1. Session 4, Group 2: Data completeness and reliability - the role of Supreme Audit Institutions (SAIs) and how to rely on their work
27 November 2017

2. Supreme Audit Institutions
The highest Audit Institution of a country
Oversees the management of public finances, including government revenue from extractive industries
Independent and professional

3. The accountability chain

4. Three types of audit Financial audit Compliance audit
Performance audit

5. Example of audit Zambia:
Mineral royalty tax calculation: production volume*copper price*royalty tax %
Risk: Under-reporting of production volumes results in less mineral royalty tax
Audit result (2016 audit report):
- Ministry of Mines does not receive production returns from all companies
- Mineral royalty tax calculated based on mining companies self-declaration
- Ministry of Mines does not share production volume reports with Zambia Revenue Authority
- Ministry of Mines does not carry out inspection on exit points

6. Example of audit Kenya: IT Audit of the accounting system, IFMIS
Used to record government revenue, including extractive industries revenue

7. Lesson learned?
SAIs are in a unique position to audit the whole extractive industries value chain
Access to information
Independent
Cour de Comptes vs Inspection generale des finances

8. Lessons learned?
IT audit is important! Encourage the SAIs to perform IT audit on the financial accounting system used for recording revenue It will give you assurance on whether or not to rely on government revenue figures prepared by Ministry of Finance

9. International standards of Supreme Audit Institutions (ISSAIs)
Internationally recognized auditing standards for public auditing
Developed and maintained by the International Organisation for Supreme Audit Institutions (INTOSAI)
Applying the ISSAIs is the best way to ensure quality of audits

10. How to rely on the work of SAIs - ways of measuring quality
Sources of verification:
Supreme Audit Institution Performance Measurement Framework (SAI PMF)
Public Expenditure and Financial Accountability (PEFA)
Indicators 30 and 31

11. SAI PMF assessment SAIs are assessed on a number of indicators
Quality of audit work is assessed and scored;
0-4
The framework also
includes cour de comptes
Domain A
SAI Reporting Score
SAI-1
Financial Audit Results 1
SAI-2
Compliance Audit Results
SAI-3
Performance Audit Results 2
SAI-4
Judgment Results 3
Applying the framework enables you to have an opinion on whether the independent assessor (the SAI) conforms with the requirements in 4.9 of the EITI standard

12. Challenges facing SAIs
Lack of independence:
27 July 2017
Former finance minister says: «Its a political decision. Chiri has been causing pain in government»

13. Challenges facing SAIs
Poor financial record management in government Low funding of SAIs