Proposal for creation of new Working Group on Audit of Extractive Industries

1. Proposal for creation of new Working Group on Audit of Extractive Industries SAI India Comptroller and Auditor General of India

2. About Extractive Industries • Include oil, gas, and mining industries. • Currently generate about 3.5 trillion US Dollars (USD) in annual gross revenue, corresponding to around 5 per cent of the global gross domestic product (GDP). • A great portion of money involved in the extractive industries is in fact public money. • About 70 percent of world oil production lies in the hands of state-owned enterprises. • Important role for SAIs role in the oversight of these enterprises, depending on their overall legal framework and mandate. Comptroller and Auditor General of India

3. Background • AFROSAI-E and the INTOSAI-Donor Secretariat agreed to work jointly on the mapping of SAI involvement in audit ofExtractives Industries. • Terms of Reference for such mapping approved by the INTOSAI-Donor Steering Committee • Explore SAI activities, best practices, challenges, and needs in this regard, including recommendations for a way forward. • The study was carried out by the INTOSAI-Donor Secretariat with support from the AFROSAI-E Secretariat. • Similarly, several initiatives are currently underway within INTOSAI, which are of relevance for SAIs in this field. Comptroller and Auditor General of India

4. Background • A questionnaire drafted by the INTOSAI-Donor Secretariat and discussed with 25 participating SAIs at an EI workshop hosted by AFROSAI-E in February 2013. • Also sent to regional and sub-regional secretariats of INTOSAI, namely ASOSAI, ARABOSAI, AFROSAI-E and CREFIAF, and OLACEFS. • On the basis of the responses, a report being drafted. • Responses confirm the strategic importance of auditing Extractive Industries for SAIs • Responding SAIs also see a clear need to enhance knowledge and capacity. Comptroller and Auditor General of India

5. Challenges before SAIs • Technical complexity of the sector • Lack of knowledge of business processes of extractive sector • Lack of capacity within SAIs • Training and retention of specialised staff • Mandate limitations

6. Felt needs of SAIs • Increased sharing of knowledge and experience • Better domain appreciation • Currently, reliance on external consultants • Acquisition of auditing skills • Training etc. • Peer to peer support

7. Proposal for a new Working Group • New Working Group on Audit of Extractive Industries proposed Industries under the INTOSAI Committee on Knowledge Sharing and Knowledge Services (KSC). • Proposal based on informal consultations with the INTOSAI-Donor Secretariat. • Could also include a community of practice. • An institutional anchor in INTOSAI and to carry out outreach activities. • The Working Group would also serve as a key partner for any IDI or regional capacity development initiatives in this field. • Support for an international forum already manifest. Comptroller and Auditor General of India

8. Responsibilities • Promote EI audit within the INTOSAI community • Gather and disseminate existing information and knowledge • Create new knowledge • Reach out to other stakeholders • Liaise with other INTOSAI bodies

9. Way Forward • On KSC approval, the above proposal would be presented in the upcoming INTOSAI Governing Board meeting and XXI INCOSAI in Beijing. • We would also then seek candidatures for chairing the Working Group and hosting its Secretariat. Comptroller and Auditor General of India

10. Proposal for approval In-principle approval by the KSC Steering Committee for the constitution of a new Working Group on Audit of Extractive Industries. Once approved, the proposal will be placed before the INTOSAI GB and the XXI Congress for their endorsement.

11. THANK You Comptroller and Auditor General of India