1. © OECD UKRAINE GOVERNANCE ASSESSMENT 2006

2. © OECD Sigma Ukraine governance assessment External Audit Francois-Roger.Cazala@oecd.org

3. © OECD External audit baselines questions Clear authority to audit all public and statutory funds and resources, bodies sand entities ? Full range of regularity and performance audit as from INTOSAI standards ? Necessary operational and functional independence ? Fair, factual and timely reports ? Is work considered by Parliament ? Adoption and implementation of auditing standards ? Involvement in international activities ?

4. © OECD Clear authority to audit all public and statutory funds and resources, bodies sand entities T he ACU has a satisfactory audit mandate covering all budgetary income and expenditure in line with international requirements, but only since January 2006 when the restriction concerning revenue was lifted. Full range of regularity and performance audit as from INTOSAI standards ? The ACU audit work until now has been mostly limited to legality aspects. The ACU has to undertake a substantial effort to cover also regularity and performance issues as defined by the international auditing standards. The approach and the concept of the annual audit on the execution of the budget need to be revisited.

5. © OECD Necessary operational and functional independence ? The legislation provides the ACU with a satisfactory base for its functional and operational independence. However there are still need for improvements, in particular in the key field of programming the audit work Fair, factual and timely reports ? Too much of the ACU resources is assigned for analytical work, based on data and information obtained from other institutions without proper verification through audit work. Little added value of ACU reports

6. © OECD Is work considered by Parliament ? Little impact of the ACU work in Parliament’s activity and discussion on the budget Adoption and implementation of auditing standards ? The existing methodological framework of the ACU audit work is insufficient, as it mostly focuses on procedural aspects. Therefore further work is needed to adapt the recognized international standards and to implement them into the work practice Involvement in international activities ? Active participation of the ACU, in the international SAI cooperation

7. © OECD To sum up…………. lA new and key institution born from nearly nothing lDeveloped in a short period of time lAnd in a context of continuous struggle with the Executive, (now over ?)

8. © OECD lFormal compliance of ACU with most standards of INTOSAI : very much comparable to the situation of other SAIs in Central and Eastern Europe lACU not immune of shortcomings identified in Ukrainian PA lStill more « the KRU of Parliament » rather than a true Supreme Audit Institution lStill misunderstandings about what proper role should be : stop being yet another irregularity-hunter and a competitor with other « control bodies », but becoming a contributor to sound management of public finance lThe annual report should become the matrix business lToo small size for the mandate

9. © OECD However…. it is possible to say lThat external audit in Ukraine generally meets the requirements of INTOSAI, in particular with regards to independence and audit remit BUT lFurther work is needed to move towards an efficient Supreme Audit Institution, involving a degree of cultural change and of stakeholders’ awareness raising

10. © OECD This implies (amongst others )… lA long-term comprehensive development strategy lRevisiting the annual audit approach lRevisiting the balance of work between own programme and “upon request”, as well as between analytical and audit work lReform internal procedures lDefine policies in key areas of work lAssess current impact of audit activity lContinues international cooperation