Turning the tide – SAIs respond to 2023 Accountability and Transparency Report findings

By Angela Drake, Principal Advisor International Engagement, Office of the Auditor-General, New Zealand 

Transparency International’s annual Corruption Perceptions Index (CPI) has confirmed that, for the fifth year in a row, there is stagnation in the Pacific CPI scores. [1] This will be no surprise to PASAI members who strive to turn the tide on these low scores through their daily work.

Nine months ago, PASAI published its fourth Accountability and Transparency Report, exploring the effectiveness of the work of Pacific SAIs between 2018 and 2022. The report found that there is work to do to overcome a range of integrity threats facing Pacific SAIs. SAIs, and the context they work in, both need to change if we are to see better accountability of governments in the Pacific.

As the Accountability and Transparency Report points out, there is a need for consolidated, collaborative action – across both the public financial management system and the national integrity system – to achieve meaningful progress towards good governance, accountability, transparency and integrity in the Pacific. 

Challenges facing Pacific SAIs

There are four leading themes in the issues discussed in the report:

• Investment is needed in the capability of those responsible for preparing accountability information (for example, financial statements of government) for SAIs.

• A clear and aligned view needs to be established by those with power to influence the public financial management and integrity systems.

• Independence is fundamental to enabling SAI effectiveness.

• SAIs in the Pacific are under sustained pressure to build and maintain both their capacity and the capability to play an ongoing and impactful role in their national integrity systems. Additional investment and support to SAIs to continue to build their capability and capacity remain vital.

Small steps to create change

Talking about the challenges we face

PASAI has already started to address the most significant weaknesses identified in the report.

Over the last nine months, PASAI Secretary-General, John Ryan, has hosted a webinar series on Building strong national integrity systems in the Pacific. Drawing on expertise from across our region, these panel discussions evaluate progress, issues and risks involved with building and maintaining accountability and transparency in the Pacific.

Communities of practice

PASAI also offers facilitated communities of practice after each panel discussion.

These discussions support SAI heads and emerging SAI leaders to consider what practical steps their SAI can take to improve collaboration with other players involved in the public financial management and integrity systems. Participants are encouraged to apply the one-degree rule: they share reflections on how their SAI might raise its appetite or ‘temperature’ by one degree to increase their impact or the effectiveness of their work.

Creating a strategy together

The communities of practice have been an instrumental forum to capture and discuss the ambitions of member SAIs in the next 10 years. Important perspectives and contributions shared continue to shape the development of PASAI’s future strategic priorities.

PASAI is also working with current and potential development partners to secure funding for the PASAI 2024–2034 Strategy.

In September 2023, PASAI jointly hosted a Funder’s Forum in Fiji at the Australian High Commission in partnership with the New Zealand Ministry of Foreign Affairs and Trade and the Australian Department of Foreign Affairs and Trade. Potential future partners were able to provide feedback on, and contribute to, the development of PASAI’s strategic intentions.

Communities of practice in action

What topics have been covered in the webinars and communities of practice?

The May 2023 panel explored how to raise the level of public participation in the allocation, distribution and management of public funds with two prominent Pacific civil society organisations (CSOs) – Transparency International Papa New Guinea and the Pacific Islands Association of Non-governmental Organisations (PIANGO).

In July 2023, we built on this dialogue through a second panel discussion with three investigative journalists from TV, radio and print media across the region. Panellists described how the media and SAIs can be allies in their pursuit of bringing accurate, independent information about public sector spending to the community.

The third panel, held in December 2023, focused on how the United Nations Convention Against Corruption and the Teieniwa Vision have supported countries to develop inter-agency approaches to detect and prevent fraud and corruption. Panellists partnering with the UN Office on Drugs and Crime shared challenges common to small island states. These include addressing conflicts of interest, lack of powers to investigate and challenges in prosecuting and sentencing. The value of increasing public understanding was expressed – specifically, mobilising young people to seek accountability and justice when behaviours do not meet integrity standards.

Warming up by one degree

In August 2023, at the Leadership Community of Practice, SAI heads committed to increase their SAI’s engagement with the public, CSOs or local media by one degree, including by:

• Planning one face-to-face outreach with citizens so that members of the community are more able to understand the role of the SAI and its work. Proposals included outreach events to outer island communities, engaging with high school leavers and hosting community groups at the SAI.

• Building the SAI’s relationship with local media over a coffee or a phone call to ensure they understand what government auditors do and the frequency of audit reporting.

• Working as a team to be more effective and timelier at providing short summaries of audit findings to media and weblinks to audit reports for CSOs.

• Leading proactive engagement with media to explain why an audit report has been delayed (for instance, if the legislature has not yet released it or auditees have not provided enough detail to audit) to create visibility of issues and pressure/momentum for changes to be made.

• Increasing social media posts relating to published audit reports to provide citizens with another avenue to access information.

• Encouraging colleagues to participate in PASAI’s Communications training programme, especially for teams that do not have the resources to appoint a communication officer.

What’s next?

Developing strong relationships

In the next panel discussion on 23 February 2024, we will focus on the importance of developing strong relationships with legislatures, parliamentary accounts committees and other legislative committees.

Panellists from across the region will provide practical advice on how to build and enhance the working relationships between SAIs and legislatures. We will consider how public access to information is a critical part of the democratic process, allowing people to contribute to the scrutiny of government performance. The effectiveness of the relationship between the legislature, its committees and the SAI plays a major role in the integrity of this scrutiny. The legislature’s deliberations on audit findings support better public awareness of issues, improved transparency by public organisations and more accountability from the government to the public.

Can you play a part?

We welcome new members to join our communities of practice in 2024 and look forward to delving deeper into what each SAI considers may be its next practical step to enhance engagement with its legislature and committees.

We encourage you to consider what steps you can take in 2024 to best influence other players in your national integrity systems to promote public trust and to hold power to account. May our collective efforts soon turn the tide on the region’s Corruption Perceptions Index scores.

The Office of the Auditor-General of New Zealand has made past webinar recordings in the series available on its website.

References

[1] Annual corruption report reveals fifth year of stagnation in the Pacific

Challenges faced by our SAIs in ensuring audit quality

By Meresimani Vosawale-Katuba, Director (South Pacific), PASAI

Supreme audit institutions (SAIs) in small island developing states (SIDS) face unique challenges in capacity to adhere to international standards. A major factor is the small pool of qualified and experienced supervisors to provide a robust system of quality controls for their audit engagements. This is exacerbated by the small size of the SAIs, for whom it may not be a sustainable option to establish a dedicated quality assurance (QA) function.

Only the two largest SAIs out of our 20 SAI members in SIDS have a QA function. Audit quality is therefore a major issue that we need to address. Our recent independent QA reviews of the seven SAIs participating in an audit programme revealed only two had satisfactory compliance with the ISSAIs.

Factors such as high inflation in SIDS have resulted in experienced SAI staff migrating to more developed countries for better pay and quality of life for their families. This depletion of financial audit experience and training/mentoring has made it very challenging to fill supervisory roles.

The remaining supervisors not only have fewer staff resources available to complete audits on time but often have to train and mentor new recruits on top of their increased workload. While SAIs are faced with the challenge of a limited local pool of experienced and qualified financial audit supervisors, performance auditing technical expertise is in even shorter supply.

Creative solutions needed

However, a history of limited resources for these remotely located SIDs has made their SAIs rather resilient as they have always needed to improvise solutions. Because of this, Pacific Island SAI heads have ideas and thoughts on how assistance can be structured. They may need flexibility from donors on the eligibility of their gratefully received interventions. Support can be tailored to meet SAI needs and address their challenges after consultation with the SAIs.

How the SoAQM initiative can help

One intervention to the challenge of ensuring audit quality is a collaboration between us and the INTOSAI Development Initiative (IDI) to support SAIs in setting up a System of Audit Quality Management (SoAQM).

Such systems will be consistent with the organisational requirement of the revised ISSAI 140 Quality Management for SAIs (currently under exposure draft), which requires SAIs to move towards a holistic and systemic risk-based approach to quality management.

Through the IDI–PASAI SoAQM initiative, we will provide regionally customised support to SAIs to transition from the old concepts of quality control/assurance into systemic, dynamic, scalable and risk-based quality management. [1]

What happens next?

IDI has also developed a draft playbook to support SAIs in setting up a SoAQM. We will work with IDI to deliver the SoAQM programme to six SAIs from our region. The SoAQM focuses on key processes in quality management, rather than on defining what should be in specific components of the quality control system in a SAI. These processes include quality risk management, monitoring and remediation, and evaluation which provide scalable solutions to SAIs. [2] The programme will involve integrated professional education as well as an implementation phase for participating SAIs. Letters of commitment from SAIs are to be finalised this month.

References

[1] and [2] The SoAQM Pilot for SAIs

PASAI develops its first Competency Framework

By Danial Sadeqi, eLearning Specialist, PASAI

Background

We at PASAI promote transparency and accountability in the use of public sector resources in the Pacific by building the capability of our member SAIs. We help SAI staff to become professional auditors who can conduct timely audits and publish reports to ensure accountability in their jurisdictions. We do this through a host of programmes and activities which have evolved over the years.

Feedback from development partners and stakeholders highlighted the need for a Competency Framework to guide and streamline our capability development initiatives. The framework will provide a structure for our capacity building interventions by clarifying the required skills, identifying skill gaps and creating targeted training programmes. It will also guide staff in member offices on which training programmes to access to build the skills required to do their jobs effectively.

While international frameworks are available, there was a need for a framework that reflects the learning and development requirements of the Pacific region and is tailored to that context (including existing capacity, job descriptions and resourcing set-ups).

We have used our unique understanding of this context to develop a framework that supports a coordinated approach for our members. This also helps to attract development partner funding and achieve economies of scale.

The framework outlines core competencies for all audit roles within a SAI and contains functional competencies for each specific position.

Methodology

We completed a comprehensive review of existing international and SAI-level competency frameworks and adopted the following approach.

First, we collected role descriptors and knowledge required for different audit roles. We analysed competency frameworks and relevant documents from:

• internationally recognised audit entities [1]

• developed SAIs within the Pacific region [2]

• internationally recognised institutions [3] and

• other institutions in the Pacific region. [4]

Second, we collated and analysed audit, communications, human resource and information technology job descriptors from job advertisements across New Zealand, Australia and Pacific SAIs. We also conducted interviews with SAI heads, senior auditors, human resource staff and other stakeholders. SAIs who participated in our interviews included those of Fiji, the Marshall Islands, Solomon Islands, Kiribati, the Cook Islands, Sweden (HR team), Western Australia, New South Wales and New Zealand. We also used interviews with Secretariat staff and existing data from PASAI surveys to collate the relevant information.

We grouped this information into competency areas and developed dimensions accordingly. We adjusted the proposed competency areas in response to feedback during Congress to better match the competency areas required at SAI level.

The Competency Framework

1. Key concepts

There are three measurable or observable competencies critical to successful job performance:

a) knowledge (the theoretical or practical understanding of a subject)

b) skills (the proficiencies developed through training or experience) and

c) personal attributes (the qualities, characteristics or traits of a person).

The extent to which a specific competency is measured or observed depends on what the framework is being used for (the purpose).

The competency framework, then, is the conceptual model that details and defines the competencies expected of individual/collective human resources contributing to the successful implementation of PASAI’s mission and strategy at any given point in time.

Competency frameworks are not static but rather dynamic in nature and seek to define the elements needed to drive success. These elements will change depending on the circumstances.

2. Components of the Competency Framework

The PASAI Competency Framework is organised into three levels:

Level 1 core competencies will cover the knowledge, skills and personal attributes of any person entering the SAI and working at any audit technical role.

Level 2 functional competencies is where specific knowledge, skills and personal attributes will be developed in the three main audit streams – financial, compliance and performance audits. Other areas that can be added to this level include investigations and information technology.

