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3 – SUPREME AUDIT INSTITUTIONS’ INPUT INTO POLICY IMPLEMENTATION – 111
Box 3.2. The SAI of Poland – the annual state budget execution audit (continued)
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Criteria
Country laws, KNIS, entity objectives, foreign laws (EU regulations), international principles (INTOSAI, EUROSAI and IFAC standards).
Resources
The budgetary audit was carried out between January and May 2015, mainly by SAI auditors with experience of financial and performance audits. Auditors also needed a good knowledge in the area of management control systems in order to analyse financial statements and their individual elements. Audit activity was supported by the Computer Analysis Assisted Tool, the SAI’s own software solution for statistical sampling and databases analysis. The help of external experts and specialists was not needed.
Outcomes
Audit results, presented both in the form of aggregated analysis and reports corresponding to approximately 80 budgetary elements, are discussed with relevant parliamentary committees. The analysis constitutes the basis on which Parliament issues the resolution granting discharge to the government for the financial year. Some audit results are subject to media attention.
Good practices used
The budgetary audits influence the improvement of financial management in the public sector. As a result of the last budgetary audit, Poland’s SAI, NIK, recommended changes including: the implementation of performance budgeting, broadening and strengthening the internal control system, the application of international accounting standards, and IT techniques development. When taking a multi-year perspective, the soundness of financial management has been significantly enhanced.
Lessons learned
The SAI has changed its approach to budgetary audits in an attempt to apply more risk analysis and to concentrate on areas where the usage of auditing resources is the most effective. The SAI has also become more accustomed to IT advances, especially in statistical sampling processes.
General utility of the budgetary audit is connected to stakeholders’ interests. It is therefore necessary to link typical financial (compliance) audits with performance audits, as these results are more interesting for stakeholders.
Further reading
www.nik.gov.pl/plik/id,6907.pdf. www.nik.gov.pl/analiza-budzetu-panstwa/archiwum/.
Source: OECD Survey of Peer Supreme Audit Institutions; further reading links above.
SUPREME AUDIT INSTITUTIONS AND GOOD GOVERNANCE: OVERSIGHT, INSIGHT AND FORESIGHT © OECD 2016
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Exercise of internal control and risk management
Box 3.3. The SAI of the Netherlands – assessing financial risk exposure of government
Objective
Since the 2008 credit crisis, financial ties between the Netherlands and the international institutions that are assisting European countries and banks in financial difficulties have grown considerably stronger. The Court of Audit has studied the financial ties between the Netherlands and eight of these institutions, including their financial profiles and the measures the Netherlands has taken to mitigate the risks.
The value of the guarantees the Netherlands has given to international institutions and of the interests it has taken in them to combat the European debt and banking crisis has increased in recent years from EUR 18.5 billion (3% of GDP) in 2008 to EUR 201 billion (33% of GDP) in 2012. In view of this sharp increase, parliament requires an insight into: which risks are shared, how the institutions mitigate the risks, the institutions’ precautionary balances, and the risk to the Netherlands.
Type
Financial audit, performance audit.
Scope
Eight factsheets have been prepared that show the financial ties between the Netherlands and the eight financial institutions. Information includes the financial profiles of the institutions and the measures taken by them to mitigate risks. Wherever possible, public information published by the institutions and the Minister of Finance in their annual reports was used.
Methodology
The risks to public finances have increased in recent years, but they are not periodically and comprehensively mapped out. The House of Representatives therefore cannot see at a glance what risks public finances are facing, their potential consequences and how they can be controlled. In a series of reports, the Netherlands’ SAI tries to present a comprehensive understanding of the situation.
Criteria
Country laws, Foreign laws, international standard.
Resources
280 days of work.
Outcomes
The minister could have informed parliament more proactively and explicitly. The SAI would have expected information on: the reasons for the proposals, the exact duration, the assets and events guaranteed, and the consequences for the institutions lending capacity. The Minister of Finance should provide parliament with timely, explicit, appropriate and concrete information on future budget proposals involving international institutions. This would also be in keeping with the Risk Arrangements Committee’s recommendation that the minister pro-actively provide parliament with appropriate and concrete policy-related explanations by submitting the completed assessment frameworks for new risk arrangements.
Good practices used
The audit is part of a series of audits on the sustainability of public finances. In the last couple of years, Netherlands’s SAI has repeatedly put this topic on the political agenda and tried to raise the awareness of parliament. The SAI has, with this series, made the minister of Finance more thoroughly consider what information is needed to make and monitor decisions in this field.
SUPREME AUDIT INSTITUTIONS AND GOOD GOVERNANCE: OVERSIGHT, INSIGHT AND FORESIGHT © OECD 2016
