2.5. SAI activities in assessing policy formulation

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Examining internal controls has always been a traditional task of SAIs, and depending on the audit and control architecture, SAIs may also be responsible for setting internal control guidelines and oversight. Even when another entity (usually a centre of government body) is responsible for developing and co-ordinating a whole-ofgovernment control system, SAIs have an active role in promoting good practice in the development, implementation and evaluation of risk management and internal control arrangements. To carry out this role they rely on the wealth of information gathered from years of experience in auditing public entity controls.

The role of SAIs goes beyond assessing controls ex post, and nine out of ten SAI peers have looked at processes for the development of internal control guidelines. In France, these elements are systematically integrated into the financial auditing framework. Over half of peer SAIs have looked at the overlaps and synergies between actors involved in creating and implementing those controls.

Examples of SAI work in this area include:  In response to pervasive issues in establishing a coherent whole-of-government system for internal control and audit, the US GAO adopted international COSO principles and applied them to the public sector to create Standards for Internal Control in the Federal Government, known as “the Green Book”. The GAO works with state level audit offices to disseminate good practice and build the capacity of auditors to integrate this good practice into their own audit work and then share it with relevant co-ordinating bodies (such as the Office of Management and Budget at the federal level). The Green Book has been considered internationally as a useful guide as it is free and accompanied by supporting guidance documents (GAO, 2014c).

The clear establishment of autonomy, roles and responsibility of audit and control bodies (Table 2.4, key element C)

SAIs have a unique role in relation to establishing effective internal control mechanisms as they are both the overseer of control execution (discussed in Chapter 3), and, in some cases, responsible for developing guidance on implementation of internal control measures. Six out of ten peer SAIs provide written guidance on establishing rules and controls, and five out of ten undertake research in this area.

SAIs base their guidance and assessments of internal controls on internationally accepted principles,7 in addition to national legislation. This helps them to build subject matter expertise regarding integrated risk management and internal control techniques.

SAIs can play a vital role in the execution of controls by providing an external independent assessment on the quality and impact of internal control mechanisms across all entities. In a context of fiscal consolidation and austerity measures, it is important for SAIs and the government’s principal financial management agency (Ministries of Finance) to co-operate in order to achieve the most comprehensive and effective system for managing and controlling the budget.

Some SAIs collaborate with international agencies in order to access the best audit criteria and promote better governance. Guides that may be of use for SAIs, and for the public sector more broadly, include:  Internal Audit in Practice: A series of case studies produced in collaboration with the National audit Office. The NAO teamed up with the Chartered Institute of

SUPREME AUDIT INSTITUTIONS AND GOOD GOVERNANCE: OVERSIGHT, INSIGHT AND FORESIGHT © OECD 2016