1. INTOSAI Development Initiative - Global SAI Stocktaking Report 2017
Einar Gørrissen,
Director General

2. Context to the Global SAI Stocktaking Report
Our changing World
Regional and global instability and challenges
Democratic Backsliding
Sustainable Development Goals
The World of INTOSAI
ISSAIs 2010, 2013
ISSAI Implementation
Professionalisation Agenda
SAI Performance Measurement Framework
[Purpose of these slide is just to set the scene and help manage expectations on progress.]
Key points:
Events in the middle east have led to development declines in some countries, and this is reflected in observed performance within SAIs in ARABOSAI
We live in a time of great change world wide, which some commentators have referred to as democratic backsliding. We find some evidence of this in the environment SAIs face, and in their levels of independence. This fits with findings of the 2017 Open Budget Survey which found declines in the transparency of budget information.
The SDGs offer a focal point for the world to come together behind sustainable development for all, and this is an opportunity – for SAIs both to better serve their purpose in terms of improving the lives of citizens and in terms of enhancing the transparency and accountability of SAIs. And SAIs are facing up to this challenge.
Within INTOSAI, the ISSAIs approved in 2010 (lv 4) and 2013 (lv 3) are a landmark opportunity for the strengthening of SAIs, but we should not underestimate the implementation challenge this brings. The SAI community has made a good start through the ISSAI Implementation Initiative, but this needs to be mainstreamed and sustained in all our future activities.
ISSAI implementation requires, at its core, professional auditors. INTOSAI is working on the professionalization agenda, and our ability to progress on ISSAI implementation – especially in the smallest and weakest SAIs - is heavily linked to the success of this agenda.
INTOSAI has also approved the SAI PMF. As well as being a fantastic tool for SAI strategic planning and capacity development, the SAI PMF is now helping us generate evidence based global data on the capacity and performance of SAIs, in a way we never had before.

3. The Global SAI Stocktaking Report 2017
Synthesis of Multiple Data Sources:
INTOSAI Global Survey 2017
SAI Performance Measurement Framework (SAI PMF) Assessments (Developing Countries)
Open Budget Survey Data
Public Expenditure and Financial Accountability (PEFA) Assessments (Developing Countries)
Follow-up to 2010 and 2014 SAI Global Stocktaking Reports
Examines SAI operating environment, independence & mandate, SAI performance & capacity, support provided to SAIs, & functioning of INTOSAI Regions
Data presented by income groups and INTOSAI regional classification
In this presentation, unless otherwise noted, the figures refer to all SAIs around the world for which data was available: that means both developed and developing country SAIs. Generally, the figures for developing country SAIs only show worse performance – though not always.

4. SAI Environment: Support of Legislatures for SAIs
FINDINGS: The role of SAIs within national systems, and the interest of legislatures in the SAI’s work, is constrained, reducing the benefits of SAIs to citizens
48% of national legislatures do not hold public hearings in which audit reports are reviewed and scrutinized (OBI data, 2015)
Around 18% did not hold any legislative hearings to discuss audit reports (OBI, 2012)
In 57% of countries, neither the SAI nor the legislature reports publicly on steps the executive has taken to implement audit recommendations (OBI data)
Support, such as IDI’s ‘SAIs Engaging with Stakeholders’ program, needs to continue to foster this relationship at the national level as a matter or priority. Without the support of national legislatures, SAIs are severely weakened, and the linkages between the SAI and parliament are often characterized as the weakest part of national PFM structures.

5. SAI Independence
FINDINGS: Globally, SAI independence has shown small improvements. However, SAI performance and benefits to citizens remains hampered by constraints to financial and operational independence
Globally, only 44% of SAIs met IDI’s benchmark on SAI independence (Analysis of SAI PMF reports – developing countries)
Most SAI budgets continue to be overseen by bodies the SAI audits
Legislature oversees annual funding request in just 46% of countries (INTOSAI Global Survey)
Increasing executive interference in the SAI budget process
SAIs reporting executive interference in their budget process up from 41% in 2014 to 64% in 2017 (INTOSAI Global Survey)
Declining financial independence in some INTOSAI regions
Budgets approved by legislative and consistent with SAI needs: down from over 50% to around 25% in AFROSAI-E and ARABOSAI (OBI data)
Legal protection of SAI Heads from removal remains a challenge
Large regional variations. Declined from 27% in 2012 to 17% in 2017 in ARABOSAI (OBI data) – but % in all other regions
SAIs continue to face restrictions in publication
10% have no freedom to publish reports; 31% face restrictions in publishing (INTOSAI Global Survey)
While some of these challenges, for example in the ARABOSAI region, may be beyond our control, there is still much that we can all do to advocate for greater SAI independence. It starts with knowledge: knowing that the biggest challenges relate to financial independence, particularly executive interference in the budget process. Again, SAIs need strong relationships with legislatures to address this, to try to ensure they have the resources and freedom to fulfil their roles.
Financial independence a particularly grave challenge in CREFIAF, CAROSAI & ARABOSAI (INTOSAI Global Survey)
Restrictions to publication remain a major challenge for a minority of SAIs. But there are interesting dynamics at play here. We compared data on restrictions to publication to data on the percentage of reports published, and produced very interesting findings, as you will see.

