IA CHU at ESV Monday

Development and coordination of the internal audit in the central government sector: 

Development and coordination of the internal audit in the central government sector Ekonomistyrningsverket – The Swedish National Financial Management Authority Annika Alexandersson Catrin Lind Ebert Hamdi Ercan “Central Harmonisation Unit for Internal Audit”

The tasks for ESV from 2006: 

The tasks for ESV from 2006 ESV is the Central Harmonizing Unit and contact point for Internal Audit in the central government sector. ESV shall develop and coordinate the internal audit in the central government sector ESV shall each year submit an assessment/ evaluation of the internal audit in the central government sector to the government ESV also provides export of services connected to internal audit.

Slide3: 

Operational Management Mr Peter Björebo Performance and Financial Management Ms Susanne Jansson Accounting Principles and Internal Audit Mr Fredrik Rosengren Central Government Accounting Mr Ingemar Härneskog Financial Analyses and Forecasts Ms Kristina Lundqvist Coordination of Govern-ment Procurement and IT System Hermes Mr Bo Svanlind Coordination of IT System Hermes Ms Anna-Lena Johansson Coordination of Govern-ment Procurement Ms Ylva Mannervik Director General Ms Yvonne Gustafsson Operations Department Ms Cecilia Aste IT systems Acting Mr Peter Houtila Deputy Director General Mr Bengt Anderson Training Department Mr Magnus Hedenskog International Department Mr Bo Dahlström Special Projects Ms Eva Wern Financial Dep:t Ms Malin Eriksson Coordination of Government Internal Audit Mr Hamdi Ercan

ESVs Advisory Council for Internal Audit : 

Yvonne Gustafsson, Director General ESV (chairman) Klas Schöldström, Secretary General, IIA Sweden Yvonne Palm, Head of Internal Audit, The Swedish social Insurance Agency Gunilla Werner Carlsson, Head of Internal Audit, If Maria Nikula, vice president, Internal Audit, Volvo, Brussels Gunilla Liljeroth, Head of Internal Audit, Premium Pension Authority Ann-Katrin Harringer, Head of Internal Audit, Swedish Board of Agriculture Per Johansson, Senior Adviser, Ministry of Finance ESVs Advisory Council for Internal Audit

Historical background: 

Historical background Ordinance on Internal Audit 1995 National Audit Office (RRV) was Government Internal Agency 1995 -2003 Commission of Inquiry on Internal Audit 2002-2003 ESV 2006

The Government internal audit: 

The Government internal audit There is no central government audit authority after the 1st of July 2003 The government don’t have direct control over the agencies internal audit departments Internal audit is compulsory for major central government agencies and authorities Internal audit is regulated by a new government ordinance from the 1st of Jan 2007 The regulations of the ordinance is transferred to and issued by ESV from the 1st of Jan 2007

Internal Audit in the central government sector: 

Internal Audit in the central government sector 48 agencies have Internal Audit functions (march 2007) 6 are outsourced, 1 are coordinated 120 Internal auditors (march 2007) 3 in average The Swedish social Insurance Agency has 15 employees In 16 agencies only 1 internal auditor Budget 145 mnsek (2005) 2,7 mnsek in average Varies from 30 tkr to 21 mnsek.

Usual traits for agencies with internal audit departments: 

Usual traits for agencies with internal audit departments Large cash flows (taxes, allowances, social insurance) Large funds in the balance sheet Complicated operations Great importance to the public interest

Evaluation – Quality assessment: 

Evaluation – Quality assessment Yearly self assessment from the internal audit departments to ESV Yearly report from ESV to the government dealing with the standard of the internal audit in the central government sector External quality assessment

Evaluation - Self assessment : 

Evaluation - Self assessment From whom? - Governmental authority with an obligation to have an internal audit function. The information shall be provided yearly ESV has provided the first report (for 2006) to the government the 30th of March 2007.

Evaluation - Purpose of the Self assessment: 

Evaluation - Purpose of the Self assessment Contribute to develop and improve the internal audit in the central government sector Make up the supporting information that ESV needs for the yearly report to the government Give ESV supporting information in the ongoing work to develop and support the internal audit in the central government sector

Evaluation - Self assessmentConclusions: 

Evaluation - Self assessment Conclusions The internal audit departments work is mainly conducted objectively and in an independent fashion. There are divergence from standards mainly according to developing and improving work efficiency, the reporting of findings and recommendations to the board and the follow-up on measures taken according to the audit reports.

The regulations of the internal audit ordinance state that:: 

The regulations of the internal audit ordinance state that: The scope of internal audit (IA) is to cover all of the agencies operations. Free access to information is necessary. The internal audit function is established at the agency by employing an head of the internal audit department. The internal audit function shall be independent from the agencies operational business and placed directly under the head of the agency.

The regulations (continued):: 

The regulations (continued): IA works for the Board and is one of the instruments for evaluating the efficiency, effectiveness, appropriateness and reliability of the agency’s internal control and management. If there is no Board, the IA reports to the Director General of the agency.

The regulations (continued):: 

The regulations (continued): IA is to be conducted according to generally accepted auditing standards in Sweden and internationally. IA is to be conducted independently, professionally, objectively and with great integrity

The regulations (continued):: 

The regulations (continued): The Board decides on a yearly audit program (AP), which is based on a risk analysis carried out by the audit department. AP determines the goals and objectives for the audit, based on the criteria of materiality and risk Audit measures and actions are decided by the IA

The regulations (continued):: 

The regulations (continued): IA reports the findings of the audit to the Board, who makes decisions accordingly. The Board decides when during an ongoing audit it needs to be informed by the IA, however, at least once a year. ESV decides on the regulations for the ordinance.

Issues regarding the interpretation of the ordinance: 

Issues regarding the interpretation of the ordinance The public right to access information (“offentlighetsprincipen”) and the lack of opportunity for an internal auditor to give an informant anonymous Proprietary right of the internal auditors documentation and the definition of what the audit working papers consists of Who has the right to close an ongoing audit

Support – Competence development: 

Support – Competence development Competence requirement and profile Competence development program Certification

Support – Competence development: 

Support – Competence development ESV have developed a proposal for a competence profile and a competence program for internal auditors in the state sector. No formal decisions about the proposal have been taken yet.

Support – Competence development: 

Support – Competence development Why is a competence profile needed? Need to develop a general level of competence and a common frame of reference. Provide guidelines to be used when employing internal auditors. Clarify the need for competence development for the internal auditors already employed. The governments demand for evaluation of the internal audit in the central government sector.

Support – Competence development: 

Support – Competence development Competence profile Academic degree, At least 2 – 3 years experience from internal or external audit in the private or state sector, Knowledge of the rules and regulations in the government sector, Restrictions in employing people without previous audit experience – in this cases internal supervision must be at hand.

Support – Competence development: 

Support – Competence development Choice of certification IIA:s international certification (CIA) should be used. A special certification for the Swedish government sector is not an option because the group of internal auditors are to small. It is unclear what a special certification for the Swedish government sector should measure. The need for education must have first priority.

Support – Competence development: 

Support – Competence development ESV:s competence development plan The competence development plan includes courses with emphasis on subjects that is specific for the government sector. The internal auditors in the government sector needs this courses in order to achieve ESV:s competence profile. The courses are not available today. Part taking in courses depending on the individuals educational need.

Contact: 

Contact annika.alexandersson@esv.se catrin.lind-ebert@esv.se hamdi.ercan@esv.se http://www.esv.se/internrevision