1. M EASURING IA S UCCESS ? P OLISH PERSPECTIVE Konrad Knedler, CIA, CGAP O CTOBER 4, 2011

2. www.auditsolutions.pl 2 IA IN P OLISH PUBLIC SECTOR BASIC FEATURES Decentralised IA function Initial legal framework were laid down in 2001 – mandatory requirements Many, rather small units in ministries, government offices, quangos and local government Soft coordination (and quality assurance) – Ministry of Finance IIA standards in force Recognition of IIA qualifactions Functional reporting to top management (ministries, CEOs, mayors) Audit Committees at ministries level Coexistence with Control, Inspection type units

3. www.auditsolutions.pl

6. 6 IC IN P OLISH PUBLIC SECTOR BASIC FEATURES 2001 – start with the concept of financial control 2010 – management control (MC) concept COSO based framework MC is top management responsibility Ministers and other top managers issue Declarations of Assurance (avaliable on www) Only 5 of 17 ministries issued clean DAS Reservations concerned mostly the lack of risk management process No liaison (so far) between DAS and budgetary discharge procedure

7. www.auditsolutions.pl 7 W HAT S THE P ROBLEM ? W HAT IS IA FOR ? Ex ante IA existence justification: As easy as that – legal requirements EU negotiations commitments SAI recommendations to professionalise existing Control inspection type units Calls for Value for Money Ex post IA existence justification : Compliance focus – is it enough? What was in lawmakers minds? Where is added value? What are IA costs? What are CLEAR benefits for IA existence?

8. www.auditsolutions.pl 8 IA INDICATORS Compliance oriented Independence Charter Audit process as defined in regulations Timeliness as defined in regulations Performance oriented Time consumed for audit activities (target 70%) Savings? Audit area focus

9. www.auditsolutions.pl 9 P UBLIC SECTOR INTERNAL AUDIT BENCHMARKING – M O F R EPORT SEPT. 2011 Start of benchmarking process Source of criteria for selfassessment Limited to government sector Organisations grouped by: empleyees number, expenditure level, IA size, type (ministries, central officess), number of auditors/number of staff Measures based on: Performance Measures for Internal Audit Functions: A Research Project 3 performance measures categories based on: Outcomes Quality Efficiency Impact

10. www.auditsolutions.pl 10 O UTCOMES BASED MEASURES Number of assurance assignments Number of consulting assignments Number of recommendations

11. www.auditsolutions.pl 11 N UMBER OF ASSURANCE ASSIGNMENTS IN DIFFERENT TYPES OF ORGANISATIONS

12. www.auditsolutions.pl 12 Q UALITY BASED MEASURES Auditors turnover Audit certificates Auditing experience Quality assurance techniques

13. www.auditsolutions.pl 13 A UDITORS TURNOVER IN DIFFERENT TYPES OF ORGANISATIONS

14. www.auditsolutions.pl 14 E FFICIENCY BASED MEASURES Audit duration Audit workload Auditing as % of IA time budget Accepted recommendations

15. www.auditsolutions.pl 15 A UDIT WORKLOAD - ASSURANCE MANDAYS / NUMBER OF ASSURANCE PROJECTS

16. www.auditsolutions.pl 16 I MPACT BASED MEASURES High risk areas covered by IA Audit cycle

17. www.auditsolutions.pl 17 H IGH RISK AREAS COVERED BY IA

18. www.auditsolutions.pl 18 IA MEASURES - W ORRIES One dimension assessment always fails. A need for multidimensional appraisal Every measure can be interpreted in different way. White or black situations are really rare Contextual perspective is essential. IA is as matured as organisation for which it serves Common distrust in benchmarking – specificity as an excuse

19. www.auditsolutions.pl 19 F URTHER CONSIDERATIONS Rationality What is profit maximizing for IA? Goals consistency Top management and IA – are they working for the same (common) good? Independence Help or obstacle? Top management vs IA perspective. Performance Performance or compliance – what goes first?

20. www.auditsolutions.pl 20 P OTENTIAL FOR IA RATIONALE Proactive involvement in management control and risk management processes, performance based budgeting and other projects – agent of changes Auditing external actions – subordinate and supervised bodies. Focus on savings – VFM audits Meeting Boards expectations More data analyses job

21. T HANK YOU konrad.knedler@auditsolutions. pl www.auditsolutions.pl