Module 4 - Introduction to Performance Audit_4B

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characteristics depending on the audit objective. An appropriate subject matter is identifiable and capable of consistent evaluation or measurement against the criteria, such that it can be subjected to procedures for gathering sufficient and appropriate audit evidence to support the audit opinion or conclusion. 37 19) The subject matter of a performance audit need not be limited to specific programmes, entities or funds but can include activities (with their outputs, outcomes and impacts) or existing situations (including causes and consequences). Examples might be service delivery by the responsible parties or the effects of government policy and regulations on administration, stakeholders, businesses, citizens and society. The subject matter is determined by the objective and formulated in the audit questions. 38 30) The subject matter relates to the question “what is audited” and is defined in the audit scope. The subject matter of a performance audit may be specific programmes, undertakings, systems, entities or funds and may comprise activities (with their outputs, outcomes and impacts) or existing situations, including causes and consequences. The audit scope is the boundary of the audit and is directly tied to the audit objectives. The audit scope defines the subject matter that the auditor will assess and report on, the documents or records to be examined, the period reviewed, and the locations that will be included. 39 Topics for performance engagements are identified in the context of the assurance provider’s planning processes. The Performance Audit ISSAI Implementation Handbook provides an example framework for identifying important topics for performance audits, summarized below. Activity Scanning the public sector environment Reviewing official announcements Financial analysis Media monitoring Description Monitoring key issues in the public sector. Monitoring official announcements and publications, including: National sustainable development goals. Resolutions by the Committee on Public Accounts or equivalent. State of the nation or parliamentary opening speeches by the head of state. Legislation and legislative proposals. National budgets and guidelines. Other public policy documents. Annual reports of audited entities. Global developments, such as themes identified by INTOSAI. Paying close attention to: Complex financial arrangements. New sources of income and expenses. Areas where spending is high or changing rapidly. Monitoring a wide range of media to identify concerns about public 37 ISSAI 100 Fundamental Principles of Public Sector Auditing, INTOSAI, 2019. 38 ISSAI 300 Performance Audit Principles, INTOSAI, 2019. 39 ISSAI 3000 Performance Audit Standard, INTOSAI, 2019. 25
General overviews Consideration of views of citizens Liaison with other external stakeholders Internal discussions and assessments within the SAI services. Completing a general overview or survey to identify audited entity’s objectives, main activities, and the level and nature of resources used in carrying out its functions. Engaging with representatives of civil society, taking account of inclusiveness, stakeholder concerns, public interest, regulatory requirements, and consequences for society. Building relationships with external stakeholders, subject experts, academics, and other relevant parties, including non-government organizations to leverage available research, case studies, and networks. Discussion with other auditors and review of previous audits, identifying trends, themes, and potential audit priorities. Framework for Strategic Planning 40 Criteria for selecting topics may be identified and scored to assist with the process of prioritization. Entity and central government priorities may be considered including the application of budgetary resources. Criteria may cover the following: Materiality. Auditability. Possible impact. Risks to the SAI (or internal audit function). Legislative or public interest. Relevance. Timeliness. Previous audit work. Other major work planned or in progress. Requests for maintenance audits. 41 The purpose of criteria is to assist the auditor in making an evaluation of performance without reducing the assessment to a compliance check. The internal audit standards emphasize the importance of a risk-based approach, in accordance with Standard 2010 – Planning. Performance audits (like other engagements) are identified based on organizational priorities, objectives, and significant risks. The plan may be modified as circumstances change. 2010 – Planning The chief audit executive must establish a risk-based plan to determine the priorities of the internal audit activity, consistent with the organization’s goals. Interpretation: To develop the risk-based plan, the chief audit executive consults with senior management and the board and obtains an understanding of the organization’s 40 Performance Audit ISSAI Implementation Handbook, IDI, 2021. 41 Performance Audit ISSAI Implementation Handbook, IDI, 2021. 26
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Module 4 - Introduction to Performance Audit_4B

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