IDI ISSAI Implementation Initiative – 3i Programme

Ines MetsaluHead of Financial Audit Department

National Audit Office of Estonia

Agenda

• Objectives for 3i Programme• Product Development Meeting for iCAT in Oslo• iCAT and other outcomes of the first stage• Envisaged activities for 2012-2013• Discussion points for FAS

Objectives for 3i Programme

• To assess needs at regional and SAI level regarding ISSAI implementation at level 2 and level 4(financial, compliance and performance audit) of the ISSAI framework.

• To create capacity for implementation of ISSAIs in AFROSAI-E, ASOSAI, CAROSAI, PASAI and EUROSAI.

• To facilitate ISSAI implementation rollout (financial, compliance and performance audit) at regional and SAI level for developing countries of English speaking regions.

• To provide a web based knowledge sharing forum for 3i programme and products.

Steps in implementation of 3i programme

• Activities in 2012 and beginning of 2013:– Development of the product iCAT in July 2012;– ISSAI certification programme for ISSAI facilitators delivered

through UNITAR e-learning platform in October-November 2012;– Management workshops in all regions in 2012-2013.

• Envisaged activities for 2013 and onwards:– Development for Audit Manuals and Model Audit Files;– E-course on financial, compliance, performance audit;– ISSAI compliance assessment in SAI-s;– Facilitate ISSAI implementation at SAI Level.

Roles and responsibilities of FAS

• Draft of Cooperation Agreement between FAS and IDI:– Participate in the planning of the programme;– Provide contents and subject matter expertise for development and

delivery of certification programme for ISSAI Facilitators – Financial Audit;

– Provide contents and subject matter expertise for development of audit manual, model audit file and iCAT for financial audit;

– Provide subject matter expertise for design and delivery of 3i Management Workshops, iCAT and ISSAI roll out at SAI level.

• Cooperation agreement vs practice in Oslo

Product Development Meeting for iCAT in Oslo

• Expected outcome in Oslo– iCAT for level 2 and level 4 ISSAIs;– E-learning and certification programme for seven weeks:

• Pre course test• Core Text introducing financial audit• Exercises, case studies etc and suggested solutions• Discussion Forum – topics, issues, questions• Evaluation• Further Reading • Links• Glossary of key terms• Interviews• Video

Product Development Meeting for iCAT in Oslo (2)

• Three weeks• Altogether 22 participants including supportive staff of IDI• Group of six people worked on financial audit:

– Margaret Te Paeru-a-te Ara Numanga from SAI of Cook Islands; – Carolyn Dawn Lewis Watson from SAI of Jamaica; – Luz Loreto Tolentino from SAI of Philippines; – Josephine Mukomba from AFROSAI-E; – Khalid Hamid from SAI of United Arab Emirates; – Ines Metsalu from SAI of Estonia.

 

Outcomes from product development - iCAT

• Expectation of IDI:

iCAT as compliance assessment tool must reflect ALL requirements of corresponding guideline.

• Decided in the financial audit working group:– All ISA requirements are included:

• Easy to identify requirements– Some guidance from of Practice Notes are included;– To make it as user-friendly as possible:

• Institutional level vs audit level;• Pre engagement, planning, fieldwork, reporting;• Reference to guidance (PN-s and ISA application paragraphs);• How to comply?

An example from iCAT

Compliance Requirement Reference to ISSAI

Reference to PN

Institutional level (IL)/ audit level (AL)

Audit flow: pre-engagement; planning; fieldwork; reporting

Guidance and application material

How to comply? The status of compliance: met, partially met, not met, not applicable

As part of obtaining an understanding of the entity and its environment in accordance with ISA 315, the auditor shall obtain a general understanding of:(a) The legal and regulatory framework applicable to the entity and the industry or sector in which the entity operates; and(b) How the entity is complying with that framework.

ISSAI 1250. 12

AL Planning (Ref: Para. A7)

planning document

Outcomes from product development: iCAT (2)

• Do we add value?– Should iCAT be a quality assurance checklist or help the

implementation process?• Comment from FAS Secretariat

– If iCAT where supposed to be a tool to measure the possibilities to implement the ISSAIs in SAIs environment and to identify areas where they don't have a possibility to comply listing all the requirements of the ISAs is not the right approach.

• Possible solution– Second set of iCAT where 125 “important” requirements were

identified• Requirements that determine the audit process;• Items which are fundamental to the day to day operations of the audit;• Requirements which if satisfied will substantially embrace other

requirements.

Example of iCAT

Compliance Requirement Reference to ISA

Reference to PN

Institutional level (IL)/ audit level (AL)

Audit flow: pre-engagement; planning; fieldwork; reporting

Guidance and application material

How to comply? Important requirement in starting phase of implementation: yes

The auditor shall comply with relevant ethical requirements, including those pertaining to independence, relating to financial statement audit engagements.

ISSAI 1200.14 P17 IL-AL Starting at pre engagement

ISSAI 1200 Ref: Para. A14-A17

SAI policy, working papers

yes

Outcome of product development - E-learning course for iCAT facilitators

• Objective: train the facilitators to carry on the iCAT assessment– 60 participants based on a pre-test have been selected

• Working group prepared E-course on financial audit includes following modules:– Week 1 – Introductory Module;– Week 2 – Common Module on Level 2;– Week 3 – FA pre engagement;– Week 4 – FA planning;– Week 5 – FA conducting fieldwork;– Week 6 – FA audit conclusion and reporting;– Week 7 - Common Module on Reporting iCAT results.

Outcome of product development: E-learning course for iCAT facilitators (2)

• For preparing the e- course the working group decided:– Core-text: to highlight the main concepts of standards, not

explaining each standard, for each module 10 pages;– Exercises and discussion forums: getting familiar with iCAT;– Reading materials:

• ISSAI 1000-2999 General Auditing Guidelines on Financial Audit; • IFAC guidance into IFAC Guide to Using International Standards on

Auditing in the Audits of Small- and Medium-Sized Entities Volume 1 – Core Concepts;

• IFAC guidance IFAC guide for Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities Volume 2—Practical Guidance;

• Quality assurance manual of CAROSAI; AFROSAI-E model audit file; The International Public Sector Accounting Standards (IPSAS).

• FAS is expected to provide a mentor for e-course.

Activities for 2013

• Management workshops in five regions– Target: senior management of SAIs to create awareness of ISSAIs

and introduce iCAT.• FAS participation at seminars is expected

• Pilot run of iCAT in selected SAIs– IDI is looking for volunteers among SAI-s

• Next product development in 3i Programme in summer 2013– Development for Audit Manuals and Model Audit Files

• FAS participation is expected

Discussion points for FAS

• How to start with ISSAI implementation process?– Could the iCAT with critical requirements be a way forward?

• How to support SAI-s with limited resources?• How to deal with issues in PN-s that seem to need

clarifications?– The issues the working group identified were addressed in a letter

to FAS• How to deal with practice of SAIs without no clear distinction

between financial audit and compliance audit?• The role and responsibilities of FAS

– Role of the expert and quality of products