September Terms of Reference for the Office of the Auditor General

Transcription

1 September 2011 Terms of Reference for the Office of the Auditor General

2 ABBREVIATIONS ACB Audit Committee of the Board ADB AO Asian Development Bank Administrative Order IIA OAG QAIP Standards TA Institute of Internal Auditors Office of the Auditor General Quality Assurance and Improvement Program International Standards for the Professional Practice of Internal Auditing Technical Assistance

3 CONTENTS Page I. MISSION AND SCOPE OF WORK 1 II. AUTHORITY 1 III. ACCOUNTABILITY 2 IV. STANDARDS OF PRACTICE 2 V. INDEPENDENCE AND OBJECTIVITY 3 VI. RESPONSIBILITIES 3 A. Audit Services 3 B. Advisory Services 4 C. Assurance to External Parties 4

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5 I. MISSION AND SCOPE OF WORK 1. The Office of the Auditor General (OAG), Asian Development Bank s (ADB) internal audit function provides independent and objective audit and advisory services designed to add value and improve ADB operations. OAG provides assurance to the President and the Audit Committee of the Board (ACB) that ADB s financial and operational controls designed to manage risks and achieve ADB s development objectives are operating in an efficient and effective manner. OAG assists Management and the ACB by bringing a systematic and disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes in ADB. 2. OAG strives to be a trusted advisor, enabling good corporate governance. Its operations are guided by shared values including working together to sustain a harmonious and enjoyable environment that embraces integrity, objectivity, accountability, transparency and the pursuit of excellence. OAG supports its staff by promoting knowledge enhancement, professional development and work life balance. 3. All activities of the ADB, including but not limited to (i) sovereign loan, TA and grant operations; (ii) non-sovereign lending and equity investment operations; (iii) treasury and risk management functions; (iv) information technology; and (v) finance and administration are covered by OAG s scope of work, without regard to any internal boundaries or geographical restrictions. II. AUTHORITY 4. The responsibility, authority, objective and scope of work of OAG are defined in Administrative Order 1.02 (Organization Bulletin). The Auditor General and the authorized audit staff of OAG shall have full and unrestricted access to information and records relating to all ADB activities, ADB personnel, and physical property of ADB, subject to the restrictions on the confidentiality of certain materials in Administrative Orders 2.10 (Whistleblower and Witness Protection), and 4.05 (Information and Communication Technology Principles) and in the Integrity Principles and Guidelines. For the full and effective discharge of his/her assigned responsibilities, the Auditor General is authorized to: i) examine any and all ADB files, records, books, data, papers, and any other materials whatsoever related to ADB s business, as and when deemed necessary; ii) iii) iv) take temporary physical possession of any material referred to above, against written receipt if requested, and make copies for his/her own use; require, with the knowledge of the head of department/office concerned, any ADB staff member to supply information, orally or in writing, on any matter relating to the business of ADB and within the knowledge of such staff member; and hold any information, knowledge, and material that he/she acquires in the course of discharging his/her duties in appropriate confidence.

6 2 5. In addition, OAG may examine borrower/executing agency or consultant files, records, books, data, papers and other material related to ADB-financed projects, to the extent provided in the loan documents/contracts. III. ACCOUNTABILITY 6. The Auditor General reports directly to the President, and through the President, to the ACB. The ACB assists the Board of Directors in carrying out its responsibilities, such as ADB s financial reporting and audits, including internal controls and risk management. The Auditor General meets periodically with the President and ACB to discuss OAG s risk-based work plan, OAG s activities relative to its work plan, the effectiveness of OAG, and other significant internal audit matters. 7. The Auditor General, in the discharge of his/her duties, is required to: i) Report, at least semiannually, on the activity of the internal audit function, including a summary of recent audit reports and recommendations and the implementation progress of outstanding high risk recommendations; ii) iii) Ensure OAG achieves established objectives and fulfills its mandate in alignment with ADB s overall strategic direction; and Ensure that audit and advisory activities are carried out in an efficient, economical and effective manner. 8. OAG provides assistance to ADB s external auditor in coordinating the annual audit and attestation activities relating to ADB s financial statements. OAG coordinates its work plan and results, as appropriate, with the external auditors, the Office of Anticorruption and Integrity, the Independent Evaluation Department, and other relevant control and monitoring functions, to ensure that optimal audit coverage is provided to the ADB at a reasonable overall cost. 9. OAG maintains regular working relations with Heads of Departments and Offices of ADB. OAG liaises with other multilateral development banks and international financial institutions to exchange best practices. IV. STANDARDS OF PRACTICE 10. OAG will adhere to the International Standards for the Professional Practice of Internal Auditing (the Standards) and the Code of Ethics as promulgated by the Institute of Internal Auditors (IIA) OAG ensures that all audit staff maintain and develop knowledge, skills and other competencies needed to perform individual responsibilities. Annual work plans (at both the office and individual level) include provision for maintenance of professional capacity. OAG staff are expected to have a professional designation in auditing or accounting, or in exceptional cases a related professional designation (i.e. Chartered Financial Analyst). Where needed, 1 The Institute of Internal Auditors is the professional society of internal auditors and the only international organization dedicated solely to the advancement of the individual internal auditor and the internal auditing profession. OAG audit staff are members of the IIA.

