1 / 15

THE INTOSAI WORKING GROUP ON KEY NATIONAL INDICATORS

THE INTOSAI WORKING GROUP ON KEY NATIONAL INDICATORS. INITIAL ASSESSMENT White Paper on the Audit of Macroeconomic Forecasts Dmitry Zaytsev Accounts Chamber of the Russian Federation. Brasilia, Brazil, April 26, 2017. INITIAL ASSESSMENT

genera
Download Presentation

THE INTOSAI WORKING GROUP ON KEY NATIONAL INDICATORS

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. THE INTOSAI WORKING GROUP ON KEY NATIONAL INDICATORS INITIAL ASSESSMENT White Paper on the Audit of Macroeconomic Forecasts Dmitry Zaytsev Accounts Chamber of the Russian Federation Brasilia, Brazil, April 26, 2017

  2. INITIAL ASSESSMENT White Paper on the Audit of Macroeconomic Forecasts The project objective (Purpose) Developing standard within the ISSAI Framework Guidance from other internationally recognized, regional or national standard setters ISSAI Category Target Group The categories of auditing in the project The tasks within the project (Scope - Content) Author-Committee KSC

  3. INITIAL ASSESSMENT White Paper on the Audit of Macroeconomic Forecasts THE PROJECT OBJECTIVE (PURPOSE) • Enhance SAIs’ role in the assessment of reliability and soundness of macroeconomic forecasts • Expand the scope of analysis of fiscal projections conducted by SAI’s with an auditors opinion on the reliability and soundness of macroeconomic forecasts • Highlight the importance of reliable macroeconomic forecasts in policy development and achievement of strategic goals • Support feasibility of strategic goals attainment via application of reliable macroeconomic forecasts in decision making process

  4. INITIAL ASSESSMENT White Paper on the Audit of Macroeconomic Forecasts DEVELOPING STANDARD WITHIN THE ISSAI FRAMEWORK • Fundamental Principles of Financial Auditing (ISSAI 200) • Fundamental Principles of Performance Auditing (ISSAI 300) • Guidelines on the evaluation of public policies (INTOSAI GOV 9400) • Value and Benefits of SAIs-making a difference to the life of citizens (ISSAI 12)

  5. INITIAL ASSESSMENT White Paper on the Audit of Macroeconomic Forecasts THE TASKS WITHIN THE PROJECT (SCOPE - CONTENT) • The document should be developed to: • determine the place of audit of macroeconomic forecasts within SAI’ activities • review the best practice of the audit of macroeconomic forecasts • arrange (systematize) the process and procedures within the audit, audit issues, criteria and methods • develop proposals on the SAI’ capacity building

  6. INITIAL ASSESSMENT White Paper on the Audit of Macroeconomic Forecasts

  7. INITIAL ASSESSMENT White Paper on the Audit of Macroeconomic Forecasts • Macroeconomic forecast methodology complies with the methodology’ requirements, rules and regulations laid down in international or national regulations • Finland: the IMF (2007) and the OECD (2002) recommend that the assumptions concerning the forecasts should be reported and explained openly and clearly and the risks associated with the assumptions should be reviewed. Similar requirements are also laid down in EU legislation (Budgetary Frameworks Directive and the Regulation on Monitoring and Assessing Draft Budgetary Plans) • Lithuania: the current regulatory legislation does not foresee the procedure for preparing an economic development scenario and the periodicity of its preparation

  8. INITIAL ASSESSMENT White Paper on the Audit of Macroeconomic Forecasts • Cooperation between ministries in the process of forecast preparation, interdepartmental coordination • Figures and indicators used in forecasting and the requirements applied to them • Finland: The figures presented in the economic surveys were compared with the statistical data published by Statistics Finland. • Malta: The econometric model used in this forecasting run is based on the latest data issued by the National Statistics Office and all equations in the system have been re-estimated to reflect the recent available data and economic trends. The current forecasting process incorporates a set of variables which are treated as completely exogenous to the system of equations. Assumptions relating to international developments, are adapted from assumed estimates provided by reputable international institutions, in particular the European Central Bank, the European Commission and Consensus Economics.

  9. INITIAL ASSESSMENT White Paper on the Audit of Macroeconomic Forecasts • The main characteristic of forecast is its comparability and consistency • Finland: The macroeconomic and budgetary forecasts must be compared with the most updated forecasts of the European Commission and, if appropriate, those of other independent bodies. • Malta: Comparison of MFIN forecast with other institution’s expectations for the Maltese economy and with those generated by the European Commission. A comparison of the macroeconomic projections with those generated by the Central Bank of Malta.

  10. INITIAL ASSESSMENT White Paper on the Audit of Macroeconomic Forecasts • The most important step in auditing the forecasts is revising of internal controls and procedures in place • The system of internal control should show the accuracy of a forecast which means that the forecast is as close as possible to the data entered in the statistics • Finland: The accuracy of the economic forecast was compared with those produced by the most important Finnish economic forecasting institutes, the European Commission and the OECD. The Ministry of Finance's forecasts are mainly based on expert discretion. There are no comprehensive methodological descriptions.

  11. INITIAL ASSESSMENT White Paper on the Audit of Macroeconomic Forecasts • The plausibility and reliability of economic forecasts should be revised by SAIs through the caring out the analysis of forecasts errors • Validation and backtesting should be in place and used by the official bodies responsible for forecasting • The mandate of a SAI should involve looking into mechanism of forecasting, feasibility assessment, its consistency and coherence analysis

  12. INITIAL ASSESSMENT White Paper on the Audit of Macroeconomic Forecasts • SAIs need to assess if the preconditions were realistic, sound and valid Malta: Given the smallness and openness of the Maltese economy in relation to developments in the international economy it is evident that developments in such exogenous variables are not affected by factors specifically related to the Maltese economy. The exogenous variables within the forecasting exercise are based on the views of international reputable organizations and that all possible ad-hoc information available from local sources has been evaluated and taken on board in the preparation of the forecasts in this exercise. Lithuania: The economic development scenario is a description of economic development which results from the assumptions chosen and identified by the Ministry of Finance, which is based on the available statistical data and on the data of national accounts and does not contradict economic regularities. The macroeconomic and budgetary forecasts shall be compared with the most updated forecasts of the European Commission and, if appropriate, those of other independent bodies.

  13. INITIAL ASSESSMENT White Paper on the Audit of Macroeconomic Forecasts • SAIs may revise forecasting mechanism itself and if there is any comprehensive description of the forecasting process • Malta: The econometric model used in the preparation of the forecast is expenditure driven, including a number of identity and behavioral equations using data for the 1995-2013 period. Sound econometric methodologies have been used in the overall preparation of this forecast output. This is a process, which is well documented and done with detail. All the relevant information up to the cut-off date established for this forecasting exercise is taken on board. • Lithuania: An important element of the assessment phase is analysis of whether the projections prepared are to be considered the most likely.

  14. INITIAL ASSESSMENT White Paper on the Audit of Macroeconomic Forecasts • The SAI may evaluate the risk management system in the departments responsible for macroeconomic forecasts • Hungary: The risk analysis consists of three phases: • 1) analysis of the risks related to the developments in individual factors of the macroeconomic projection of the government • 2) analysis of the correlations between the changes in individual factors: exploration of inconsistencies and of the risks that strengthen one another and the ones that offset one another’s impacts • 3) the effect of the risks related to the changes in the macroeconomic environment on the main budget revenues and certain fiscal expenditures as well as on the balances of the budget (primary and cash-based, GFS balances

  15. INITIAL ASSESSMENT White Paper on the Audit of Macroeconomic Forecasts THANK YOU!

More Related