The audit was conducted within the framework of the Public Works Audit Working Group (GTOP) of the Organization of Latin American and Caribbean Supreme Audit Institutions (OLACEFS), through compliance audits, with the participation of the SAIs of Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Honduras, Mexico, Paraguay, Peru and the Dominican Republic.
The objective of the coordinated audit was to evaluate, through compliance reviews, the quality of road construction and maintenance works under the direct administration of government, covering from preliminary studies to the execution of the works.
Due to the participation of several countries in the audit, it was necessary to set crosscutting and common audit criteria for the audited object. The criteria that were evaluated were distributed according to the phase of the project: contracting of companies, design, execution of the works, oversight of the works, and changes in design after project contracting.
The evaluations carried out in the audits were based on guidelines that describe those practices whose observance was considered essential for good quality works. In planning the audit within its territory, each SAI took on the responsibility of identifying the legal and regulatory provisions adopted in their country related to the guidelines.
Practical Advice for Auditors of Foreign Aid Projects in the Pacific: First Co-Operative Financial Audit
Report ID: 242
The regional co-operative audit of funds provided by foreign aid was the first pilot for a co-operative financial audit conducted by the Pacific Association of Supreme Audit Institutions (PASAI) under its co-operative audit program. Supreme Audit Institutions (SAIs) in six Pacific Island Countries (PICs) conducted individual audits. This report summarises the findings across the six individual audits conducted and identifies some of the common weaknesses in the audit of foreign aid projects. Furthermore this pilot program resulted in multiple observations and lessons learned which will assist SAIs in the conduct of financial audits of foreign aid projects in the future.
It is expected that both SAIs and development partners in the Pacific Region may learn valuable lessons from individual SAI reports as well as from this regional report to improve and enhance the quality of the audits of funds provided by foreign aid.
Six SAIs participated (Cook Islands, Fiji, Kiribati, Samoa, Tonga and Tuvalu), with 12 participants attending the planning meeting and 10 participants attending the final reporting meeting.
The conduct of a financial audit does not include any scope for the auditor to comment on the efficiency or progress of the project itself or the effectiveness of the foreign aid received by government. This scope falls under the audit requirements of a performance audit. On this basis, the audit reports provided an audit opinion on compliance with the funding agreement.
The audit findings that resulted from the audits are summarised as follows:
1. non –compliance with the funding agreement in relation to procurement processes and reporting requirements
2. weak controls over the disbursement of payments
3. poor record management systems
4. lack of asset management processes in place (no fixed assets register)
5. budget reports were not sufficiently comprehensive and were sometimes not prepared according to funding agreements (or project operational manuals)
6. untimely budget reporting which limits their usefulness
7. lack of evidence of governance arrangements such as no signing of minutes of steering committees and no sign off by review panelists to engage contractors
The management responses received from the auditees were positive and in support of the audit recommendations raised by the SAIs.
Overall the foreign aid for these projects was generally managed effectively and as a result the findings were not pervasive and the audit opinions issued were therefore unmodified. However, these audit findings are repeated year after year and usually the auditors do not follow up on the implementation of recommendations until the next annual audit. If these audit issues are not addressed by the implementing agency when the auditors raise them, this increases the opportunity in the future of risk of theft, fraud and misappropriation of funds or assets.
Details of the audit scope, including what constitutes a risk-based approach to financial auditing and audit findings can be found in Section 1 and Section 2 of this report.
The International East Carpathians Biosphere Reserve, similarly to other biosphere reserves, should meet the criteria and functions specified by the UNESCO and included in the Statutory Framework, and should be directed by the guidelines for actions specified by the UNESCO in the Seville Strategy and the Pamplona Recommendations.
Between 2014 and 2015, as part of the activities of the EUROSAI WGEA, the SAIs of Poland (Audit Coordinator), Slovak Republic and Ukraine decided to perform a parallel audit to evaluate the activities carried out on the territory of the International Biosphere Reserve of the Eastern Carpathians for their National and Landscape Parks which form the reserve on the Slovak, Ukrainian and Polish side and ensure implementation of the objectives, for which the biosphere reserve has been established.
The inspection consisted of the following issues:
• activity of the national authorities, related to the functioning of the Reserve and the entities it incorporates, including international cooperation;
• public funds intended for the functioning of the IECBR and for the functioning of the entities it incorporates, as well as the manner in which these funds are to be used;
• implementation of the provisions included in the regulations and other official documents concerning the functioning of the Reserve and entities it incorporates.
These issues were included in the “Joint inspection areas”, and each Party incorporated them for implementation within the national inspections.
Period subject to the inspection: Years 2012–2016.
Inspections – at the same time in Poland, Slovakia and Ukraine – have been conducted in the first half of 2017.
The objectives of the International East Carpathians Biosphere Reserve are being implemented, but it is not the Reserve that implements projects in its area – the parks that form theReserve perform statutory tasks resulting from national regulations and not specified as tasks of the biosphere reserve.
Supreme audit institutions of Slovakia, Ukraine and Poland, on the basis of the results of parallel audits, state that for proper determination – and effective implementation – of the common strategy of the Reserve, common priorities and objectives, it is necessary to take action by the competent authorities of the three countries to conclude an intergovernmental agreement in on the functioning of the Reserve.
Report of the Task Force on European Banking Union on prudential supervision of medium-sized and small (“less significant”) institutions in the European Union after the introduction of the Single Supervisory Mechanism
Report ID: 259
As from 2008, Europe was hit by a financial crisis and a subsequent sovereign debt crisis. Many governments supported failing financial institutions with public funds amounting to hundreds of billions of euros. In response, the countries of the euro area introduced the European Banking Union, including a Single Supervisory Mechanism. In this Mechanism, the European Central Bank is directly responsible for prudential supervision of all ‘Significant Institutions’. National Competent Authorities are directly responsible for supervising the ‘Less Significant Institutions’, based on guidance of the European Central Bank.
The Supreme Audit Institutions of Austria, Cyprus, Finland, Germany and the Netherlands carried out a parallel audit to examine banking supervision at national level. The objectives of the parallel audit were:
1) to gain insight into differences among EU Member States in the way supervisors have set up and carry out prudential supervision for LSIs, and
2) to collect evidence about possible ‘audit gaps’ that may have emerged as a result of the introduction of the Single Supervisory Mechanism.
One of the findings was that a comprehensive audit mandate assessing the supervisory review and evaluation process of banking supervision is no guaranteed in the Single Supervisory Mechanism(SSM) and that before November 2014, National Supreme Audit Institutions audit scope went far beyond what the ECA is able to exercise today vis-à-vis the ECB.
EUROSAI website: https://www.eurosai.org/en/databases/audits/Report-of-the-Task-Force-on-European-Banking-Union-on-prudential-supervision-of-medium-sized-and-small-less-significant-institutions-in-the-European-Union-after-the-introduction-of-the-Single-Supervisory-Mechanism/