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State Audit Office of Hungary - Audit Methodology and Tasks in the Fight against Fraud and Corruption Zoltán GIDAY 25 November 2011. State Audit Office (SAO) of Hungary - Outline. History Legal status Independence New Act on SAO SAO’s strategy Organisation. History.
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State Audit Office of Hungary - Audit Methodology and Tasks in the Fight against Fraud and CorruptionZoltánGIDAY 25 November 2011
State Audit Office (SAO) of Hungary - Outline • History • Legal status • Independence • New Act on SAO • SAO’s strategy • Organisation
History Our historical predecessor, the Hungarian Audit Office was established in 1870. The Hungarian Supreme Royal Audit Office was dissolved in 1949.. On the eve of the political transition by amending the Constitution on 23 October 1989, the State Audit Office of Hungary (SAO) was re-established. The Act XXXVIII on the State Audit Office of Hungary was adopted on 28 October 1989. 5 July 2010: The National Assembly elects the President and Vice-President of SAO, the constitutional structure is restored. 2011: New Act on SAO
Legal status • the SAO is the financial and economic audit organisation of the National Assembly, the supreme organ of public auditing and one of the key basic institutions of the democratic state organisation; • the SAO audits the utilisation of public funds and properties; • the SAO is an independent organisation both in political and professional terms; • the SAO carries out ex-post audits on the basis of legality, expediency and effectiveness.
Independence • it issubjected only to the National Assembly and the laws; • a majority vote of two-thirds of members of Parliament (MPs) present is required for the adoption of the Act on the SAO and for the election of its President and Vice-President; • the President and Vice-Presidents are elected for 12 years; • INTOSAI Governing Board, October 2011 http://www.aszhirportal.hu/documents/speech-sao-act-pdf_20111102163639_97.pdf
New Act on SAO • Further enhances SAO’s independence, • Further specifies audit activity and makes it more efficient and transparent, • Introduces new instruments for providing SAO with further possibilities and responsibilities to promote the sound management of public funds and the audit of their utilisation. • Ceases the practice of audit findings without any consequences and introduces sanctions in case of refusal of cooperation or the non-observance of SAO’s recommendations. http://www.asz.hu/introduction/act-lxvi-of-2011-on-the-sao/act-on-sao-2011.pdf
SAO’s strategy The mission of the State Audit Office of Hungary is to promote the transparent and sound management of public finances with its value creating audits performed on a solid professional basis, thus contributing to ‘good governance’. • SAO facilitates the creation of the integrity based, transparent and accountable utilisation of public funds http://www.asz.hu/strategy/strategy/sao-strategy-2011-2015.pdf
Organisation • New organisation • Aim: the organisation shall be able to continuously progress, challenges from the continuously changing environment shall be met flexibly. • http://www.asz.hu/introduction/organisation-1/org-chart-sept-2011.pdf
Audit Methodology • Achievements • Working groups and other bodies • Future tasks
Achievements • Audit Manual http://www.asz.hu/en/audit-manual • Other 3 level of methodology documents (only in Hungarian) • Audit Terminology and Explanation (trilingual Dictionary and Glossary)
Working groups and other bodies • Implementation of ISSAIs • 3 WGs for 3 main audit types: financial, compliance, performance audit • Governing body for organisation management (5 main areas: Planning, Methodology, Human resources, IT, Communication), coordination of other committees and working groups
Future tasks • General Methodology working group (coordination of 3 main audit types) • Working group on training • New Methodology Committee (headed by Vice-president) • Implementation of strategic plan
Tasks in the Fight against Fraud and Corruption • Basis for functioning a democratic state • SAO’s mandate • Audit • Risk assessment • Good example • International cooperation
Basis for functioning a democratic state • a guarantee condition for the functioning of a democratic state based on the rule of law lies in the legality, transparency and accountability of the utilisation of public funds and properties
SAO’s mandate • Makes proposals for legal regulation, • Calls upon the restoration of lawful conditions, • Initiates an action towards the repayment of unlawfully used funds and the declaration of personal liability, • Suggests Public Procurement Arbitration, • Reports to the police on suspected crimes and • blocks funds in case of wasteful use, • Suspends the utilisation of funds for investments funded from the central budget in order to prevent damage.
Audit • An important task of the SAO is to widely introduce and disseminate ‘best practices’ experienced in the course of its audits. • Pilot audits of local authorities of different levels (capital, counties, cities with county rights, towns, villages) • New methods for risk assessment in compliance audits
Risk assessment • In selection of audit topics • During the auditing of internal controls and internal audit of audited organisations • Using ethical questions for risk assessment in pilot audits
Good example Joint statement on the cooperation of state organisations in the fight against corruption was signed between the Ministry of Public Administration and Justice, the State Audit Office, the Supreme Court and the Prosecution Service of Hungary on 18 November 2011. http://www.asz.hu/en/news/2011-11-21/cooperation-against-corruption
International cooperation INTOSAI Working Group on Fight Against Corruption And Money Laundering • http://www.wgfacml.cao.gov.eg/ • Seminar on Fighting Corruption, Prague, September 2011 3rd EUROSAI/ARABOSAI Conference, Abu Dhabi, March 2011 • http://www.asz.hu/presentations/2011-03-30/experience-of-the-hungarian-sao-in-fighting-against-corruption/t340.pdf V4+2 Seminar on Fight Against Corruption, Ljubljana, April 2011 V4+2 Working Group on Fight Against Corruption - New
Other Useful links Hungarian Homepages • http://www.asz.hu:8080/ASZ/www.nsf/useful_links_hun.html International Homepages • http://www.asz.hu:8080/ASZ/www.nsf/useful_links_int.html ISSAIs • www.issai.org
Thank you for your attention and best wishes in your fight against fraud and corruption!