Level 3 professional competencies further enhanced knowledge and skills for the main audit streams, leading to professional certification. We also endeavour to build the leadership, human resource management and office management competencies of senior staff to ensure the sustainability of SAI performance.

Competencies

Core competencies	Functional competencies	Professional competencies
Mandate of the SAI	Financial audit	Financial audit certification
SAI independence	Performance audit	Performance audit certification
Internal governance and ethics	Compliance audit	Compliance audit certification
Public sector auditing	Special audits and investigations	Continuing education
Public finance management system	Information technology	Leadership
Audit methodology	Communication	Human resources and office management
Skills - audit, IT, comms, management		Communication with stakeholders
Attributes - integrity and commitment

3. Proficiency levels

Competency level	Proficiency level
Core competencies	Level 1 - Junior Auditor
	All auditors entering the SAI must understand: - Mandate of the SAI (Domain A) - SAI independence (Domain A) - Internal governance and ethics (Domain B) - Fundamentals of public sector auditing (Introduction to Domain C) - Public Financial Management (related to Domain C) - Audit methodology - Cross-cutting audit skills - Skills - audit, IT, comms, time management - Attributes - integrity and commitment
Functional competencies	Level 2 – Senior Auditor
	Develop skills of auditors in the following work streams: - Financial audit (Domain C) - Performance audit (Domain C) - Compliance audit (Domain C)
	Learn skills for other audit work: - Investigations and audits of projects etc - IT audits
	Learn communication skills: - Clients - Stakeholders
Professional competencies	Level 3 – Advanced Auditor
	Attain professional certification in the following work streams: - Financial audit (Domain C) - Performance audit (Domain C) - Compliance audit (Domain C) - Continuing professional education – accounting and auditing standards, IT and emerging issues (Domain E)
	Learn other skills for advanced auditor training to be SAI heads: - Leadership - Human resource, financial and office management (Domains D & E) - Communications with stakeholders (Legislature, civil society and media) (Domain F)

4. Next steps

Given the nature of competencies required in an ever-changing world and the complexity of a framework that is relevant to SAIs with different mandates, staffing, resources, etc., we are making the framework available to SAIs and working closely with them to ensure that the framework is and will continue to be relevant in the future. We are also working on aligning our existing training programmes to the Competency Framework as well as ensuring that our suite of trainings covers all competency areas.

References

[1] INTOSAI’s Competency Framework for public sector audit professionals at Supreme Audit Institutions, INTOSAI’s The Future Relevant Value-adding Auditor, INTOSAI GUID 1950, INTOSAI GUID 1951, ISSAI 200 Financial Audit Principles, ISSAI 300 Performance Audit Principles and ISSAI 400 Compliance Audit Principles.

[2] Audit New Zealand, the Australian National Audit Office and the Territorial Chamber of Accounts of New Caledonia.

[3] The World Bank, United Nations, UN Women, UNESCO, International Atomic Energy Agency, UNICEF and Talent OECD.

[4] Pacific Islands Forum Secretariat, Civil Defence and Emergency Management NZ, New Zealand Transport Agency, University of Otago, New South Wales Public Service Commission, Victorian Public Sector Commission, Australian Health Informatics and Australian Evaluation Society Inc, Northern Territory Government (Office of the Commissioner for Public Employment).

New quality management standards for the North Pacific

By Doris Flores Brooks, Director (North Pacific), PASAI

The American Institute of Certified Public Accountants (AICPA) has issued a new standard on a Firm’s System of Quality Management. To be compliant with the standard, systems are to be implemented by 15 December 2025, and will be effective for audits and reviews of financial statements for periods beginning from that date.

The standard applies to firms who perform audits of financial statements. It does not apply to government audit offices. However, they may find the standard useful in improving their overall internal quality control system and quality assurance.

INTOSAI has also issued an exposure draft of ISSAI 140 Quality Management for SAIs. The new ISSAI provides guidance on establishing and maintaining an appropriate system of quality management to cover all audit and other assurance work performed by each SAI.

SAIs operate under different mandates and models with their size varying greatly around the world. The guidance may not be equally applicable to all SAIs but is intended to lead SAIs towards the common goal of audit quality.

Here, I will outline some of the characteristics of the new AICPA standard and not the ISSAI 40 exposure draft.

The AICPA standard follows a new risk-based approach to include a risk assessment process, tailored quality management, revised components of systems of quality management, more robust leadership and governance requirements and an enhanced monitoring and remediation process.

The components of quality management

There are eight components of quality management:

• Risk assessment process

• Governance and leadership

• Relevant ethical requirements

• Acceptance and continuance of client relationships and specific engagements

• Engagement performance

• Resources

• Information and communication

• Monitoring and remediation process

Risk assessment process

Establish quality objectives, identify and assess quality risks, design and implement responses.

Governance and leadership

Office culture, leadership responsibility and accountability, office organisational structure, assignment of roles and responsibilities, resource planning and allocation and the tone at the top.

Relevant ethical requirements

Know the requirements and follow them.

Acceptance and continuance of client relationships and specific engagements

Establish the necessary objectives to make appropriate judgements.

Engagement performance

The office’s actions to promote and support consistent performance of quality engagements.

Resources

Obtain, develop, use, maintain, allocate and assign resources in a timely manner to enable the design and use of the system of quality management and performance engagement, including technological, intellectual and human resources.

Information and communication

Obtain, generate and use information about the system of quality management, and communicate information to internal and external parties on a timely basis.

Monitoring and remediation process

Provide the office with relevant, reliable and timely information about the design and use of the system of quality management and take appropriate action to remediate deficiencies on a timely basis.

An audit firm should design and use a system of quality management to provide it with reasonable assurance that its personnel:

• fulfil their responsibilities in accordance with professional standards and applicable legal and regulatory requirements;

• conduct engagements in accordance with standards and requirements; and

• issue engagement reports that are appropriate in the circumstances.

For more information

Refer to AICPA’s Statements on Quality Management Standards A Firm’s System of Quality Management and Engagement Quality Reviews.

SAIs who operate in a congressional system (which is predominant in the North Pacific) can now pick and choose between the AICPA quality management statements or the ISSAI 40 exposure draft.

References

I acknowledge Dr Jeanne Yamamura. I obtained much of the above information from the session she presented on AICPA Quality Management Standards at the 2023 APIPA Conference.

Taking a regional approach to good governance and public accountability

By Susana Laulu, Programme Director, PASAI

I was privileged to attend the 34th annual APIPA Conference in Majuro, Republic of the Marshall Islands, from 28 August to 1 September 2023.

The Association of Pacific Islands Public Auditors (APIPA) was formed to achieve the following objectives:

• Establish an organised body to act as one voice in support of the goal of promoting efficiency and accountability in the use of public resources of emerging nations of the Pacific.

• Provide a forum for exchanging ideas, experience, problems, and identifying solutions, which are often unique to the Public Auditors in the Pacific.

• Sponsor auditing and accounting training workshops in cooperation with established associations of the staff of member offices.

• Identify scholarship sources for Pacific Islanders needing financial assistance to study auditing and accounting at the post-secondary level.

• Promote public awareness for the purposes of conducting audits of public resources. [1]

Building on the theme, “Shining a Light on Public Accountability”, the conference signalled a continuous commitment to raise awareness of the importance of public audits. The primary objective of these audits is to strengthen the accountability of governments by reporting on the use and management of public resources.

In his keynote address, His Excellency David Kabua, President of the Marshall Islands, reiterated this commitment. He acknowledged the fundamental role of SAIs to report on and inform the work of government and what the leaders are doing. This, more importantly, holds the leaders accountable for the wise and prudent use of public funds to better serve the interests of citizens. With the significant challenges brought by rapid economic, technological, social and environmental changes, the insight of credible SAIs has never been so crucial as now.

HE David Kabua, President of the Marshall Islands

The commitment of public auditors to promoting good governance and accountability requires proper resourcing, capacity and capability of their respective SAIs. Equally important is for SAIs to uphold and maintain ethical values and to protect the independence and integrity of their offices.

The conference provided training on specific and cross-cutting topic areas to strengthen and enhance the skills and knowledge of SAI staff. Ideally, SAIs should be able to do more than just conduct quality audits on the government’s use and management of public resources. They should also raise awareness of their work and publish timely, accessible reports to inform the citizens of what their leaders in government have been doing. Transparent reporting on the activities of government promotes and strengthens good governance and accountability.

The conference theme echoes the PASAI vision which refers to the work of SAIs leading to increased accountability in the Pacific. The training offered was a good complement to the activities we undertake through our own strategic priorities.

Regional events such as this conference, which involve other active participants in the public financial management system, are needed to support Pacific SAIs effectively deliver their mandates and be champions of good governance and public accountability.

In the words of HE David Kabua, “Our collaboration and collective efforts are pivotal to promote good governance, responsible spending and accountability in all sectors of the public service within our respective nations and our Blue Pacific.”

APIPA Principals

References

[1] About the Association of Pacific Islands Public Auditors

Partnership is pivotal to SAI capacity building

By Sinaroseta Palamo-Iosefo, Director Practice Development, PASAI

Last month, I had the privilege of attending the INTOSAI Capacity Building Committee (CBC) Annual Meeting in Kingston, Jamaica. Other meetings held jointly with the CBC meeting were the INTOSAI Donor Cooperation (IDC) and the International Federation of Accountants’ (IFAC) MOSAIC [1]. The overall theme of the weeklong contiguous meetings was “Partnering for Stronger SAIs and Enhanced PFM”.

The deliberations in each meeting collectively anchored on the important role that SAIs play in ensuring government accountability and strengthening effective public financial management (PFM) systems. It was acknowledged that the quality of the SAI’s work is dependent on the SAI having full autonomy to deliver its mandate without fear or favour, having appropriate systems and processes in place to govern its operations as well as having quality people. Further, it was recognised that the impact of the SAI’s work is dependent on the work of other key players who have responsibilities in the various phases of the PFM cycle, such as the legislature, the executive and government entities.

PFM cycle

Image source: Adapted from an IFAC presentation

Smaller SAIs in developing countries often lack resources (financial, human, capital) and capability to effectively perform their mandated duties. Therefore, it’s imperative that SAIs strengthen and deepen the relationships and collaborative efforts with other “players” in the PFM system, to achieve quality outcomes and impact people’s lives in their respective jurisdictions. SAIs should build and/or strengthen alliances at the national, regional and global levels.

Key partners

Image source: A presentation by SAI Kenya

Key takeaways from the meeting

There was a strong recognition of the value of INTOSAI regions in SAI capacity development. Reflected in the Kingston Agreement, the IDC Steering Committee agreed to maximise the involvement of the INTOSAI regions to facilitate country-level capacity development by leveraging on their knowledge and experience.

• SAIs need to build capacity and capability, keep up to date with emerging issues such as new ISSAIs [2], climate finance and sustainability reporting, and establish alliances with other players in the PFM value chain to be able to conduct the relevant audits and have an impact on society.

• Cooperation at the regional and country levels in support of the professionalisation of public sector accountants and auditors to enhance PFM systems. This premise hinged on the fact that strengthening accountability in the public sector is the responsibility of many players in the PFM system, not just the SAI (external auditing) and the Ministry of Finance (accounting and reporting). It means having the right people with the right skills and competencies across governments and public sector entities. It is not enough to have frameworks and standards alone.

• Enhancing PFM systems requires cooperation and collaboration with all players in the whole PFM ecosystem. Key players include legislature, government, judiciary, SAIs, civil society organisations (CSOs), donors, development partners and the public. This could include establishing country working groups that cooperate with the education community, including professional accounting organisations, universities and government schools, towards achieving professionalisation goals.

