Revision of ISSAIs WGPD Secretariat | ASF Annual meeting of the WGPD Helsinki, Finland September 10-12, 2012

WGPD | 2 Work Plan 1. ISSAIs Revision2. Systematic survey on Public Debt3. Investigation Themes4. New Strategic Plan

WGPD | 3 ISSAIs Harmonization Project PSC Timeframe: Revision: ISSAIs Impact: ISSAIs  KSC

WGPD | 4 ISSAIs Harmonization Project PSC: ISSAIs Harmonization Project WG members: Periodic Revision Selected WG members: Revision Portugal and Mexico: Preliminary revision Permanent Review frequency at least every 5 years In process Concluded

WGPD | 5 ISSAIs Revision Strategy Draft versions of revised products shall be ready by June 30, Special analysis is carried out in order to point out possible overlaps with other WGs’ products. Revised versions will be presented and discussed during the WGPD’s meeting (Helsinki, September ‘12).

WGPD | 6 Revision Criteria 1. Are the ISSAIs and INTOSAI GOV still useful? 2. Do they need to be updated? In what respects? 3. Do the Working Group’s ISSAIs need to be harmonized with other WGPD products? 4. Do Working Group’s ISSAIs need to be aligned with the ISSAIs ? 5. Do Working Group’s ISSAIs need to be aligned with the general ISSAI terminology?

WGPD | 7 1. Are the ISSAIs and INTOSAI GOV still useful? Yes, definitely. ISSAIs support the development of the audit work Integrate best practices Various audit institutions’ experiences & audit guidelines

WGPD | 8 2. Do they need to be updated? In what respects? YES

Official ProductReviewing Team Comments ISSAI 5410 – Guidance for Planning and Conducting an Audit of Internal Controls of Public Debt. USA Brazil Zambia WGPD | 9 ISSAIs Revision Sub Committee of Internal Control:: INTOSAI GOV 9100, INTOSAI GOV WGPD: Brazil’s project on IT auditing Connections Definition of internal control, risk assessment, control activities, monitoring Example: monitoring the change in ISSAI 5410 or the effectiveness versus monitoring quality in INTOSAI GOV To be harmonized Examples of internal control audit work by specific SAI: they are from the 1990’s and should be substituted by newer ones or augmented to incorporate the old and the new audit work. References to further work by the WGPD To be updated

Official ProductReviewing Team Comments ISSAI 5411 – Debt Indicators.Mexico Endorsed at the XX INCOSAI (2010). Revision planned in 3 years. WGPD | 10 ISSAIs Revision All WGPD products. WGKNI. Connections None. To be harmonized Not yet. To be updated

Official ProductReviewing Team Comments ISSAI 5420 – Public Debt: Management and Fiscal Vulnerability: Potential Role for SAIs. Canada Lithuania WGPD | 11 ISSAIs Revision WGPD: Debt indicators (definitions) Connections None. To be harmonized Information on recent financial crises. To be updated

Official ProductReviewing Team Comments ISSAI 5421 – Guidance on the Reporting of Public Debt. Portugal Moldova Korea WGPD | 12 ISSAIs Revision WGPD: Debt indicators (definitions) INTOSAI subcommittee on accounting and reporting. Connections ISSAI or INTOSAI GOV. To be harmonized Future works: What will we do? We announced several developments that never took place. Examples are from the 90’s. To be updated

Official ProductReviewing Team Comments ISSAI 5422 – An Exercise of Reference Terms to Carry Out Performance Audit of Public Debt. Mexico Need to make reference to recent crisis: Greece, Spain and Portugal. ISSAI 5430 – Fiscal Exposures: Implications for Debt Management and the Role for SAIs. USAISSAI that makes reference to the techniques for risk evaluation, its increase, and management. After the crises, concepts as risk evaluation, credit and liquidity, have changed. WGPD | 13 ISSAIs Revision

Official ProductReviewing Team Comments ISSAI 5440 – Guidance for Conducting a Public Debt Audit – The Use of Substantive Tests in Financial Audits. USA Austria Revision in process. WGPD | 14 ISSAIs Revision

WGPD | 15 Yes, some concepts and definitions have to be harmonized. For example, in ISSAI 5410, the public debt is defined operationally and the definition defers from that used in the ISSAI The latter makes additional reference to hidden liabilities; while the ISSAI 5410 does not mention them at all. 3. Do the WG’s ISSAIs need to be harmonized with other WGPD products?

WGPD | 16 Another example is related to the risks evaluation. ISSAI 5410 makes reference only to the operational risks (even when the document considers different types of risk by mentioning monetary risks as part of the operational risk), and ISSAI 5422 mentions nine types of risks. In this regard, it is important to consider that the international financial practices acknowledge a two-type risk classification: a) financial, and b) operational. The market, credit and liquidity risks belong to the financial type, that include the risks form the volatility of interest rates and the exchange rates; on the other hand, the operational risks include the processes, the legal part and technological risks. It would be convenient to evaluate if the concepts must be harmonized with those accepted on the international financial scope. 3. Do the WG’s ISSAIs need to be harmonized with other WGPD products?

WGPD | Do they need to be harmonized with other WGPD products? An additional example: debt sustainability. ISSAI 5410 mentions that: “Debt sustainability is the degree to which a government can maintain existing programs and meet existing creditor requirements without increasing the debt burden on the economy”. ISSAI 5422 makes reference to a concept regarding to the fiscal sustainability and conceptualize it as “...whether the present value of its future revenues is greater than its expenditures, including debt service...”.

WGPD | Do they need to be aligned with the ISSAIs ? Yes. Example: ISSAI 5422 “An Exercise of Reference Terms to Carry Out Performance Audit of Public Debt” should be aligned to ISSAI 3100 “Performance Audit Guidelines: Key Principles”.

WGPD | Do they need to be aligned with the general ISSAI terminology? Not in all cases. It all depends on the year the ISSAI has been issued, in view of the new exiting terminology Due Process, Harmonization Project, ISSAIs awareness raising initiative, INTOSAI Glossary.

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