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Audit Directive
2008
Consultation with SCoAG
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
Audit Directive - 2008
Types of audits
Regularity
Audit
(financial,
compliance
and AOPI)
Performance
Audit
Special audits
Investigations
Audit Directive - 2008
Types of audits
Full suite of IFAC audit
pronouncements
Regularity
Audit
(financial,
compliance
and AOPI)
Special audits
Other
Performance
Audit
Investigations
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
Audit Directive - 2008
IFAC Auditing pronouncements
Code of ethics
International Standard on Quality Control
International Framework for assurance engagements
Audits and reviews of
historical financial
information
International Standards of
Auditing
International Audit Practice
Statements
Assurance engagements
other than audits or
reviews…
International Standards on
Review Engagements
International Review
Engagement Practice
Statements
Audit Directive - 2008
Audit findings model
Supervision, review and
quality assurance
Audit response
/ report
Audit finding
Audit evidence
Audit documentation
Audit Directive - 2008
PUBLIC DOCUMENT
Communication with those
charged with governance
INTOSAI
Working group
Financial Audit Guidelines
Subcommittee
International Standards of
Supreme Audit Institutions
Level 1:
Founding Principles
Lima Declaration
ISSAI1
Level 2:
Prerequisites for the
functioning of SAIs
INTOSAI Code of Ethics
ISSAI 10-30
Level 3:
Fundamental auditing
principles
INTOSAI Auditing Standards
100-400
Level 4:
Auditing guidelines
INTOSAI Financial Audit
Guidelines
ISSAI 1000-2999
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)
Audit Directive - 2008
ISSAIs
• Founding principles
– Lima Declaration
• Prerequisites
– Independence
– Transparency and accountability
– Code of ethics
Audit Directive - 2008
ISSAIs
• Auditing principles
– Basic principles
– General (planning) standards
– Fieldwork standards
– Reporting standards
(Note – 2010 possible change-over)
Audit Directive - 2008
ISSAIs
• Financial audit guidelines
– Implementation guidance
– Regularity Audit
– Performance Audit
– Compliance Audit
– International / environmental /
privatisation / IT audit / public debt /
disaster aid
Audit Directive - 2008
ISSAIs
• Governance
– Reporting on internal control
– Other
Audit Directive - 2008
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
Audit Directive - 2008
AOPI - Strategy
Year
2005-06
Approach
•
•
•
2006-07
•
•
•
Report
Understanding of performance
information (PI) environment
Existence, consistency and
format
Compare to source
Deficiencies in management report
Emphasis of matter in audit report
Understanding of internal
controls regarding PI
Document system descriptions
Existence, consistency, format,
compare to source
Deficiencies in management report
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
Deficiencies in management report
Separate audit opinion on PI
Audit Directive - 2008
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
Audit Directive - 2008
Investigations
•
AGSA has adopted interim standards for investigations:
–
–
–
•
•
•
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
–
–
–
•
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.
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
Audit Directive - 2008
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
Audit Directive - 2008
Audit Directive - 2008
•
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
Audit Directive - 2008
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