• CSOs can play a critical and value-adding role in the PFM value chain by lobbying for government actions to ensure audit report recommendations are implemented and SAI independence is maintained.

Attending the CBC annual meeting was an excellent opportunity to share the work of PASAI in building SAI capacity and learn from others with a common goal, shared values and similar challenges. The global forum exhibited new interventions and modalities to build SAI capability through the various CBC subcommittees and workstreams. Attendees were able to consider the perspectives of donors, development partners and the global accountancy profession on the role of the SAI in enhancing PFM.

It was also an opportunity to establish new networks with SAIs, regional organisations, international organisations and donors in the INTOSAI community who are potential partners that we may collaborate with in the future in our pursuit to build stronger SAIs and enhance PFM in the Pacific.

References

[1] Memorandum of Understanding to Strengthen Accountancy and Improve Collaboration

[2] For example, ISSAI 150 – Auditor Competence

Audit quality management – changes in perspective for our SAIs

By Meresimani Vosawale-Katuba, Director (South Pacific), PASAI

For a SAI to be credible, trustworthy and effective, its audits must comply with applicable standards and its reports must be of a high quality.

INTOSAI is currently revising ISSAI 140 - Quality Control for SAIs, with plans to move towards a holistic and systemic risk-based approach to quality management. [1] The Forum for INTOSAI Professional Pronouncements has developed an Exposure Draft of ISSAI 140 Quality Management for SAIs which is now open for comments. [2]

The changes emphasise that the auditor’s objective is about managing quality and associated procedures in a risk-based and dynamic way in order to achieve the required level of quality, rather than implementing a defined set of quality control procedures.

The SoAQM pilot initiative

The INTOSAI Development Initiative (IDI) has developed the System of Audit Quality Management (SoAQM) pilot. In this system, the SAI designs and implements at the organisational level to enable it to conduct high quality audits, fulfil its responsibilities in accordance with professional standards and applicable legal and regulatory requirements, and contribute value.

There is a proposed collaboration between us and IDI to support interested SAIs in our region in this initiative, for which we held an awareness session with SAI heads.

We recently facilitated a workshop to assist SAIs in sustainably planning, executing and reporting on their financial statements of government (FSG) audits in accordance with international standards. [3] This training was the final stage of a programme of capability-building support to conduct FSG audits in accordance with the International Standards of Supreme Audit Institutions (ISSAIs). We started this programme in 2020 in collaboration with IDI.

Quality assurance reviews were carried out by independent reviewers for the participating SAIs' completed FSG audits. The workshop focused on the quality assurance review findings and provided some practical, immediate and long-term solutions for audit teams to implement in future financial audits.

It was also an opportunity for participants to share the challenges faced in audit methodology and processes, and implementing audit quality controls. They could also gain insights from their peers in other SAIs on suggested solutions.

Following these learnings, we introduced participants to the SoAQM pilot initiative to create awareness on the proposed changes to the audit quality management process for SAIs and also to assist them in planning their future activities on audit quality management. 

The future of audit quality control

It is proposed that the new ISSAI 140 take effect one year after the endorsement by the INTOSAI Governing Board. The effective date for the revised ISSAI 140 is estimated to be 1 January 2025.

The effective date will be important for SAIs that wish to be able to state that an audit has been carried out in accordance with the ISSAIs. From the effective date such claims can only be made if the SAI fully complies with the requirements of ISSAI 140. [4] In light of this, we are working with our member SAIs to begin shifting our perspectives towards managing quality in a risk-based and workable way.

References

[1] The System of Audit Quality Management: Pilots for SAIs
[2] Revision of ISSAI 140 – Quality management for SAIs
[3] Twenty-one Pacific Island government audit office staff in Fiji for improved financial auditing
[4] Explanatory memorandum professional pronouncement on quality management for SAIs and related revision of ISSAI 100 – fundamental principles of public sector auditing

Environmental audit opportunities for the PASAI region

By Jonathan Keate, Senior Solicitor Sector Manager, Office of the Auditor-General in New Zealand

This blog post covers recent and upcoming environmental auditing events and opportunities ahead for the PASAI region including two global climate change projects.

WGEA’s 19th Steering Committee Meeting

SAI New Zealand represents the PASAI region on INTOSAI’s Working Group on Environmental Auditing (WGEA), participating in meetings of its Steering Committee, which delivers the work programme of the group.

This March, the committee met in person in Rabat, Morocco, with participants from 20 different member SAIs discussing and approving the scope of the projects in the new work plan for 2023-25. SAI Morocco hosted the meeting, which began with an excursion to a new wastewater treatment plant. They use the treated water to irrigate parks and reserves in the city.

Wastewater management technology and water reuse in Rabat, Morocco

WGEA Work Plan 2023-25

The WGEA ensures each work plan includes a mix of projects, with hands on support for those SAIs doing their first environmental audit, and more ambitious projects to serve the needs of more experienced SAIs and auditors.

The Work Plan 2023-25 reflects this by providing audit support to SAIs in two main areas, namely: Climate Change and Biodiversity; and the Green Economy.

Global projects in the climate change area include:

• A joint INTOSAI Development Initiative (IDI)/WGEA global audit of climate change adaptation actions, with scope for collaboration within and between INTOSAI regions including small island states; and

• Brazil’s ClimateScanner project – an innovative approach to undertaking a global rapid review of government climate actions.

There is also a research project into the connections between climate change and biodiversity and how these connections could influence audits in these areas.

The green economy projects are in three areas, focused on more experienced SAIs:

• Sustainability reporting – exploring the role of SAIs in promoting sustainability reporting.

• Environmental accounting – exploring concepts such as natural capital accounting and ecosystem accounting.

• Green fiscal policy tools – how economic tools such as environmental taxes, green investment funds and emissions trading schemes, can be used to improve environmental outcomes.

The Steering Committee will develop guidance, research and training materials in these areas over the next three years, in collaboration with international organisations and experts.

Regional WGEA meeting in Sydney, 9–11 May 2023

All PASAI members have been invited to attend the upcoming Regional WGEA meeting in Sydney, Australia from 9 to 11 May 2023. We have shaped the programme around the themes from the WGEA work plan. The event includes:

• training by Dr Vivi Nienmenmaa, Secretary-General of the WGEA about environmental auditing and the Sustainable Development Goals;

• the chance to learn more about the two global climate change cooperative projects and discuss opportunities for participation from the PASAI region;

• expert speakers on sustainability and climate reporting, and on how traditional knowledge perspectives can inform biodiversity and climate change audits;

• opportunities to share insights about potential or planned performance audits, including on climate change adaptation and biodiversity; and

• workshops to choose topics and scope audits for those that will participate in the global climate change adaptation audit.

To maximise participation, there is an option to join the morning sessions online for the training and to hear from guest speakers. Afternoon sessions involve practical workshops for those who attend in person. To participate please register your interest by Monday 24 April 2023.

Global climate change audit projects

National audit offices in the PASAI region have recently received an invitation from the IDI and WGEA to participate in a global cooperative audit of climate change adaptation actions (CCAA), with responses requested by 1 May 2023. The IDI and WGEA are working in cooperation with PASAI for the rollout of this initiative in the Pacific.

The main objective of this initiative is to help SAIs provide a relevant audit response to climate change. The programme offers support to SAIs for auditing a thematic area related to:

• disaster risk reduction,

• water resource management,

• sea level rise and coastal erosion, and

• implementation of climate change adaptation plans or actions (linked to SDG 13).

This will be a very supported audit process with the audits done and reported between December 2023 and July 2024 and a global report of results in 2025.

Given the importance of climate change to the PASAI region, this is a good opportunity for members to undertake their first environmental audit or to resume environmental auditing activities. Members that took part in PASAI’s cooperative performance audit on disaster risk recovery and climate change adaptation in 2010–2011 would be well-placed to do further audit work in this area, including follow ups.

We were pleased to hear that around 11 SAIs expressed interest in participating in this global cooperative audit at PASAI’s 24th Congress in Palau.

By attending the regional WGEA meeting in Sydney, members who are interested in taking part in the audit will be able to discuss and plan their involvement and seek assistance with topic selection with support from the group and their Australian and New Zealand twins present at the meeting. PASAI and the regional WGEA will be pleased to offer ongoing regional support to SAIs who participate in the global cooperative audit of CCAA.

The regional WGEA meeting will also feature a session from SAI Brazil about its Climate Scanner project. This is an innovative project over a three-year period for SAIs to undertake rapid reviews of their governments’ climate actions and for the results to be consolidated and reported globally.

For more information

Please follow the WGEA on Twitter and LinkedIn to keep up with WGEA activities. There is also a lot of up-to-date information on the INTOSAI WGEA website.

If you have any questions or comments, please contact me at  jonathan.keate@oag.parliament.nz.

The power of language to create a culture of equity and inclusion

By Annie Subactagin-Matto, Director – Monitoring, Evaluation and Reporting, PASAI

The role of language and its impact on organisational culture and stakeholder engagement

Language and communication enable us to connect with and engage others. Both can be powerful drivers of inclusion, and represent an organisation’s values, vision and mission. This is true for internal and external communication. However for communication to be effective, it needs to resonate with the intended audience.

We can use language inside the workplace to make everyone feel respected and valued. This includes conversations during meetings and formal communications cascaded from senior management to the wider organisation, as well as informal day-to-day conversations in the kitchen or cafeteria.

Language and messaging used for an external audience demonstrates what an organisation stands for, and the value that it adds to its diverse range of stakeholders including local and regional communities. We can use external communication to connect with stakeholders by building rapport and creating trust and confidence in an organisation. This is best achieved using effective messaging made with inclusive language. We can also use inclusive imagery to amplify the impact of the messaging.

Equity, diversity and inclusion

“The term equity refers to fairness and justice and is distinguished from the concept of equality. Whereas equality means providing the same to all, equity means recognizing that we do not all start from the same place and must acknowledge and make adjustments to imbalances. This requires us to identify and overcome intentional and unintentional barriers rising from bias and systemic structures.” [1]

© Robert Wood Johnson Foundation

Your organisation is likely to have people from different backgrounds, skillsets and with different personalities. As a result, your organisation and the business units and teams within it are diverse in their experiences and expectations by default. The challenge is to create an organisational culture that values diversity and fosters the inclusion of everyone in your diverse workforce, so that they feel valued, accepted and engaged. This is especially important as inclusion has been linked to increased employee engagement, wellbeing, productivity and retention. [2–6]

What is inclusive language and why is it important?

Inclusive language includes phrases and expressions that are respectful and free from bias, assumptions and stereotypes. It acknowledges diversity and promotes the acceptance and value of all people. It aims to foster a sense of inclusion, by including and empowering the audience. It also challenges conscious and unconscious biases, and can be used to shift our beliefs, attitudes and actions. [7]

How can we use inclusive language in the workplace?

You can use inclusive language in the workplace by:

• using words that show others respect and dignity. Avoid words that describe disabled people as sufferers, victims or the afflicted. [8] For example, use the words, “uses a wheelchair,” instead of, “confined to a wheelchair,” and, “was born with a disability,” instead of, “has a birth defect.”

• using genderless terms. For example, use “chairperson” instead of “chairman” and “police officer” instead of “policeman.”

• using universal phrases that are relevant to the cultural context of your communication. For example, if someone were not likely to understand a baseball reference, replace, “Team, let’s work together and hit it out of the park!” with, “Team, let’s work together to achieve something extraordinary/incredible!”

• avoiding language that implies judgement and strengthens stereotypes. An example is reframing the phrase, “Older drivers are dangerous,” to instead say, “As we get older sight loss is more common and as a result driving may become more difficult.” [9]

Other skills related to inclusive communication

We may choose to work on other skills that strengthen our ability to use inclusive language. These include improving our emotional intelligence, empathy and self-awareness. Active listening is an important element of effective interpersonal communication and helps us respond appropriately to both verbal and non-verbal cues. This can be supported by adopting a growth mindset where we make a commitment to continuous learning, development and self-improvement.