7 3 OAG will augment its internal capacity by contracting firms and/or individuals from outside OAG for specialized reviews. 12. OAG maintains a Quality Assurance and Improvement Program (QAIP) designed to provide reasonable assurance that OAG performs its work in accordance with its mandate, operates in an efficient and effective manner, and complies with the Standards and IIA Code of Ethics. The QAIP includes both internal and external assessments to confirm compliance and identify opportunities for improvement. V. INDEPENDENCE AND OBJECTIVITY 13. OAG will remain free from influence or interference as to the objective and scope of its audit programs, the frequency and timing of its audits, and the content of its audit reports. OAG designs its internal policies and procedures to achieve the degree of independence necessary to effectively carry out its processes and responsibilities in an unbiased manner. OAG will have no direct responsibility for developing and implementing changes in systems, procedures, and controls that it normally would be expected to review and appraise. Furthermore, OAG staff are not authorized to perform any operational duties for ADB, initiate or approve accounting transactions external to OAG or direct the activities of any ADB employee not employed by OAG, except where ADB employees have been assigned to OAG or otherwise designated to assist the internal auditors. 14. As provided for in the Terms of Reference of the ACB, the ACB meets separately with the Auditor General to review and discuss any matters that the ACB or the Auditor General believes should be reviewed and discussed. 15. The Auditor General confirms the organizational independence of OAG through its annual report. VI. RESPONSIBILITIES 16. OAG s mandate covers the delivery of both audit and advisory services. OAG is also responsible for coordinating ADB s external audit as well as arranging for internal and external audits designed to provide assurance to external parties. OAG s specific responsibilities include the following: A. Audit Services 17. OAG s activities evaluate and contribute to the improvement of risk management, control and governance processes. OAG develops an annual audit plan applying a risk-based methodology that incorporates risks and/or concerns identified by Management, the ACB, the external auditors, the Independent Evaluation Department and other stakeholders as appropriate. OAG s work program (including the annual audit plan) is approved by the President and endorsed by the ACB. 18. To determine whether there is reasonable assurance that various processes are functioning as intended to support the achievement of ADB s goals; and that ADB operates in an efficient and effective manner, the following are reviewed: i) Achievement of ADB Objectives: OAG assesses the performance of organizational units and determines whether objectives and goals relating to their

8 4 activities and programs are consistent with the broad objectives of ADB, and whether they have been achieved. ii) iii) Reliability and Integrity of Information: OAG examines and verifies the reliability and integrity of information, both computer-based and manually maintained, and the means to identify, measure, classify and report such information. OAG ascertains that manual and computerized systems examined present reliable information that can be used to prepare financial statements in accordance with generally accepted accounting principles. Effectiveness and Efficiency in ADB s Operations: OAG evaluates the effectiveness and efficiency of internal control in ADB s systems, including those in place for safeguarding ADB s assets; and to consider both costs and benefits when evaluating controls. OAG appraises efficiency and effectiveness in ADB s administration and use of resources to detect wasteful and uneconomical practices or inefficiencies. OAG evaluates the risk of fraud and the manner in which it is managed by the organization, but is not expected to have the expertise of a person whose primary responsibility is detecting and investigating fraud. OAG assesses the effectiveness of computer organization, installations, and applications; and determines whether the system meets the needs of its users, maintains data integrity, adheres to Management policies, achieves organizational objectives effectively, and consumes computer resources efficiently. iv) Compliance with Policies, Procedures, Guidelines, Agreements, Laws, Regulations, Loan Agreements, and Contracts: OAG reviews: (i) compliance with generally accepted standards of accounting and control; (ii) policies, procedures, guidelines, agreements, laws, regulations and contracts; and (iii) compliance of third parties with ADB requirements. 19. In addition to the items noted above, OAG conducts periodic reviews and ascertains whether adequate corrective actions have been taken based on recommendations made; and reports on the results of these reviews. B. Advisory Services 20. OAG provides expert advisory services to Management on any matter pertinent to these Terms of Reference. Its advisory role encompasses the review of systems and procedures, participation as members/observers in task forces, working groups and committees including those tasked with developing, modifying and enhancing specific systems and procedures. C. Assurance to External Parties 21. OAG arranges audits with external auditors as requested by donors, for trust funds and donor contributions administered by ADB. OAG may also conduct reviews of donor contributions based on agreed-upon procedures established with donors.