audit directive 2008

Audit Directive 2008

Consultation with SCoAG

Audit Directive - 2008

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

TerenceN


Types of audits

Performance Audit

Special audits Investigations

Regularity Audit

(financial, compliance and AOPI)


Types of audits

Regularity Audit

(financial, compliance and AOPI)

Performance Audit

Special audits Investigations

Full suite of IFAC audit pronouncements

Other

Basic auditing principles of INTOSAI

standards

AND

INTOSAI guidelines on performance auditing

Basic auditing principles of IFAC

standards

AND

own development based on best practices


IFAC Auditing pronouncementsCode 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 Audit Practice Statements

International Standards on Review Engagements

International Review Engagement Practice

Statements


Communication with those charged with governance

Audit finding Audit evidence

Audit response /

report

Supervision, review and quality assurance

Audit findings model

Audit documentation

PU

BL

IC D

OC

UM

EN

T

International Standards of Supreme Audit Institutions

Working group

Financial Audit Guidelines Subcommittee

INTOSAI

Level 1: Founding Principles

Level 4:Auditing guidelines

Level 3:Fundamental auditing

principles

Level 2:Prerequisites for the functioning of SAIs

Lima Declaration ISSAI1

ISSAI 1000-2999

100-400

ISSAI 10-30

INTOSAI Financial Audit Guidelines

INTOSAI Auditing Standards

INTOSAI Code of Ethics


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)


ISSAIs

• Founding principles– Lima Declaration

• Prerequisites– Independence– Transparency and accountability– Code of ethics


ISSAIs

• Auditing principles– Basic principles– General (planning) standards– Fieldwork standards– Reporting standards

(Note – 2010 possible change-over)


ISSAIs• Financial audit guidelines

– Implementation guidance– Regularity Audit– Performance Audit– Compliance Audit– International / environmental /

privatisation / IT audit / public debt / disaster aid


ISSAIs

• Governance– Reporting on internal control– Other


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


AOPI - StrategyYear Approach Report

2005-06 • Understanding of performance information (PI) environment

• Existence, consistency and format

• Compare to source

Deficiencies in management report

Emphasis of matter in audit report

2006-07 • Understanding of internal controls regarding PI

• Document system descriptions• Existence, consistency, format,

compare to source


Audit report – agreed upon procedures under the heading of “other reporting responsibilities”

2007-09 Same as above with more substantive procedures, lifting the bar in line with readiness and progress at audited entities

Same as above

2009-10 Audit procedures relevant to providing reasonable assurance


Separate audit opinion on PI


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


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


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



• 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


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

audit directive 2008

Documents