Diversity and inclusion at PASAI

PASAI is an equal opportunity employer. We are committed to providing an inclusive working environment that values diversity and where all employees have equal access.

We have mainstreamed gender equality and inclusion by teaching inclusive language in our Communications and Stakeholder Programme. We developed an ‘Inclusive language’ fact sheet, discuss it in all our communications workshops and make it available on our Learning Platform. As language is fluid and reflects societal and cultural norms, we regularly update this resource to ensure it meets the cultural and contextual requirements of our region.

Our self-paced Interpersonal Communications course contains modules on inclusive language and active listening, and will be launched on our Learning Platform in the coming months.

References

[1] National Association of Colleges and Employers. https://www.naceweb.org/about-us/equity-definition/

[2] INTOSAI Capability Building Committee. (2022). Human Resource Management: A guide for SAIs.

[3] Forbes. (2021). 15 Key benefits of Diversity, Equity and Inclusion to communicate with team members https://www.forbes.com/sites/forbeshumanresourcescouncil/2021/05/19/15-key-benefits-of-dei-to-communicate-with-team-members/?sh=20e038ae195c

[4] Edmondson, A. (1999). Psychological safety and learning behaviour in work teams. Administrative Science Quarterly, Vol. 44, No. 2, p. 350-383

[5] McKinsey and Company. (2020). Diversity wins: How inclusion matters. https://www.mckinsey.com/featured-insights/diversity-and-inclusion/diversity-wins-how-inclusion-matters

[6] Fletcher, B. (2016). Diversity and Inclusiveness is good for your well-being. Psychology Today. https://www.psychologytoday.com/nz/blog/do-something-different/201609/diversity-and-inclusiveness-is-good-your-well-being

[7] Fast Company. (2022). How to get better using inclusive language in the workplace. https://www.fastcompany.com/90753901/how-to-get-better-at-using-inclusive-language-in-the-workplace

[8] Ministry of Social Development [2019] Disability language – words matter. https://msd.govt.nz/about-msd-and-our-work/work-programmes/accessibility/quick-reference-guides/disability-language-words-matter.html

[9] Leyla, O. (2020). Seven ways inclusive language creates belonging at work. https://diverseminds.co.uk/7-ways-inclusive-language-creates-belonging-at-work/

Establishing a Quality Assurance function at SAI Fiji

By Meresimani Vosawale-Katuba, Director (South Pacific), PASAI

The Office of the Auditor-General of Fiji (SAI Fiji) established a Quality Assurance (QA) function in 2017. This was to ensure the SAI’s audit engagements complied with the International Standards of Supreme Audit Institutions (ISSAIs), and that the Quality Control (QC) systems in these audit engagements were effective. More importantly, it enabled the SAI to identify areas for improvement in audit methodology and QC systems as a SAI, with relevant solutions for these issues.

Getting started

Upon its inception, the first order of business for the QA team was to develop a policy and a manual to guide its activities. The team reported directly to the Auditor-General, and maintained a database of findings from all its QA reviews. The database highlighted ‘key focus areas’ audit teams needed to work on. The QA team conducted awareness sessions of the significant or recurring findings from the QA reviews. The team held separate sessions for the preparers and the reviewers of working papers.

The QA team continues to conduct awareness sessions throughout the year so fellow staff keep ‘key focus areas’ in mind while performing audits.

The QA function was established with existing office personnel – a Senior Auditor and an Auditor. Serendipitously, four months later the INTOSAI Development Initiative (IDI) conducted weeklong training for QA reviewers. This assisted the team to navigate the ‘unchartered waters’ of quality assurance at the SAI. PASAI's Quality Assurance Manual was also a main reference point.

SAI Fiji also used QA materials and guidance from AFROSAI-E and the Tasmania Audit Office (through a DFAT-funded twinning programme).

Ingredients for success

For a QA function to be effective, there needs to be an established and documented audit methodology in place that is in line with the ISSAIs. A QC system also needs to be in place and operating effectively. This enables a benchmark for the SAI’s work to be measured against during a QA review.

A QC system is intended to provide the SAI with reasonable assurance that the office and its personnel comply with professional standards and applicable legal and regulatory requirements, and that engagement reports the SAI issues are appropriate in the circumstances.

The support of the SAI Head and Executive Management is also critical for the success and effectiveness of a SAI’s QA function.

It is critical for those performing the QA function to work very well together as a team. As well as having sound technical knowledge, the individuals should have diligence, integrity and mutual respect. The team must also be independent and have sufficient and appropriate experience and authority to perform QA reviews (as required under the standards).

Positive changes

A significant impact of SAI Fiji’s QA reviews was that teams were more careful to ensure quality in their audit working papers, and to obtain sufficient and appropriate audit evidence. The SAI’s audit engagement teams also appreciate how a sufficient and rigorous risk assessment affects the planned audit approach.

Significantly, the independent QA function assisted SAI Fiji to identify and address areas for improvement in its audit methodology. This resulted in a consistent approach to quality across the organisation.

Where to from here

When audits are executed consistently, in line with the requirements and intent of ISSAIs, within a strong system of quality controls across the organisation, and in an environment of objectivity, independence, ethics and integrity, the outcome is quality audits. Enhancing audit quality is really a journey of continuous improvement and change. Delivering quality audit services and providing value-adding insights to our auditees, and ultimately, our citizens, means finding better ways to conduct audits every day.

The IDI and PASAI programme, Financial Statements of Government Audits in line with ISSAIs, includes a QA review of these audits as the final stage of the support. Of the eight participating SAIs, Fiji, Kiribati  and Tuvalu have had their reviews carried out. The remaining SAIs (Papua New Guinea, Samoa, Solomon Islands, Tonga and Vanuatu) are targeted to have QA reviews completed by June 2023.

Governance, external audit and accountability – why it matters

By Esther Lameko-Poutoa, Chief Executive, PASAI

The recent Forum Economic Ministers Meeting held in Vanuatu indicated a solidarity stance to advance economic recovery and resilience while supporting the ‘2050 Strategy for the Blue Pacific Continent’. The 2050 Strategy endorses thematic areas which range from leadership to climate change to connectivity through technology.

Simultaneously, there was also the consistent request for more support from development partners. Governments need more money. And where there is public money, there is accountability. The pandemic has exposed the vulnerabilities of the fragile economies of the Pacific region. Forum Economic Ministers themselves called for the acceleration of public financial management (PFM) system reforms to, “strengthen immediate economic recovery and fiscal capacities to cope with shocks.”[1] This acknowledges that better accountability by executive governments is needed.

Image adapted from: https://www.forumsec.org/wp-content/uploads/2022/08/Annex-A-2050-Strategy-for-the-Blue-Pacific-Continent.pdf

In this context, it’s increasingly important auditors general and public auditors work together with the Legislature to hold executive governments to account and improve PFM.

We at PASAI are committed to the capacity development of supreme audit institutions (SAIs) and working with stakeholders to progress accountability.

Timely financial reporting

About 80 per cent of the financial statements of government of countries in the Pacific region were audited on time pre-COVID. Since the emergence of the pandemic, the governments of some countries have not prioritised financial reporting.[2] These reporting delays continue to be a significant setback to economic recovery. 

Governments are obligated to show how they are managing the public purse and should prioritise such reporting. It’s about building trust in government and the public sector. These financial statements of government must be externally audited. Doing so adds credibility to the financial statements. It creates opportunities to strengthen internal controls, improve financial systems, set high standards for services, and lift performance management, timely reporting and decision making. It's about building integrity in processes and embedding it in the values in the long term.

In short, creating robust financial management systems leads to a more trusted public service.  

Communication with citizens

It’s important for government audit offices to not only produce and submit audit reports to the Legislature, but also to release them to the public. This matters because the public has a right to know and understand how public money is being spent and to question it.

The public is an ally to SAIs to hold governments to account. SAIs must produce audit reports that are easy to read and understand, and preferably in multiple languages, if needed. SAIs’ reports should be timely and on projects and areas of high interest to citizens. Equitable access to information about the public sector is vital.

Audit independence and scrutiny by the Legislature

To ensure impartiality, government audit offices must have functional and organisational independence from the executive governments, which are the public entities they audit. This matters because without independence, these watchdogs won’t be able to effectively review and evaluate government spending. They must have the authority to audit and report on public spending objectively and without fear of retribution. Protection against outside influence is necessary.

The Legislature should be an ally of the SAIs, a relevant partner in the oversight of the Executive Government. It is ideal when they share a mutual interest in regularly reminding government entities of policies, regulations and timely reporting to the Legislature. The Legislature should prioritise the scrutiny of these audited financial statements of government and not obstruct SAIs from making  recommendations available to the public.

Timely financial reporting, communication with citizens, audit independence and scrutiny by the Legislature all contribute to promoting government accountability.

References

[1] 2022 Forum Economic Ministers Meeting 11–12 August 2022, Outcomes

[2] PASAI – October update of the Financial Statements of Government audits

The IntoSAINT programme is ready to kick off again

By Nicole Ayo von Thun, Senior Advisor, International Engagement, Office of the Auditor-General in New Zealand

While borders have been closed, the International Team at SAI New Zealand has been working hard to update the IntoSAINT facilitator materials. This means that now that borders are opening up we are ready to kick off this important programme again.

What is IntoSAINT?

For those of you who are new, IntoSAINT is an integrity assessment that evaluates how strong an organisation’s integrity systems are and identifies ways to reduce vulnerabilities. This process helps strengthen controls and reduce risks.

Both supreme audit institutions (SAIs) and public sector organisations can use it. The integrity assessment is called IntoSAINT when assessing a SAI and SAINT when assessing a public sector organisation. SAINT stands for Self Assessment of Integrity.

What’s the format?

A cross-section of up to 16 staff from an organisation will spend two to three days in the workshop. It is a self-assessment because the organisation’s staff do it. Administering an integrity assessment requires commitment from the organisation’s management. They must give staff who attend confidence that their views are valued, and the time to fully participate in the workshop.

There are two to three trained facilitators to guide staff through the assessment process. The staff then consider the results and develop recommendations to strengthen organisational integrity. These recommendations are powerful because they come from staff who really understand how the SAI or organisation works. The facilitators then provide recommendations to management through a presentation and a written report.

What benefits does an organisation get from the integrity assessment?

The benefits include:

• The assessment and the presentation of recommendations to management are completed within a week.

• A management team receives clear recommendations about how to strengthen the organisation’s integrity.

• Staff become strong advocates for integrity and act as integrity ambassadors after the workshop.

• Staff better appreciate how the organisation’s culture affects behaviour and trust in the public sector.

• Staff who are interested in holding managers to account for taking action.

What’s new with the IntoSAINT materials?

The pack of materials now includes a guide that leads facilitators through what an integrity assessment is, how to organise it, how to run one, and how to report the recommendations to management. It sits on top of all the documents required to do an assessment and shows facilitators how and when to use the additional materials and training documents.

We have also developed a range of new documents like the agendas, run sheets and a cover letter for the management report. We have also updated the PowerPoints so that the wording and instructions better align to the IntoSAINT Facilitator Guide. 

The goal is to make it easier for SAI staff once they have been trained as IntoSAINT facilitators to do an IntoSAINT or SAINT assessment. Previously there was a lot to remember after the training. But now all of that information is documented in the guide so facilitators can self-refresh before every workshop.

The aim is that more SAIs in the Pacific region will be able to use this tool to strengthen integrity in their own public sectors. We will share this new package with the IntoSAINT Working Group, which is chaired by SAI Mexico, to be used internationally. SAI New Zealand is currently the PASAI regional representative on the working group.

