Elements of a system of quality control -Leadership responsibilities -Relevant ethical requirements -Acceptance and continuance of client relationships -Human resources -Engagement performance -Monitoring 10

Audit Quality 11 TONE AT THE TOP Strategy Quality Control System Communication Human resources Ethical requirements Monitoring

TCA EXPERIENCE 12

Audit management integrity  Independence of TCA and auditors:  Independence for publishing audit reports  Independence on audit scope  Budgetary independence 13

Human resources and ethics  Competent and qualified auditors  2 years of pre-vocational training and internship  On-the–job training  TCA Law requiring adoption of code of ethics 14

Quality Control System Quality Control Procedures for Audit Quality 15 Hot review -Team leader -Head of Group -Audit Planning and Coordination Group -Chambers -Report Evaluation Board Cold review -Audit Planning and Coordination Group - Internal peer review

Audit Management Software 16

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Accountability 19 Meeting with the Speaker of the Turkish Parliament  The TCA Communication Strategy Document for Internal and External Communication  Annual Accountability Report  Strategic Plan for  Parliament being informed by the President of the TCA at least twice a year.  Transparency reports or publicity reports

Conclusion  SAIs should adhere to the principle of accountability themselves and ensure audit quality.  If SAIs manage to ensure audit quality and audit management integrity, then their contribution to good governance in public sector will be valuable and they will ensure enhancing the stakeholders’ confidence.  The management should set the right tone at the top to ensure audit quality. 20

THANK YOU 21