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Financial audit in NAOF

Financial audit in NAOF. 3.10 .2011 Visa Paajanen. Mission of the Financial Audit. The mandate : according to the NAOF law (2000/676; 1 §:2) NAOF shall audit the state’s financial management’s legality and appropriateness and compliance with the state’s budget.

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Financial audit in NAOF

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  1. Financial audit in NAOF 3.10.2011 Visa Paajanen

  2. Mission of the Financial Audit The mandate: according to the NAOF law (2000/676; 1 §:2) NAOF shall audit the state’s financial management’s legality and appropriateness and compliance with the state’s budget. The mission of the Financial Audit is to • audit the state accounts • ensure • the legality of accounting units financial management • the functioning of the internal controls • the appropriateness of bookkeeping and management accounting • the correctness and sufficiency of the essential annual performance reporting

  3. Performance goal-setting Scope of Financial Auditing Accounting Internal controls Compliance with the state budget True and fair view of financial statements and annual report

  4. Financial Audit’s Focus on Performance Reporting True and fair information in the Annual Report Policy Effectiveness Policy Effectiveness Outcome targets How operations and finances have affected policy effectiveness • Outputs and quality management • goods and services • service capacity and quality PERFORMANCE MANAGEMENT • Operational efficiency • economy • productivity • profitability • cost-equivalence Operational Performance targets ACCOUNTABILITY Operational results (witch can be influenced by management practices) Management and development of human resources

  5. AUDITING THE ANNUAL PERFORMANCE • Performance Budgeting • The main focus of the financial audit concerning the performance budgeting is on determining if the performance budgeting procedure has been appropriate, not on the content of the goal or objectives. 2. Performance Accounting • The objective of the audit is to find out if the state agencies have organised their performance accounting and reporting as provided by the law. 3. Performance Reporting • Audit focus on the content and the scale of the reporting on operational efficiency as well as on the uniformity of the information with other performance reporting.

  6. AUDIT REPORTING • Reporting only on findings of reasonable significance. Remarks has to be based on and be able to conduct from the law. • When assessing the significance of the errors in the performance information the auditor has to pay attention to the amount of the errors and estimate if the errors prevent building a true and fair view of the finances and operations • Reporting is required if • the agency has not reported on performance even if the ministry has set goals for the operation • the agency has not presented appropriate indicators nor other information concerning on economy and productivity • there is material errors in the information or the information gives a misleading picture of the operational efficiency or its development.

  7. Original reports Accounting Unit Corresponding line ministry Copies Head of Accounting Unit Board Members Ministry of Finance Parliament's Audit Committee Distribution of final audit reports

  8. AUDIT REPORTING… 2008: 42 % 2009: 47 % 2010: 33 % 2008: 28 % 2009: 33 % 2010: 49 % YES True and fair information 2008: 26 % 2009: 18 % 2010: 16 % 2008: 4 % 2009: 2 % 2010: 2 % NO NO YES Performance targets for the economy of the most significantelements of operating performance

  9. Developing the Performance Management Improving Performance Management and Reporting • To improve the performance management the ministries and the agencies need to develop the goal setting and the follow up and reporting of the results of the operations. • They should in co-operation create a common view on how far the performance reporting can be developed in each administrative sector or state agency and to determine what is the true and fair information needed to evaluate organisations’ performance. • The liability of determining how far it is possible to go in developing the performance reporting should be expressed more strictly in the regulations. • Financial auditor is in charge of verifying if the ministries and agencies have reported the agreed subject matters including the appropriate indicators and that the information doesn’t contain any material errors.

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