What’s next for IntoSAINT in the Pacific region?

At the beginning of 2020, SAI New Zealand had a full programme lined up to roll IntoSAINT out across the region. Unfortunately, as with many things, COVID-19 got in the way.

Next year SAI New Zealand, with the support of PASAI and other trained IntoSAINT facilitators in the region, would like to reignite the enthusiasm for this valuable tool. We will be reaching out to everyone who signed up for a 2020 assessment, as well as connecting with those in the region who would like to know more about it.

Keep an eye out for communications on this in the coming months. For any questions in the meantime on the new material or the IntoSAINT roll out in the Pacific region, please get in touch with the International Team at SAI New Zealand at international@oag.parliament.nz.

Understanding the government financial audit opinion

By Doris Flores Brooks, Director (North Pacific), PASAI

PASAI has 10 SAIs who follow the United States (US) Congressional model of governance. These SAIs are in the Federated States of Micronesia (the National Government and the four members states of Chuuk, Kosrae, Pohnpei and Yap), the Marshall Islands, Palau and the US Territories of American Samoa, the Northern Mariana Islands and Guam.

The standards these SAIs follow require the annual audit of the financial statements for the whole of government to be signed by a US licensed Certified Public Accountant (CPA). Very few of these SAIs have a licensed CPA on staff so for the past several decades they have contracted out the annual government financial audits to independent CPA firms.

The financial audit report of the Government of Guam for the fiscal year ended 30 September 2021 [1] is 201 pages long. It begins with an Independent Auditors’ Report prepared by Deloitte and Touche LLP addressed to the Governor of Guam. We’ll use this as an example of terminology common among financial auditors that likely requires ‘translation’ when presented in other formats for laypeople [2].

Report on the Financial Statements

The report opens by listing the financial statements audited, namely, those of:

• the governmental activities,

• the aggregate discretely presented component units,

• each major fund,

• the aggregate remaining fund information, and

• the related notes to the financial statements.

It should be clear from the beginning which statements of information the audit opinion is expressed on.

Governmental activities include education, general government, public safety, public welfare, economic development, transportation, interest on debt and other activities governments customarily perform.

In this part of the audit opinion, it highlights the main activities of government which were covered in the audit.

Component units are state owned enterprises that have been established by law and separated from the general treasury. These component units have their own financial records that document revenues and expenses.

This information is particular to a government being audited. In this case, the Government of Guam has more than 20 component units. They include the hospital, the community college, the university and the authorities for the airport, the waterworks and the port.

Major funds in Guam include those for Federal Grants Assistance, American Rescue Plan Act Assistance, COVID-19 and Coronavirus Aid, Relief, and Economic Security Act Unemployment Assistance.

This part of the audit opinion highlights the main funds and revenue sources of the government.

Management’s Responsibility to the Financial Statements

“Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, this includes the design, implementation, and maintenance of internal control to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.”

This part of the audit opinion highlights the responsibility of government in the preparation of financial statements. Management, in this case, the Department of Administration, prepared the financial statements following the Generally Accepted Accounting Principles (GAAP). It is the responsibility of government to have proper financial management systems and adequate systems of internal controls in the preparation of these financial statements.

Auditor’s Responsibility

“Our responsibility is to express opinions on the financial statements based on our audit.”

This part is the responsibility of the independent external auditor, to express an audit opinion based on sufficient and appropriate evidence collected and documented from the audit. The audit must be conducted in line with international audit standards, in the case of Guam, the Generally Accepted Government Audit Standards, known as GAGAS or the Yellow Book.

Opinions

“In our opinion, based on our audit and the reports of other auditors, the financial statements … present fairly, in all material respects, the respective financial position of the government…”

This is the actual audit opinion expressed on the financial statements. In this case, the auditor issued an unqualified audit opinion and that the government’s financial statements are fairly stated. In other cases, audit opinions can be modified if there are significant issues with the financial statements.

Emphasis of Matters

An emphasis of matter paragraph is to highlight a matter to the readers of the financial statements which does not affect the audit opinion expressed. Emphasis is made if auditors want to highlight certain topics even though they have been appropriately presented in the financial information.

In this case, the auditor emphasised a change in an accounting principle and that the government thought COVID-19 may have a negative effect on its finances.

Other Matters

This is where auditors raise matters relevant to understanding the financial information.

Required Supplementary Information

The Government Accounting Standards Board (GASB) requires certain information to be presented so there is context to the basic financial statements. The auditor pointed out that management didn’t present certain information (the Schedule of Revenues, Expenditures and Changes in Deficit – Budget and Actual – General Fund and notes).

Other Information

Management provided extra information on pages 143 to 197 for additional analysis to support the financial information presented.

Other Reporting Required by Government Auditing Standards

In this paragraph the auditor states it has issued a report on the government’s internal control over financial reporting and its own tests of its compliance with certain laws, regulations, contracts and grant agreements.

The Challenge

It’s one thing to understand financial audit opinions and another thing to explain them to a SAI’s stakeholders. SAI Guam has done a commendable job in creating a short 2021 Financial Highlights document [3] that incorporates some effective visuals and summarises important points from the Independent Auditors’ Report and the government’s financial statements as a whole.

References

[1] https://www.opaguam.org/sites/default/files/2_-_govguam_fs21_final_jul_18_2022_0.pdf

[2] Much of this information was obtained from Jeanne Yamamura CPA, at the 2022 APIPA virtual conference.

[3] https://www.opaguam.org/sites/default/files/1_-_ggw_fy_2021_hl_final.pdf

Reflections on seven years at PASAI

By Tiofilusi Tiueti, Director – Technical Support, PASAI

When you walk into an organisation on your first day and are greeted happily you know your tenure will be a pleasant one. About seven years ago, I was warmly welcomed at the PASAI Secretariat office in Auckland and immediately felt at home with my co-staff and as a member of the PASAI community.

This is not your usual blog post on a technical audit topic to garner interest from members and the public audit community. Rather, it is a sharing of fond memories to express how much I have enjoyed the opportunities and challenges of working in PASAI, the partnerships we have forged among our member SAIs, and, most of all, the camaraderie of our dedicated, hard-working team in the PASAI Secretariat. All this could be perceived as trite, but the feelings are absolutely genuine – as I am now finding.

After prudent consideration, I concluded that although it would still be delightful to work in PASAI, the value I take from the worlds of public finance and global development would also make a humble contribution to Tonga and the region. So, I have resigned.

Memories of the work I have engaged in and the opportunities afforded to me over the last seven years at PASAI will remain with me forever. 

Since I became a PASAI staff member, I have enjoyed working for an organisation that is continuously empowering SAI staff and endeavouring to make a difference in the lives of people in the Pacific.

I remember Eli Lopati and Matereta Raiman, the former heads of SAI Tuvalu and SAI Kiribati, who were persistent in reforming their respective audit legislation to strengthen their SAIs’ independence. It is encouraging to see other SAIs also pursuing their SAI independence ‘journey’. Having a will at the top, a clear independence strategy and an effective advocacy program with key stakeholders is vital to bolstering SAI independence.

I remember parliamentarians in Fiji, FSM Pohnpei, Kiribati, Samoa, Solomon Islands and Tonga appreciating the integral external oversight roles of SAIs and Public Accounts Committees (PACs). They are vital in the effective follow-up of the implementation of audit recommendations by the Executive and in holding the government accountable in its use of public resources. This is why we persistently promote SAIs as a critical component of a robust public finance management (PFM) system and advocate they have effective communication with parliament. 

I remember the thrill of seeing SAI Nauru addressing its 15-year backlog of Financial Statements of Government (FSG) audits and continuing with the determination to get the subsequent years’ FSG audits up to date. Seeing the staff support from SAIs Fiji, Samoa, and Tonga of SAI Nauru on the Financial Audit Secondment Technical Support (FASTS) initiative bear success was most pleasing. This is a good approach to help reducing audit backlogs and ensure the timeliness and quality of FSG audits.

I remember working with SAI staff on various INTOSAI Development Initiative (IDI) cooperative audits and other programmes. The SAI-level support to eight SAIs on their FSG audits to be ISSAI compliant presents a useful model for audit quality and building the capacity of SAIs.

I remember working with a fine bunch of PASAI audit professionals over the years in conducting the SAI Performance Measurement Framework assessments of member SAIs. The results of these assessments have provided PASAI with a wealth of evidence-based information on the status of SAI operations and performance but more importantly, have identified areas where SAIs need support to become more professional and independent. 

I remember sharing knowledge, revealing experiences and absorbing discussions with SAI staff in various training, workshops and SAI-level support programmes.

I remember working with Sarah Markley (aka the Deputy Secretary-General) to secure funding to implement the second half (last five years) of the PASAI Strategic Plan 2014–2024. The wise guidance of the Secretary-General and the great support of the Governing Board was vital to obtaining agreement with our development partners on building SAIs’ capacity through our programmes.

I remember the ongoing delivery of PASAI programmes with SAIs adapting to the changing global context despite the unfavourable impact of COVID-19. We still supported SAIs to respond to emerging issues and remain relevant. It also revealed that in times of adversity we have the resilience to adapt and achieve our purpose.

I remember the wise ideas and creative approaches shared and discussed by heads of SAIs, staff and colleagues, in numerous congresses, governing board meetings, and other regional and international forums. These vital interventions contributed to improving SAI systems and enhancing audit processes to ensure audit quality towards making an impact on the lives of people.

I remember uniting with development partners and engaging with regional partners who have been a great support to PASAI in funding and technical assistance. They have worked with us at the Secretariat and the member SAIs to create an environment for more inclusive dialogues on regional and global issues. Engaging constructively in regional public audit and PFM strengthening processes is of continuing significance.

I remember the countless cups of coffee in the Secretariat office to plan, set up, strategise, discuss, agree and celebrate with fellow staff and good friends.

And so, so much more.

I want to acknowledge and thank our member SAIs and officials for what we have achieved together. I have been very inspired by the incredible work of our SAIs across the Pacific – a work that I will continue to follow as I move on to my new role. I am very proud of the work that PASAI does and glad I could be part of it.

As I conclude my term, I have never felt more strongly about the need for the PASAI Secretariat. It remains the only regional organisation for government (public) auditors that provide us with the space to determine our own strategic direction, free from external influence.

Much has been achieved, but there is still much to do.

All Pacific countries and their people must feel valued and derive value from SAIs. At the same time, and particularly at these uncertain times, I sincerely hope that all 27 members continue to recall why PASAI is a necessary institution.

It has been a great privilege to serve the region as part of the Secretariat. Over the past seven years, I have had the pleasure to work with a Secretariat team of passionate, dedicated and highly competent colleagues who manage important PASAI projects and learn from their diverse experiences. I am very proud of the staff who ensure we deliver on our priorities. I know you are well placed to meet the challenges ahead under the leadership of the Chief Executive, Esther Lameko-Poutoa. I cannot wait to see what PASAI will achieve in the years to come!

I am awed by the prospect of starting my new role but I have worked at the Tonga Ministry of Finance for eight years before I joined PASAI. The new role will be rich, exciting and immensely challenging – working with local, regional and global partners in exceptional public finance landscapes, and helping to build capacity, economic resilience and global development.

When I walk out of the Secretariat’s office at the end of today and hand in my key card and other resources belonging to the Secretariat, part of me will be deeply sad. I started as a colleague of a PASAI community, I will leave as a member of the PASAI family. I still feel the warmth and welcome since my first day at the office. I’ve had a pleasant time indeed.

But … I am hoping to continue connecting in my new role. And to keep on advocating for SAI independence, strong PFM systems and accountable governments in the region.

So, farewell until we cross paths again, hopefully in the field where our best work is done.

Mālō ‘aupito mo e ‘ofa atu!

