Enhancing Auditing Standards Compliance for Efficient Financial Governance

1. Audit Directive 2008 Consultation with SCoAG

2. Objectives • To complete the 2007 process of training on auditing standards • To formally consult on the auditing standards for the 2007/8 financial years (PFMA and MFMA) • To finalise the 2008 Audit Directive

3. Types of audits Regularity Audit (financial, compliance and AOPI) Performance Audit Special audits Investigations

4. Types of audits Full suite of IFAC audit pronouncements Other Basic auditing principles of INTOSAI standards AND INTOSAI guidelines on performance auditing Regularity Audit (financial, compliance and AOPI) Performance Audit Basic auditing principles of IFAC standards AND own development based on best practices Special audits Investigations

5. IFAC Auditing pronouncements Code of ethics International Standard on Quality Control International Framework for assurance engagements Audits and reviews of historical financial information Assurance engagements other than audits or reviews… International Standards of Auditing International Standards on Review Engagements International Audit Practice Statements International Review Engagement Practice Statements

6. Audit findings model Supervision, review and quality assurance PUBLIC DOCUMENT Communication with those charged with governance Audit response / report Audit finding Audit evidence Audit documentation

7. INTOSAI Working group Financial Audit Guidelines Subcommittee International Standards of Supreme Audit Institutions Level 1: Founding Principles Lima Declaration ISSAI1 Level 2:Prerequisites for the functioning of SAIs INTOSAI Code of Ethics ISSAI 10-30 Level 3:Fundamental auditing principles INTOSAI Auditing Standards 100-400 Level 4:Auditing guidelines INTOSAI Financial Audit Guidelines ISSAI 1000-2999

8. ISA versus ISSAI • Framework launched in 2007 (Mexico) • Final ISSAIs = ISA + Practice note • Over time, one set of sector-neutral auditing standards • Completion in 2010 • Interim status – as guidelines • SA interim position, ISA adoption with ISSAI context • SA involvement • Panel of experts (confirmed) • Member of sub-committee (proposed)

9. ISSAIs • Founding principles • Lima Declaration • Prerequisites • Independence • Transparency and accountability • Code of ethics

10. ISSAIs • Auditing principles • Basic principles • General (planning) standards • Fieldwork standards • Reporting standards (Note – 2010 possible change-over)

11. ISSAIs • Financial audit guidelines • Implementation guidance • Regularity Audit • Performance Audit • Compliance Audit • International / environmental / privatisation / IT audit / public debt / disaster aid

12. ISSAIs • Governance • Reporting on internal control • Other

13. Current developments in profession • Enhancement of decisions / application of materiality and sampling • Enhancement of ISA 240 – fraud considerations (part of regularity but could trigger investigations) • Better alignment of IS audit requirements in regularity process • Pilot projects on transversal audits

14. AOPI - Strategy

15. Performance auditing • AGSA to adopt ISSAIs • Refer ISSAI 3000 – 3999 for existing and future performance audit guidelines • Focus is on auditing of economy, efficiency and effectiveness at output level • AG performance audit guideline completed and ready for final approval

16. Investigations • AGSA has adopted interim standards for investigations: • Based on previous AG forensic guidance and standards • With reference to relevant ISAs • With reference to code of professional conduct and ethics issued by the SA chapter of Association of Certified Fraud Examiners. • Interim standards to be finalised after consultation with SAICA, SAIGA, IRBA and academic institutions • Input in process based on ISA 240 considerations, complaints process, other references • Typical response to investigation identified: • Own investigation • Reference to other investigation body, better geared to handle investigation • Output from investigations • Report to the Executive/Accounting Authority • Report to relevant legislature • Report to any other legislature with a possible interest in the outcome of the investigation • Exclusions • Non-financial matters

17. GRAP statements • Currently under development • While under development / being implemented, handled as a comprehensive framework rather than a fully recognised accounting framework • 2007 - IRBA session to guide recognition • Implementation challenges • Full recognition • Guidance to entities affected • Readiness assessment at entities affected • Letter to Minister of Finance

18. Audit Directive - 2008 • PAA requirements • Public entities • Opt not to perform • Flow of information • Applicability of requirements • Complaints process • Auditing standards • Regularity audit • Special audit • Performance audit • Investigations • Response to base of accounting • Repeal of previous requirements

19. Reputation promise The Auditor-General has a constitutional mandate and, as the Supreme Audit Institution of South Africa, it exists to strengthen our country’s democracy by enabling oversight, accountability and governance in the public sector, thereby building public confidence