6. Transparency & Accountability
FINDINGS: Worrying decline in publication of audit reports due to restrictions on publication – but some SAIs overcoming these challenges
Declining global trends on publication of audit reports
% of SAIs publishing at least 80% of their audit reports down from 70% in 2014 to 50% in 2017 (INTOSAI Global Survey)
% of SAIs not publishing any audit reports up from 15% in 2014 to 27% in 2017 (INTOSAI Global Survey)
SAI leadership can and does make a difference on publication
Of the SAIs with full freedom to publish reports, only 23% did not publish (INTOSAI Global Survey) – usually, but not always, an independence challenge
Many SAIs still published despite restrictions (INTOSAI Global Survey) – SAIs overcoming independence challenges
23% of SAIs with no legal freedom to publish still did so
33% of SAIs with limited freedom to publish still did so
What for me is really interesting is that of those SAIs that did not publish reports, the majority faced restrictions on publication. Only around a quarter actually had full right to publish.
And what really encourages me is that so many SAIs managed to publish reports despite having no or limited rights to publish..
SAI leadership really can make a difference on hugely important topics like publication of audit reports.
And this is one area that everyone supporting an SAI can easily get behind, as everyone here as the same agenda – to promote transparency and accountability. If this is a challenge in your SAI or a SAI you support, please coordinate your responses and actions, and advocate for publication, and the end to restrictions against publication.

7. Transparency & Accountability (cont.)
FINDINGS: Beyond audit reports, there is much more a SAI can do to lead by example in promoting transparency and accountability
SAIs increasingly undertake performance assessments (SAI PMF, peer reviews), but could improve sharing with external stakeholders
63% developed countries shared their assessments, but only 38% of developing countries (INTOSAI Global Survey)
SAIs need to lead by example in measuring and reporting publicly on their own performance
Only 14% of developing country SAIs met IDI’s measure on performance reporting (Analysis of SAI PMF reports – developing countries)
Majority of SAIs restrict their communication efforts to their website, and have limited direct engagement with citizens and civil society (INTOSAI Global Survey)
Though this has improved since 2012 in all income groups
Again, there are so many good practices and guides out there on communicating with citizens. SAIs need to be visible and lead by example to encourage change in governments, and to mobilize support of legislatures and other stakeholders.

8. SAI Strategic Planning
FINDINGS: While almost all SAIs have a strategic plan document, the quality of strategic planning processes sometimes undermines the long term development of the SAIs
Only 28% of developing country SAIs met IDI’s benchmark on strategic planning (Analysis of SAI PMF reports – developing countries – benchmark includes the following, not all of which need to be in place to meet the benchmark)
SP based on a needs assessment
SP incorporates a results framework and indicators to measure performance, capacity and environment
SP is complemented by an implementation matrix or document
The SAI has an effective annual/operational plan
The SAI has an effective planning process
The SAI monitors and reports appropriately on its activities, budget and performance
IDI is currently updating its strategic planning handbook, as a tool to support a program on SAI strategy, performance measurement and reporting. In addition, SAI PMF and INTOSAI’s peer review guide both provide excellent assessment tools on which sound strategic plans can be based. The SAI PMF, in particular, can also form a good basis for periodic monitoring of implementation of the strategic plan.
It is probably fair to say that where strategic plans are weak is not the quality of the document, but in implementation, monitoring and reporting of the strategic plan. IDI’s SPMR program, and support envisaged under the GCP Tier 2, are designed to tackle this: to turn strategic plans into sustainable change at the SAI level.