The importance of strategic planning and alliances in creating audit impact

By Sinaroseta Palamo-Iosefo, Director – Practice Development, PASAI

A mandate that provides supreme audit institutions (SAIs) the discretion to select areas of audit focus is a tremendous responsibility. It deserves proper strategic planning, external consultation and due consideration to the intended benefits to citizens the audits will achieve through their impacts.

Coherent audit planning

A well-structured strategic plan ensures the SAI will produce work that contributes to improving performance in the public sector and solving societal problems. A SAI should have an established planning system and process to ensure it covers issues of broad public and political interest.

Where SAIs have flexibility to choose the objective and scope of their performance or compliance audits, they should consider emerging issues like inclusiveness in the audit planning process. They should also consider the resources required to perform these audits.

The COVID-19 pandemic has, in many cases, increased the disparities of opportunity, wealth and power among people. These inequalities reveal themselves when looking at demographics such as gender, ethnicity, age, class, disability, sexual orientation, religion, nationality, indigeneity, migratory status, socio-economic status, and geographical remoteness.

SAIs should consider the range of issues and risks heightened by the pandemic when selecting audit focus areas to remain relevant, increase their impact and make valuable contributions to their citizens.

SAI value creation

While SAIs have control over the quality and timeliness of their audits, there are other factors that affect the SAI’s contribution to greater impact on citizen’s lives, especially the most vulnerable and marginalised sectors. The diagram below depicts the value chain of what the SAI can achieve through audits.

Source: Adapted from IDI’s Performance Audit ISSAI Implementation Handbook, August 2021

It’s more than completing quality audits and submitting timely reports (SAI outputs), which are within the control of the SAI. The impact of the SAI’s work can only materialise when auditees action recommendations. However, if the overall accountability framework is insufficient, some auditees may lack the incentive to action any recommendations.

For citizens to reap the benefits of improvements in public service delivery, it usually requires legislative scrutiny of audit reports and interest from CSOs and the media, among other key stakeholders.

Auditees usually care about the risk of reputational loss. Knowing the implementation of audit recommendations will be followed up can motivate action.

Strategic alliance

Each SAI is part of an ecosystem with its own unique social, economic, and political context. Multiple stakeholders such as legislative bodies, auditees, civil society organisations, professional bodies, academia, and media all play a role in achieving audit impact. SAIs need to take an active role in engaging with these stakeholders throughout the audit process to ensure government policies, programmes and institutions are inclusive and responsive to the needs of citizens, especially the marginalised sectors.

Throughout the audit process—from planning, conducting, reporting and follow-up—SAIs need to maintain an active dialogue with relevant stakeholders to understand significant societal issues, the main risks, and how the SAI can add the most value through the intended audit.

PASAI support

PASAI continues to build SAI capabilities to develop their own strategic and operational plans, human resource strategies and communication strategies.

An upcoming course on Strategic Audit Planning will cover in depth how SAIs should select potential audit topics by intentionally reviewing government priorities, policies and programmes. It will also give participants a deeper understanding of emerging societal issues. SAIs should have a rationale for any audit, especially performance or compliance audit.

Collectively these initiatives aim to strengthen the SAIs to deliver meaningful and impactful audits.

Impacts guide the audit process

In summary, SAIs should focus on the outcomes and the long-term effects of audits. The overall objective of the SAI is to deliver value and benefits and make a difference in the lives of citizens. SAIs should actively consider impact throughout the audit process when:

• planning – create a coalition with stakeholders when selecting audit topics to ensure audits focus on relevant and significant issues affecting government and citizens,

• conducting – perform audits in accordance with relevant standards or ISSAIs to ensure audit quality,

• reporting – communicate the value of audit results through timely reporting to all stakeholders, and

• following up – check with the Legislature and auditees to ensure recommendations have been fully implemented for citizens to benefit from improvements.

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The Pacific Association of Supreme Audit Institutions (PASAI) is the official association of supreme audit institutions (SAIs) in the Pacific region, promoting transparent, accountable, effective and efficient use of public sector resources in the Pacific. It contributes to that goal by helping its member SAIs improve the quality of public sector auditing in the Pacific to recognised high standards. Our blog includes topics that may help auditors think about some implications to service delivery because of the global coronavirus pandemic (COVID-19).

Applying best practice to our evolving learning delivery

By Danial Sadeqi, eLearning Specialist, PASAI

When the COVID-19 pandemic brought international travel to a halt, we could no longer deliver in-person training to member SAIs. We responded by transitioning our programme delivery online to continue building Pacific SAIs’ capability. In doing so, we worked through several challenges, both in terms of infrastructure and online training delivery.

We recruited an eLearning Specialist to provide expertise in converting existing materials into an online format using instructional design principles and best practice. Our eLearning Specialist also worked with subject matter experts to design and develop online training and capability development solutions.

Throughout the development of our online courses, whether re-purposing existing materials or designing new content, we followed best practice in instructional design and workplace training to ensure high quality materials.

Our approach

We have maintained the learning and development standards which apply when designing in-person training. [1] That is, establishing learning roles, learning theories and methods used, and the models provided for applying learning (such as tasks and assignments). In addition, we draw on empirical evidence and best practice in the field of online learning to ensure our courses meet eLearning standards as well. [1, 2, 3, 4, 5, 6, 7, 8]

Evidence abounds in the importance of reflection [5, 9, 10, 11], and applying knowledge [4, 5, 10, 11] to facilitate learning. The “Kolb Cycle” [12] provides a four-stage learning cycle which not only captures different stages of learning (including reflection and applying knowledge) but also recognises four different learning styles. Therefore, we incorporate this model into our course design.

The “Kolb Cycle”. Source: https://www.nicole-brown.co.uk/reflective-model-according-to-kolb/

Our training objectives take inspiration from “Bloom’s Taxonomy” (revised in 2001 with verbs for the category names) [13]. We design training so participants will not only be able to remember course content, but also truly understand and apply it, and so on up the pyramid. Ideally they will be able to create new work that integrates their learnings.

Source: https://citt.ufl.edu/resources/the-learning-process/designing-the-learning-experience/blooms-taxonomy/#:~:text=Overview,according%20to%20complexity%20and%20richness

To ensure quality we endeavoured to create courses which:

• have a professional design and layout [1, 2]

• address learners’ current needs [14, 15]

• provide an engaging learning experience [16]

• induce frequent learner interaction [2, 17, 18]

• increase flexibility [19] and

• are segmented to allow gradual accumulation of knowledge. [20]

While the principles above informed all steps of our learning design, our aim was to set realistic goals considering our resources, timelines, budget, and other commitments. Moreover, curriculum development is a continuous process which takes a significant amount of time before even getting close to the desired outcome. [2, 15] Therefore, we aimed to get our online courses up and running as fast as we could to avoid any disruptions to our training. Then we would be in a place to move towards gradual improvement of our courses.

Once we established a project plan for converting upcoming courses into an online format, we procured a Learning Platform to host these courses, manage all eLearning content, and track and administer learners’ progress. Choosing a webinar tool was the least challenging part of the process since Zoom had already established itself as the dominant platform of choice.

The Chair of our Governing Board officially launched our Learning Platform in November 2020. The first online training which followed included a webinar and a course component on the Learning Platform. In the webinar, the facilitator delivered a Powerpoint presentation with a Q&A section. The course on the Learning Platform included a forum discussion, workshop slides, supplementary materials and a survey.

Our course design

We then set out to change the design of our online courses to maximise learning. Given that a detailed account of all the work which went into our course design and the research that informed it is well beyond the scope of this blog, I will go over three main design components.

We started off by adding a ‘Pre-course’ section which aimed to improve learning by activating existing knowledge and preparing the learners for the workshop ahead. Activating learners’ existing knowledge benefits them by acting as a building foundation for the training that follows [21]. We did this by adding:

• a survey which elicits learners’ current knowledge of the subject matter and their expectations from the course and

• a task which requires learners to upload recent work on the topic and answer guiding questions that elicit their familiarity with the topic.

The analysis of the above helps facilitators’ make the content more relevant to the learners and improve learning outcomes. [2, 14, 15, 16]

We added a practical, hands-on element based on the learners’ working context to give them an opportunity to apply their learnings and crystalise their knowledge [11, 12] in an authentic context. [22, 23] For instance, in our ‘Report Writing’ course, we ask learners to:

1. select an extract from a recently written audit-focused report and assess it against a set of given questions all of which are based on the main principles taught during the course

2. edit the extract with tracked changes based on what they learnt in the course and

3. submit their edited extract with comments on why they changed things.

This task given after the last webinar provided the learners with an opportunity to activate what they had learnt during the course in an authentic context. The facilitators provided detailed feedback on all submissions.

Our commitment to innovation and continuous improvement

We offer a post-training evaluation, and respond to our learners’ feedback by continuously improving our training offerings and Learning Platform.

User queries and trouble-shooting proved to be the most challenging aspect of online delivery. Given that this was the first time many participants and facilitators were doing an online course, we supported our learners with queries regarding registering for, logging in and navigating the Learning Platform.

We have streamlined the registration process and made significant improvements to the Learning Platform to enhance user experience. To achieve this, we re-designed our user interface, simplified the platform navigation and made the registration process easier for participants.

These changes resulted in a decrease in queries and an increase in user satisfaction ratings, in particular for ease of use and navigation. According to Allen, [2] “more responsive customer service, increased throughput, reduced accidents and errors,” and “better-engineered designs” help the success of eLearning.

Next steps

We are working to mainstream gender and inclusion into our programme of work. This is reflected in our improvements to our Learning Platform to ensure it meets accessibility standards and provides an inclusive learning experience for all our learners.

References

[1] de Freitas, S. (2014). Education in computer generated environments. Routledge.

[2] Allen, M. (2016). Michael Allen’s guide to e-Learning (second edition): Building interactive, fun and effective learning programs for any company. Wiley.

[3] Jia, J. (2012). Educational stages and interactive learning from kindergarten to workplace training. Information Science Reference.

[4] Ifenthaler, D. (Ed.). (2018a). Digital workplace learning: Bridging formal and informal learning with digital technologies. Springer.

[5] Clark, R. C. & Mayer, R. E. (Eds.) (2016). E-Learning and the science of instruction: Proven guidelines for consumers and designers of multimedia learning (4th ed). John Wiley & Sons, Incorporated.

[6] Hung, D., & Khine, M. S. (Eds.). (2006). Engaged learning with emerging technologies. Springer.

[7] Mayer, R. E. (2011). Instruction based on visualizations. In R. E. Mayer & P. A. Alexander (Eds.), Handbook of research on learning and instruction (pp. 427–445). New York, NY: Routledge.

[8] Mayer, R. E. (2014). Research-based principles for designing multimedia instruction. In V. A. Benassi, C. E. Overson, & C. M. Hakala (Eds.), Applying science of learning in education: Infusing psychological science into the curriculum. Retrieved from the Society for the Teaching of Psychology web site: http://teachpsych.org/ebooks/asle2014/index.php

[9] Weedon, E. M., & Cowan, J. (2002). Commenting electronically on students’ reflective learning journals. In Rust, C. (ED.), Improving student learning, theory and practice using learning technology (pp. 99-110). Oxford, UK: Oxford Centre for Staff & Learning Development.

[10] Moon, J. A. (2004). A handbook of reflective and experiential learning. London: Routledge Falmer.

[11] Cowan, J. A. (2006). On becoming an innovative university teacher (2nd ed.). Buckingham, UK: Open University Press.

[12] Kolb, D. A. (1984). Experiential learning. Englewood Cliffs, NJ: Prentice-Hall.

[13] Anderson, L.W. (Ed.), Krathwohl, D.R. (Ed.), Airasian, P.W., Cruikshank, K.A., Mayer, R.E., Pintrich, P.R., Raths, J., & Wittrock, M.C. (2001). A taxonomy for learning, teaching, and assessing: A revision of Bloom’s Taxonomy of Educational Objectives (Complete edition). New York: Longman.

[14] Wallace, D. (2019). Know thy learners. Talent Development, 73(3), 46-50.

[15] FAO. 2021. E-learning methodologies and good practices: A guide for designing and delivering e-learning solutions from the FAO elearning Academy, second edition. Rome. https://doi.org/10.4060/i2516e

[16] Hung, D., Tan, S. C., & Koh, T. S. (2006). Engaged learning: Making learning an authentic experience. In D. Hung & M.S. Khine (Eds.), Engaged learning with emerging technologies (pp. 29-48).

[17] Harteveld, C. (2011). Triadic game design: Balancing reality, meaning and play. Springer.

[18] Harteveld, C. (2012) Making sense of virtual risks: A quasi-experimental investigation into game-based training. Doctoral Thesis. Delft University.

[19] Hashey, A. I., & Stahl, S. (2014). Making online learning accessible for students with disabilities. Teaching.

[20] Dziuban, C. Howlon, C., Moskal, P., Johnson, C., Parker, L., & Campbell, M. (2018). Adaptive learning: A stabilizing influence across disciplines and universities. Online Learning, 22(3), 7-39.

[21] Merrill, M. D. (2002). First principles of instruction. Education Technology Research and Development, 50 (3), 43-59. https://doi.org/10.1007/BF02505024

[22] Jonassen, D. H., & Strobel, J. (2006). Modeling for meaningful learning. In D. Hung & M.S. Khine (Eds.), Engaged learning with emerging technologies (pp. 1-27). Springer.

[23] Jonassen, D. H., Howland, J., Moore, J., & Marra, R. M. (2003). Learning to solve problems with technology: A constructivist perspective, 2nd. Prentice-Hall.

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The Pacific Association of Supreme Audit Institutions (PASAI) is the official association of supreme audit institutions (SAIs) in the Pacific region, promoting transparent, accountable, effective and efficient use of public sector resources in the Pacific. It contributes to that goal by helping its member SAIs improve the quality of public sector auditing in the Pacific to recognised high standards. Our blog includes topics that may help auditors think about some implications to service delivery because of the global coronavirus pandemic (COVID-19).

The mutual benefits of engaging civil society organisations

By Luke Eaton, Communications Advisor/Editor, PASAI

Civil society organisations (CSOs) are among a SAI’s most important stakeholders. But there are things SAIs need to do to nurture these relationships to ensure both parties derive value and benefits from this engagement.

Who are we talking about?

A CSO can be anything from a small, informal group of single-issue activists to a large, influential and well-funded organisation with a diverse agenda. They include faith-based organisations, non-government organisations (NGOs), labour unions and community/professional associations [1].

Here in the Pacific, we have CSOs passionate about dealing with climate change, eradicating gender-based violence, good governance, poverty alleviation and ocean custodianship, to name just a few. If an audit relates to a Sustainable Development Goal (SDG), there is a good chance there is at least one CSO who would be interested in it.

Many CSOs are members of national umbrella networks. PIANGO’s list of ‘national liaison units’ is a good place to start looking if you haven’t identified one in your jurisdiction yet.

Why are CSOs important in the Pacific?

Many who work or volunteer for CSOs are driven by their values and not the lure of lucrative financial incentives. They are usually, by default, advocates of anti-corruption. Pacific CSOs have increasingly been formally involved in national anti-corruption committees, such as in the Cook Islands, Kiribati, Papua New Guinea, Solomon Islands and Vanuatu [2].

They are natural allies when it comes to promoting SAI independence because they often want to use audit reports as reliable sources of data to strengthen their own advocacy work.

The Pacific Islands Forum Secretariat seeks meaningful and active engagement with CSOs, as detailed in its engagement strategy. Regionally, our lawmakers recognise the influence of CSOs as special interest groups.

CSOs can spearhead the cultural change needed to amend or create beneficial legislation which is so often dependent on consensus-driven decision making in the Pacific. The Pacific Community (SPC) credits the lobbying of CSOs with the passage of disability legislation and the increase in marriageable age (aligned to the Conventions on the Rights of the Child) in Micronesia [3].

How to help them help you

1. Invite CSOs to suggest audit topics or raise issues of concern. Depending on their mandate some SAIs can conduct formal inquiries or investigate fraud allegations as well as perform audits. Conduct an annual CSO survey and/or make submissions through an online form available year-round.

2. Consult relevant CSOs on the scope and planning of individual audits. As subject matter experts, CSOs may be able to guide you to the legislation, policies and best practices to form the auditee’s performance criteria.

3. Collect evidence from CSOs during the audit’s examination phase. Many CSOs in the Pacific are based in or have connections with rural areas and can provide you with insights not readily apparent to an auditor based in a capital city. They will likely be willing to share their assessments of government programmes.

4. Produce citizen-friendly audit report summaries and/or deliver presentations to CSOs on audit findings. CSOs may be able to use reports to legitimise their own work and attract support for it.

5. Make reports and associated material (summaries, videos, infographics) publicly available so that CSOs can easily amplify the findings. CSOs might maintain public interest in a topic long after you have distributed your one media release about the report. They can share findings within their own networks, effectively multiplying the likely impact of them.

6. Inform relevant CSOs of your involvement in legislative hearings (such as by the PAC) to help monitor implementation. CSOs can pressure governments and their agencies to make desired improvements. They will likely take an interest in any follow-up audit.

It may well be CSOs who are the ones relentlessly advocating for positive changes based on your audit recommendations and preventing your reports from merely collecting dust on a shelf.

Cultivating relationships

In some Pacific nations, SAIs may still be in a ‘discovery’ stage of their relationship with CSOs. This represents a great opportunity to educate them (with pamphlets, videos and/or presentations) about the SAI’s role in public finance management.

Tongan CSO forum on public finance management in May 2022. Source: Civil Society Forum of Tonga Facebook page.

While encouraging CSO involvement in the audit cycle, it’s important to manage expectations. CSOs are not necessarily politically neutral so SAIs need to be mindful about their motivations and the perception of bias. Make it obvious to them that the SAI retains control on the decisions about audit topics and budget allocation as well as the timing of report submission for tabling.

SAIs in the Pacific are by no means immune to the occasional threat to independence. However, after several years of effective engagement with CSOs you are likely to have many enthusiastic and civic-minded defenders of your office.

Want to know more?

INTOSAI’s Engagement with Civil Society – A Framework for SAIs and CAAF’s Collaborating for Change series are great resources.

We will also conduct a virtual workshop on Effective Stakeholder Engagement on 19, 20 and 22 July 2022, with a focus on how to effectively communicate audit objectives, findings and recommendations to all stakeholders and CSOs in particular.

During the workshop, we will launch the PASAI Stakeholder Engagement Toolkit. It includes a citizen-friendly audit report summary template and a presentation template explaining the role of a SAI and audit findings and recommendations to stakeholders. SAIs are encouraged to submit nominations by 8 July to Annie.SubactaginMatto@pasai.org.

References

[1] Development Asia: Participation Tools for the Pacific – Part 1: Engaging Pacific Civil Society Organizations

[2] UNDP: Pacific Civil Society Engagement to Address Corruption and Promote Public Accountability and Transparency

[3] Pacific Community: Pacific-style Advocacy

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The Pacific Association of Supreme Audit Institutions (PASAI) is the official association of supreme audit institutions (SAIs) in the Pacific region, promoting transparent, accountable, effective and efficient use of public sector resources in the Pacific. It contributes to that goal by helping its member SAIs improve the quality of public sector auditing in the Pacific to recognised high standards. Our blog includes topics that may help auditors think about some implications to service delivery because of the global coronavirus pandemic (COVID-19).

The role of the Pacific Association of Supreme Audit Institutions (PASAI)

By Nicole Ayo von Thun, Senior Advisor, International Engagement, Office of the Auditor-General in New Zealand; and Sarah Markley, Deputy Secretary-General

Many readers will be very familiar with the work we do. However, have you ever taken a step back to think how we fit into the international public auditing community and the important role we play within our own Pacific region?

International SAI bodies

The International Organization of Supreme Audit Institutions (INTOSAI) operates as an umbrella organisation for SAIs. For more than 50 years it has provided an institutionalised framework for SAIs to promote development and the transfer of knowledge, improve government auditing, and enhance professional capacities, standing and influence of member SAIs in their respective countries.

INTOSAI encourages the exchange of experiences among its members. The resulting findings and insights promote continuous development and improvement in government auditing globally.

Seven organisations promote INTOSAI's goals regionally, providing members with opportunities for professional and technical co-operation. PASAI is one of these organisations recognised by INTOSAI and is the official association of SAIs in the Pacific region.

We promote transparent, accountable, effective and efficient use of public sector resources in the Pacific. We contribute to that goal by helping our member SAIs improve the quality of public sector auditing to recognised high standards.

The role of PASAI

Our northernmost SAI is in the Northern Mariana Islands and our southernmost is in New Zealand, with 27 members in all. Our SAIs operate in jurisdictions with a diversity of operating models, political systems and levels of development. However, what all members have in common is their willingness to work together to achieve the ultimate goal of improving accountability and governance in the Pacific region.

The PASAI Secretariat sits in Auckland, New Zealand and includes regionally based staff. With help from a pool of external consultants from all over the world, we work towards achieving our Strategic Priorities (SPs). These five SPs were jointly formed and signed up to by our members in 2014. The SPs, formalised in the PASAI Strategic Plan 2014–24, are:

1. Strengthen SAI independence

2. Advocacy to strengthen governance, transparency, accountability, and integrity

3. High quality audits completed by Pacific SAIs on a timely basis

4. SAI capacity and capability enhanced

5. PASAI Secretariat capable of supporting Pacific SAIs

These SPs guide our work empowering members to deliver their mandates and as a result, improve the transparency, accountability and integrity of the management of public sector resources in Pacific Island countries.

Why is it important to have a regional body to support SAIs?

There are many existing and emerging challenges in the Pacific. These include climate change, the COVID-19 pandemic, achieving the United Nations Sustainable Development Goals, financial crises, changes in government, geographic isolation and limited resources to respond to these.

We support SAIs to operate effectively within the wider public financial management system by developing and implementing a coordinated regional programme. This includes implementing a jointly formed strategy, coordinating a centralised repository of information and facilitating the sharing of knowledge and experience with peer-to-peer cooperation and SAI twinning programmes.

By collaborating with other regional and international organisations, we draw on a larger pool of knowledge, experience and resources to build organisational and technical capabilities. We advocate for SAI independence and contribute to various regional and international fora on matters of good governance.

We also work to build SAI capability and capacity through targeted and needs-based training programmes. These programmes support SAIs to perform timely audits that meet international standards and be a credible source of independent and objective insight for citizens, legislature and other stakeholders.

Workshop in Papua New Guinea (pre-COVID-19)

How do SAIs strengthen accountability, transparency, governance and integrity?

Citizens have a right to expect that public money is accounted for. A well-functioning SAI can make a difference to the lives of citizens by ensuring that public funds are spent effectively and efficiently. SAIs are the lead public sector organisation focusing on the accountability and transparency of public funds. They are uniquely placed to build and sustain stronger and more effective accountability and integrity mechanisms. [1]

SAIs strengthen public sector institutions. Through their audit work, they confirm whether internal controls are operating effectively, identify waste and recommend better operating models. This ensures public resources are spent effectively and make a real difference to the lives of citizens. When the SAI is supported to perform its role well, both from within the public financial management system and by regional organisations, its reporting will be timely and of a good quality. 