9. Code of Ethics
FINDINGS: Code of ethics exist, but need to be better integrated into SAI management practices
80% of developing country SAIs have a code of ethics (SAI PMF data – developing countries)
…but only 10% have robust systems to ensure and monitor implementation of their code of ethics, and ensure sound integrity systems operate throughout the SAI
As with strategic plans, it is relatively easy to develop a code of ethics consistent with ISSAI 30 and place it on the SAI’s website. But real thought is need to design and implement systems to ensure that staff across the SAI are aware of the code, understand its implications, comply with it, and to detect and prevent possible integrity violations. Tools such as INTOSAINT have been used very effectively by SAIs, especially in OLACEFS, to make the code of ethics matter for an SAI.

10. Quality Assurance Systems
FINDINGS: SAIs implementing QA systems, but fall short of international standards
67% of SAIs had QA systems covering all three audit streams (INTOSAI Global Survey)
But only 34% of SAI’s quality assurance systems met ISSAI 40 requirements (OBI data)
Effective quality assurance systems are actually tough to implement. They come at the end of the process. Only when you have really understood and tried to implement the ISSAIs can you then design a QA system that can provide independent assurance that your audits are conducted in accordance with the ISSAIs.
But there are other short term solutions. Many SAIs have used peer support to meet their quality assurance needs whilst they develop their own in-house systems. For very small SAIs, support from a peer or regional body may be a good solution.
Ultimately, ISSAI implementation and the credibility of the ISSAIs will rely on the users of the ISSAIs having sound quality assurance systems that provide stakeholders with assurance that their audits are done in accordance with the ISSAIs. But we have a long way to go on this journey.

11. ISSAI Implementation: Audit Standards & Practice
FINDINGS: Gradual development & adoption of ISSAI compliant audit standards and manuals
Implementation remains a challenge:
Professional staff – recruitment, training, retention
Roll-our across the whole SAI
Prerequisites (organisational level issues, esp. QC & QA)
Now we turn to audit standards and practice, looking at financial, performance and compliance audit.
Since 2014, the number of SAIs saying that they have adopted the ISSAIs has fallen, to 62%. We think this reflects the wide educational program on the ISSAIs: more SAIs now have a good understanding of what the ISSAIs really are.
We are encouraged to see that our evidence – and this is from robust, quality assured and evidence based assessments – is that 32-44% of sample SAIs now have standards and manuals that are consistent with the ISSAIs in the different audit disciplines. As we would expect, full implementation of ISSAI compliant practices lags behind. It is strongest in compliance audit – the traditional bread and butter work of an SAI – at 25%. And weakest in financial audit, at 10%, where there are still considerable challenges to shift from historical practices to financial audit standards based on the international standards of auditing.
Data from compilation of 25 SAI PMF assessments of developing country SAIs

12. Audit Coverage 78% in 2014 to 73% in 2017
PEFA score C or higher – audit of Government’s main budget document (developing countries only)
Global Survey Results:
Financial audit coverage: 66% meet the benchmark, from 71% in 2014
Compliance audit coverage: 58%, from 60% in 2014
Performance audit coverage: 54%, from 52% in 2014
Audit coverage is a product of two main factors. First, the resources available to an SAI. Second, how efficiently an SAI utilises those resources, in terms of it’s management practices, as well as the adoption of risk based audit approached.
In the global survey, we see both factors at play. SAI resources declining in real times as financial independence is constrained, and the adoption, but very slow implementation, of ISSAI standards.

13. Staying Relevant: Supporting SDG Implementation
FINDINGS: INTOSAI has an opportunity to play a valuable and highly visible role in the challenge of our generation: the sustainable development goals. Many SAIs are embracing this challenge.
Most SAIs do have the mandate, capacity and willingness to audit implementation of the SDGs or national preparedness for SDG implementation
56% of SAIs intend to include themes on preparedness for or implementation of the SDGs in their next audit program (IDI Global Survey)
However, 30% of SAIs say they do not know if their Governments have set SDG baseline data or intend to collect data and report on SDG progress – SAIs need to be more engaged in this area
Gender equality lies at the heart of many of the SDGs. SAIs can lead by example in this.
41% of SAIs now have a gender policy in 2017, up from 35% in 2014
17% of SAIs did a dedicated audit on gender; 19% include gender assessments in their audit work