We appreciate the continued support of our core development partners, the New Zealand Ministry of Foreign Affairs and Trade (MFAT) and the Australian Department of Foreign Affairs and Trade (DFAT), to build the capacity and independence of SAIs in the region. The people of the Pacific should be confident their governments are spending public funds effectively and efficiently.

What’s next?

Future topics in our series include:

• Engaging civil society organisations

We welcome feedback and look forward to hearing about your areas of interest. Please email secretariat@pasai.org.

References

[1] OECD: Good Practices in Supporting Supreme Audit Institutions

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The Pacific Association of Supreme Audit Institutions (PASAI) is the official association of supreme audit institutions (SAIs) in the Pacific region, promoting transparent, accountable, effective and efficient use of public sector resources in the Pacific. It contributes to that goal by helping its member SAIs improve the quality of public sector auditing in the Pacific to recognised high standards. Our blog includes topics that may help auditors think about some implications to service delivery because of the global coronavirus pandemic (COVID-19).

The North Pacific US congressional model of governance

By Doris Flores Brooks, Director (North Pacific), PASAI

Historical background

Ten of our member SAIs follow the United States (US) congressional model of governance. They are from three US territories (American Samoa, Guam and the Northern Mariana Islands) and the freely associated countries of the Marshall Islands, Palau and the Federated States of Micronesia (plus the SAIs of each of its states: Chuuk, Kosrae, Pohnpei, and Yap). 

Guam and American Samoa became US possessions at the end of the Spanish–American War in 1898. The rest of the island governments were dominated by Germany and after World War I became part of the Japanese empire.  

At the end of World War II, the United Nations established the Trust Territory of the Pacific Islands (TTPI) administered by the US. The TTPI included the Carolinian islands of Chuuk, Kosrae, Pohnpei and Yap, the Marshall Islands, Palau and the Northern Mariana Islands. The US dollar became the common currency and English the official language throughout the TTPI.

Beginning in the 1970s and continuing into the 1980s, these islands petitioned the US to become independent countries in free association with the US. Three Compacts of Free Association with the US were established, the Federated States of Micronesia (FSM), the Marshall Islands and Palau. The Northern Mariana Islands instead voted to become a Commonwealth of the US rather than an independent country.

In their respective compacts, the FSM, Marshall Islands and Palau developed their own constitutions modelled after the US form of government to include legislative, executive and judicial branches. In the executive branch the head of state is the President and/or Governor. Within the legislative branch each has a bicameral legislature with one house equally represented by area and the other house elected by population. Within the judicial branch each has a Supreme Court where the judges are nominated by the Chief Executive and confirmed by the Legislature. 

Funding from the compacts provide significant revenues to these governments which is used to fund infrastructure and general operations. The compacts of the FSM and the Marshall Islands with the US expire in September 2023 and Palau’s in September 2024. As negotiations for new compacts are ongoing the outcome, particularly from a financing perspective, is unknown.  

Financial audits and Government Auditing Standards

The US provides federal funding to each of the freely associated governments in varying amounts over the life of the compacts.

The three US territories of American Samoa, Guam and the Northern Mariana Islands are eligible to receive grants from various federal agencies, similar to those available to the 50 US states. 

Entities who receive federal grants in excess of $750,000 must have a financial audit and a compliance audit (referred to as the ‘Single Audit’) in accordance with the Government Auditing Standards (GAS) issued by the Comptroller General of the US. The GAS are also known as the ‘yellow book’.

Source: United States Government Accountability Office

The Governmental Accounting Standards Board (GASB) issues accounting standards for US states and local governments. Additionally, federal grant recipients must comply with the Office of Management and Budget Compliance Supplement for the different federal grants received.

The various standards require a US licensed, certified public accountant (CPA) to sign the financial audit opinion which must be issued no later than nine months after fiscal year end. As most of these SAIs do not have a CPA on staff, they contract out their financial audits to independent accounting firms.

Whole of Government financial statements

With these federal grant requirements, these 10 SAIs generally issue their whole of government (or  financial statement of government – FSG) audits in a timely manner. For the latest fiscal year 2020, six SAIs have issued their financial audits. As the overseeing agency, the US Department of the Interior has granted extensions for the remaining four SAIs due to COVID-19 delays. 

The departments of finance of these 10 governments prepare their respective financial statements for the whole of government in accordance with the US generally accepted accounting principles (GAAP).

Audits conducted by SAIs

As the majority of financial audits are contracted out to independent accounting firms, most of the North[1] Pacific SAIs conduct performance audits, compliance audits, investigations, inspections and other reviews. The standards used in the issuance of these reports don’t necessarily comply with the GAS, the Quality Standards for Inspections and Evaluations issued by the Council of the Inspectors General of Integrity and Efficiency and/or constitutional authority.

PASAI training and development

Our member SAIs in the North Pacific avail themselves to a variety of capability development programmes and technical assistance we provide.

Almost all have now undergone SAI Performance Measurement Framework (PMF) assessments. By collaborating with us to complete these reports, we identify organisational weaknesses to improve upon and strengths to maintain and enhance. Post-assessment, several SAIs have updated or are in the process of receiving PASAI technical assistance to update their strategic plans, operational plans, stakeholder engagement strategies, human resource strategies, independence strategies and other policies. 

Our most recent annual report outlines the assistance we provided in the last financial year. This year, we enhanced our ability to cater to the unique needs of these SAIs with the appointment of a director based in Guam.

Overall, the trajectory of our member SAIs in the North Pacific is positive and we are committed to partnering with them on their journeys to become model public audit offices into the future.

What’s next?

Future topics in our series include:

• The role of PASAI

• Engaging civil society organisations

We welcome feedback and look forward to hearing about your areas of interest. Please email secretariat@pasai.org.

End notes

[1] Our Micronesian member SAIs from Nauru and Kiribati follow the parliamentary model.

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The Pacific Association of Supreme Audit Institutions (PASAI) is the official association of supreme audit institutions (SAIs) in the Pacific region, promoting transparent, accountable, effective and efficient use of public sector resources in the Pacific. It contributes to that goal by helping its member SAIs improve the quality of public sector auditing in the Pacific to recognised high standards. Our blog includes topics that may help auditors think about some implications to service delivery because of the global coronavirus pandemic (COVID-19).

Gender equality, diversity and social inclusion

By Annie Subactagin-Matto, Director – Monitoring, Evaluation and Reporting, PASAI

Sustainable Development Goals 5 and 10 of the United Nations 2030 Agenda focus on achieving gender equality and reducing inequality through the social, economic and political inclusion of all. The UN explains, "gender equality is not only a fundamental human right, but a necessary foundation for a peaceful, prosperous and sustainable world”. [1]

Gender equality, diversity and inclusion are about giving equal access and opportunities and removing the barriers of discrimination towards women and other marginalised and vulnerable populations, such as disabled people, indigenous populations, refugees and migrants. Providing women, girls and other marginalised populations with equal access to education, healthcare, decent work and representation in political and economic decision-making processes will fuel sustainable economies and benefit societies and humanity at large.

Why is this relevant to SAIs?

Providing equal employment opportunities to women enables supreme audit institutions (SAIs) to access, grow and optimise latent and previously untapped talent available in the labour market. By recruiting and retaining a skilled, professional workforce of qualified women and men, SAIs will be most capable of achieving their core mandates.

The benefits of creating a diverse workforce include increased creativity, problem solving and innovation in response to complex and unprecedented situations. However, diversity in itself is not an endpoint. To unlock the benefits of diversity, SAIs need to create an inclusive work environment that promotes a sense of belonging, purpose and well-being among staff. Expect greater employee engagement, retention and productivity to result.

What can SAIs do to promote gender equality and inclusion?

SAIs play a critical role in promoting gender equality and social inclusion. By becoming gender responsive organisations, SAIs can model relevant strategies, policies and practices to promote equal opportunities for women and men in the public sector. By mainstreaming gender [2] in their strategies, operations and audit work, SAIs can increase awareness of the importance of gender equality and inclusion in the public sector, communities and the region.

How can SAIs become gender responsive organisations?

To mainstream the concepts of equal employment opportunities and inclusion in their strategies and business-as-usual operations, SAIs can:

1. define their gender equality and inclusion goals in their Strategic Plan

2. incorporate gender equality and inclusion in their core values

3. develop a gender equality strategy, policy and an action plan on how to achieve specific targets

4. ensure their HR Strategies, policies and processes reflect the above

5. report on progress towards achieving gender equality targets and use gender disaggregated data in their annual reports and

6. create an inclusive culture in which all staff feel valued, recognised and appreciated, fostering a true sense of belonging and purpose.

How can SAIs incorporate gender equality and inclusion in their Human Resource Management processes and policies?

To create HR policies and processes that promote gender equality and foster inclusion at all points of the employee lifecycle, SAIs can:

1. Incorporate gender, diversity and inclusion into their overarching HR Strategies and related policies, such as a Gender Policy and a Sexual Harassment Policy.

2. Attract and encourage women and marginalised people to apply by using gender sensitive and inclusive language in advertisements and job descriptions.

3. Aim to recruit a reasonably gender-balanced workforce while sourcing the right skills and capabilities required for a particular role.

4. Onboard staff with induction programmes that cater to the diverse needs and learning styles of women, men, disabled and other marginalised people.

5. Provide women and men with equal opportunities to access training and development to extend and achieve their full potential. Consider the strengths and skills of staff and create development plans that reflect them.

6. Ensure equal compensation and benefits for all staff. Compensation should always be fair, consistent, and reflective of the external market.

7. Conduct equal and fair performance assessments for both men and women, allowing all employees to provide input into their performance plans, objectives and targets. Consider female candidates in succession planning to provide suitably qualified women and men with equal opportunities to advance to leadership positions. In time this will create a more balanced gender composition of middle and senior management.

8. Retain staff by building a gender inclusive culture by offering flexible work hours, paid parental leave, study leave and allowances and onsite childcare rooms. Provide a psychologically safe opportunity to exiting employees in an exit interview to identify any issues with inclusion that may have contributed to their decision to leave. Use these insights to improve existing policies, process and the organisational culture.

Employee lifecycle [3]

Achieving impact through audit

Once a SAI has established gender equality as a strategic priority, it can include gender as part of its audit programme by conducting performance audits assessing gender issues in different sectors. SAIs may also adopt a gender lens in financial and compliance audits – such as auditing budget allocation towards initiatives promoting gender equality (for example, programmes aiming to boost women’s participation in business, education and community development).

The decision to undertake gender performance audits may present the need to manage existing audit priorities and SAI capability. This may be especially relevant for SAIs with few staff and limited capability. If SAIs don’t have sufficient capacity, technical capability and subject matter expertise, they may engage an expert to plan and conduct such audits. We explored some preliminary guidance, best practice and things to consider before conducting performance audits on gender issues in a previous blog post.

We acknowledge the support of our development partners, Marianna van Niekerk (AFROSAI-E) and Petra Schirnhofer (IDI) as we advance our gender, diversity and inclusion work.

What’s next?

Future topics in our series include:

• The North Pacific’s congressional model of governance

• The role of PASAI

• Engaging civil society organisations

We welcome feedback and look forward to hearing about your areas of interest. Please email secretariat@pasai.org.

References

[1] https://www.un.org/sustainabledevelopment/gender-equality/

[2] ‘Gender mainstreaming’ involves paying attention to the different needs and circumstances of men and women when designing, implementing and evaluating policies, programmes and projects.

[3] Steven AJ Cox

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The Pacific Association of Supreme Audit Institutions (PASAI) is the official association of supreme audit institutions (SAIs) in the Pacific region, promoting transparent, accountable, effective and efficient use of public sector resources in the Pacific. It contributes to that goal by helping its member SAIs improve the quality of public sector auditing in the Pacific to recognised high standards. Our blog includes topics that may help auditors think about some implications to service delivery because of the global coronavirus pandemic (COVID-19).