14. Providing Capacity Development Support: Sources & Tools
FINDINGS: Within INTOSAI, SAIs leverage and learn from increasing peer support – both within and between regions – and from global public goods
Source: Global Survey
Number of SAIs Engaged in Peer-to-Peer Support, by INTOSAI region
Despite the encourage trends found in the global survey, we all know there are challenges remain in matching SAI needs to available, appropriate support and timely funding mechanisms
We know from the evaluation of the INTOSAI-Donor Cooperation that matching mechanisms, such as the global call, face challenges. It has never been easy for donors to mobilise funding quickly in response to SAI needs, and to find the perfect match between what a SAI wants, and the developmental (and sometimes political) priority of donor partners.
On the INTOSAI side, we also see that while there a huge numbers of SAIs that could lend a resource person for an audit training course, there are more limited numbers of SAIs or INTOSAI entities willing and able to act as the lead entity on large scale bilateral SAI capacity development initiatives, especially in non-English speaking countries
We also know that bringing in new peer to peer partners is not always the ideal solution. In fact, the availability of long term support, and the benefits of partners having existing knowledge of the SAI they support, are key success factors to effective SAI capacity development.
Together, we need to continue to think through how we can strengthen the matching of SAI needs with the funding and peer to peer support that is available within our respective communities.

15. Providing Capacity Development Support: Effectiveness
FINDINGS: While extensive SAI capacity development support is being provided, we still need to improve behaviours to make support more effective
Some support is still not aligned behind SAI-led strategies
Support reflecting donor or provider priorities rather than SAI needs cited as second top reason for failure of capacity development projects (INTOSAI Global Survey)
Stronger strategic planning and firmer SAI leadership can help
Coordination of support by different providers improving, but remains weak
% of developing countries with an effective donor coordination group increased from 35% in to 47% in 2017 (INTOSAI Global Survey)
Top success factor for strengthening coordination is SAI’s taking responsibility and leadership for donor coordination (INTOSAI Global Survey)
While there are still unfortunately cases of donors and providers of support pursuing there own – well intentioned – priorities, all evidence suggests that programs which are not strategic priorities for the SAI will not lead to sustainable change in capacity and performance.
We also still see, in some cases, incentives which encourage SAIs to participate in too many programs, without consideration of their capacity to absorb the results of each initiative. Again, strong SAI leadership to be selective and strategic in which initiatives to pursue is essential. And for providers of support to reflect on the SAI’s existing support before proposing and commencing additional support.
Further, coordination of support remains perhaps the most significant challenge to effectiveness of capacity development. This is a key focus area for the INTOSAI-Donor Cooperation. Encouragingly, we do see increases in the figures for donor coordination groups. And again we note the role that SAI leadership needs to take in proactively strengthening coordination. All cases we have seen where coordination is strong is because the SAI leadership had decided to make effective coordination a priority, and has actively led this process.

16. Providing Capacity Development Support: Impact
FINDINGS: Participation in capacity development initiatives does not always translate into sustainable changes in SAI capacity and performance
Why?
The SAI participated for other reasons – it was not a strategic priority
Resource constraints and blockages within SAIs and lack of change management support prevented adoption of new tools (Global Survey Finding)
Limitations to professional staff capacity prevent roll-out across the organisation
SAIs make steps forward, but external factors (including conflict, budget and staff retention issues) cause performance to deteriorate
This is the biggest and toughest challenge we face. Why do our considerable capacity development efforts sometimes not lead to the sustainable changes in capacity and performance we hoped for. There is no easy answer here, but I offer you a few possibilities. The more we can understand the critical success factors for sustainable change, the better we will be able to design effective capacity development initiatives in the future.

17. Summary: Where do the Challenges Lie?
Least developed and other low income country groups lag behind on almost every data set
No specific analysis according to state fragility
SAIs continue to face serious challenges on SAI environment & independence
ISSAI implementation remains a global challenge
Even for developed countries

18. What Needs to Change? SAI & Donor Behaviour
Ensure all SAIs lead on their own development
Improve the way support is provided, esp. coordination and alignment
Increase focus on SAIs in the most challenged environments
Proactive engagement in fragile states
Not business as usual
Strengthen matching of support
Expand INTOSAI’s peer-to-peer support capability for long term partnerships
Improve timeliness of funding mobilisation

19. Thank you www.idi.no www.idicommunity.orgor
IDI Focus and INTOSAI-Donor Cooperation Newsletter
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